What if loss is more than margin paid?

#1
Say if I buy GOLDGUINEA 1 lot trading@14177 by paying margin of Rs.567

What will happen if GOLDGUINEA comes to 13500.

Whether should I pay the remaining loss amount to the broker or the contract will be closed?
 

praveen taneja

Well-Known Member
#2
Bro as per I think bro would call you to come and deposit loss of difference
If u dont pay he can close contract and recover loss from ur portfolio holding by selling any share no matter in that u r in profit or in loss
 
#6
Most commodity brokerage houses just automatically square of your position according to the amount you deposited with them as margin.

its a good and bad thing.

Good because there will be situations when market has wild swings and the commodity you traded goes up or down whether you went short or long and by auto squaring your position the brokerage house 'protects' you from making major losses!

Bad thing because most brokerage houses knowingly/unknowingly square of your position only when loss is very high and not minimal and by doing so they make a killing of sorts!

Most of them know where markets are headed but wantedly they will wait till your position goes way too high and they 'auto square off' and most of the time the same scrip would have reversed back to levels you bought or sold at.
 

alroyraj

Well-Known Member
#7
Bad thing because most brokerage houses knowingly/unknowingly square of your position only when loss is very high and not minimal and by doing so they make a killing of sorts!

Most of them know where markets are headed but wantedly they will wait till your position goes way too high and they 'auto square off' and most of the time the same scrip would have reversed back to levels you bought or sold at.
In any case the loss you bear does not go to the broker. But its true due to wild swing the margin call is triggered. So the point to remember to to allocate suitable margin for a single contract. Say the margin required is 10% Keep some 15% aside. This prevents any untoward situations. I realised it was a thumb rule after some rough experience. Say even when you need to capitalize on some good move capital should be there at hand.
 
#8
Bad thing because most brokerage houses knowingly/unknowingly square of your position only when loss is very high and not minimal and by doing so they make a killing of sorts!

Most of them know where markets are headed but wantedly they will wait till your position goes way too high and they 'auto square off' and most of the time the same scrip would have reversed back to levels you bought or sold at.
Its true same happened to me, NO margin call was made, simply squared off. My RM said he was on leave or else he would hve brought it to me..... Rubbish

The Lesson i learnt is

Never To Meet a Margin Call AGain... Dont Ever Throw Good Money After Bad ........
 
#9
What is the cost of not taking delivery?

I mean, if we forgot to square-off before the date of contract expiry date and we are not ready to take delivery of the goods, what is the penalty amount we want to pay?
 

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