Description Of Account Margin Level
When you trade with margin, it affects your account risk. To know whether your account is currently at risk of being liquidated, you can check the risk control status of your account by clicking on the financing status under "Portfolio" in the Longbridge App.
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Margin Level
An indicator to measure the risk status of your account. The margin level is divided into 4 levels: Safe, Medium, Cautious, Dangerous. (The examples in the following figures are for reference purposes only)
Safe
No financing is used.
Medium
Financing has been used and equity balance is greater than the initial margin requirement.
Cautious
Equity balance is less than or equal to the initial margin requirement and greater than the maintenance margin. In this case, the purchasing power has been exhausted and no new positions can be opened. If the market value of the positions in the account drops further, a "margin call" amount may appear in the account. In such circumstances, please top-up extra funds or sell positions to fulfil the call to prevent any force-selling of positions.
Dangerous
Equity balance is less than or equal to the maintenance margin requirement. In this state, client must deposit sufficient margin or actively liquidate some of the positions by 3:00 p.m. on the due date to cover the "margin call" amount; otherwise your positions will be forced liquidated. Brokers may determine, at their own discretion, the stock to be liquidated, as well as the price, quantity and time thereof.
Explanation of field
- Equity balance = total market value of securities + total value of cash.
- Initial margin requirement = market value of the positions × the initial margin ratio of positions. When the equity balance is less than the initial margin requirement, the purchasing power is exhausted and no new positions can be opened.
- Maintenance margin requirement = market value of the positions × the maintenance margin ratio of the positions. When equity balance is less than the maintenance margin requirement, the margin level will be updated to 'dangerous' and margin call will be triggered. To satisfy the margin call, some positions need to be liquidated and/or extra funds need to be deposited.
- Margin call amount is the minimum amount to be deposited to avoid any forceselling of the positions. Once extra fund has been received, the margin level will be reinstated.