If you have no free margin left in your account, it means your account balance is insufficient to cover the margin requirements for your open positions. This can lead to the following margin depletion consequences:
Free margin issues can often arise from choosing a lot size that exceeds the account's available funds or from inappropriate leverage settings. For instance, a large lot size or a leverage ratio that is too low could deplete free margin and prevent successful trades.
• Margin Call: FNmarkets may request that you deposit additional funds to restore your free margin and maintain your open positions.
Example: If you have an open position requiring a margin of $1,000 and your free margin is $100, you would need to deposit at least $900 to restore your free margin and avoid a margin call.
• Automatic Closure of Positions: If the margin call is not addressed or if the free margin remains insufficient, FNmarkets may automatically close your positions to prevent further losses. Positions are only closed when the margin level reaches 20% or lower, not higher, to protect your account from going into a negative balance.
Example: Suppose your free margin falls to $50, but your positions require a margin of $1,000. In this case, the available margin is only 5% of the required amount. FNmarkets may close your positions when the margin level reaches 20% or lower to avoid further loss.
To prevent margin issues, consider adjusting your leverage settings and using smaller lot sizes that align better with your account balance. Also, verify the margin requirements for each trading instrument, as they can vary significantly. Proactive management can help avoid reaching critical margin levels.
Carefully managing your free margin is essential to ensure you have enough funds to cover your open trades, especially during volatile market conditions.