Got margin call in MCX - what should I do?

chethan

Today received margin call from my broker saying my crude oil position has gone against me and I need to add more margin. I dont have more funds right now. What are my options? Will they automatically square off my position or give me time?

chethan

Reply by: BrokerageManager
Usually brokers give few hours time to add margin. If you cant add margin they will square off your position to protect both you and themselves from further losses. My suggestion is either add margin if you believe your trade direction is correct, or voluntarily square off position to control your loss. Dont wait for broker to forcefully close because they may square off at bad price during volatile time.

chethan

Reply by: LessonLearned_Trader
This is exactly why position sizing is so important. Never put all your capital in one trade. Always keep 30-40% cash as buffer for adverse movements. Margin call is very stressful situation and forces you to make emotional decisions. Better to avoid reaching that situation by trading smaller positions relative to your capital.

chethan

Reply by: RiskManagement_Pro
Also understand that commodity futures use mark-to-market margining. Your losses are calculated on daily basis and margin requirement keeps changing based on volatility. What seems like sufficient margin today may become insufficient tomorrow if volatility increases. Always maintain extra buffer and use proper stop losses to limit maximum loss per trade.