What is a liquidation margin?

Asked 5 years ago

Hey traders. I've come across some talk about liquidation margin in stock trading, and I have the following questions: What is a liquidation margin? How do you calculate it? Does it affect our credit scoring? Looking forward to your response.

Liquidation Margin trading

Andia Rispah Igobwa

Wednesday, September 22, 2021

The current value of a margin account is calculated based on its existing cash deposits and the most recent market value of its open positions, which is referred to as the liquidation margin.
Traders who allow their liquidation margins to get too low may be subject to margin calls from their brokers.
Traders may use cash in their accounts to raise their liquidation margins. Other forms of collateral may be accepted.