If loss more than 50% of the account value the position gets auto square off, unable to understand it properly. Let’s say for an example. Suppose i have total account value in commodity section is 10k. If i bought a share of only 1 quantity silvermic aprilfut as normal, margin used for this is 4100 so i have left 5900. Here i want to know will my position gets auto square off if loss exceeds 50% of margin available that is (5900) or it will be square off if loss exceeds margin used that is (4100). Confused !
If you have account value of 4100 and entered a position with required margin of 4100, if any broker mentioned above 50% loss, position will be squared off it means if loss is equal to or more than 2050 (4100*50%)(50% of initial margin) square off will happen.
If the account value is 10k it means one is having excess free cash of 5900 above the margin required to hold 1 lot of silvermic, for the position to get squared off from broker then the loss should be equal to or more than 5900+2050=7950 ( free cash+ 50% of initial margin). Free cash is taken in to consideration before closing the position.
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Thanks siva for the information.