- Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds a long position, the liquidation margin is equal to what the investor or trader would retain if the position was closed. If an investor or trader has a short position, the liquidation margin is equal to what the investor or trader would owe to purchase the stock or other trading instrument.
Liquidation margin applies to investors or traders who use margin (leverage) to increase the potential profit of a trade. When the equity of a margin account falls below the liquidation margin level requirement, the broker may automatically close any open positions in the account.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
Liquidation Level — In forex trading, the specific value of a trader s account below which the liquidation of the trader s positions is automatically triggered and executed at the best available exchange rate at the time. The liquidation level is expressed as a… … Investment dictionary
Forced Liquidation — An action taken by brokerage houses that offsets and closes all positions within delinquent customer accounts in order to reduce exposure. Forced liquidations generally occur after warnings have been issued by the broker regarding the under… … Investment dictionary
sell out — liquidation of a margin account after a customer has failed to bring an account to a required level by producing additional equity after a margin call. Bloomberg Financial Dictionary The selling of securities by a broker when a customer fails to… … Financial and business terms
Net capital rule — The uniform net capital rule is a rule created by the U.S. Securities and Exchange Commission ( SEC ) in 1975 to regulate directly the ability of broker dealers to meet their financial obligations to customers and other creditors. Broker… … Wikipedia
Contract for difference — In finance, a contract for difference (or CFD) is a contract between two parties, typically described as buyer and seller , stipulating that the buyer will pay to the seller the difference between the current value of an asset and its value at… … Wikipedia
Economic Affairs — ▪ 2006 Introduction In 2005 rising U.S. deficits, tight monetary policies, and higher oil prices triggered by hurricane damage in the Gulf of Mexico were moderating influences on the world economy and on U.S. stock markets, but some other… … Universalium
Australia — /aw strayl yeuh/, n. 1. a continent SE of Asia, between the Indian and the Pacific oceans. 18,438,824; 2,948,366 sq. mi. (7,636,270 sq. km). 2. Commonwealth of, a member of the Commonwealth of Nations, consisting of the federated states and… … Universalium
Great Depression — This article is about the severe worldwide economic downturn in the 1930s. For other uses, see The Great Depression (disambiguation) … Wikipedia
Stock — For capital stock in the sense of the fixed input of a production function, see Physical capital. For other uses, see Stock (disambiguation). Financial markets Public market Exchange Securities … Wikipedia
Chernobyl disaster — This article is about the 1986 nuclear plant accident in Ukraine. For other uses, see Chernobyl (disambiguation). Chernobyl disaster … Wikipedia