Margin Close- Out
What is Margin Close- Out rule?
In the event that the total margin of your account falls under 50% of the amount of the initial margin required to open positions, the system will close one or more of the open positions in order to protect your account’s equity from eroding to zero.
Margin Close Out is always triggered at 50% apart when adverse market conditions exist. In such rare cases the MCO is triggered at the closest rate possible to 50%.
Margin Close-Out (MCO) rule also applies to positions with a Stop Loss Order or limited risk protection.
Keep in mind that the MCO rule will not prevent you from adding to your margin if you wish to do so.
Company’s MCO rule
According to the set company’s MCO rule, when triggered, the open position with the least volume will be closed automatically.
The rule will apply any time MCO is activated and may be repeated until all the positions are closed.
Keep in mind that the MCO rule applies only during market hours. In case the symbol of the position is out of market hours, the position will not be closed.
If the required margin is not enough and you want to close any hedged positions, you need to make the request by calling the Brokerage Department on +302112340924.
OTHER MCO OPTIONS:
Hedge of Newest Positions.
When MCO is triggered you have the option to automatically open a full-hedged position to the position that was opened last, i.e. in the opposite direction and same amount to the position that was opened last. This action will be repeated at any time MCO is triggered and may be repeated until all open positions are hedged.
In case the market moves too fast, the system may not hedge the relevant position. In case MCO is triggered and the symbol of a position is out of market hours, then the position will not be hedged.
In case “hedging the newest position” is going to increase the exposure, then the position will not be hedged.
Close All – Partial re-open
When MCO is triggered you have the option to automatically re-open the closed position(s), with up to 75% of their initial volume.
This method will not charge you with spread fees.
The “Close All – Partial re-open” method will not close the position(s) that:
- Are fully hedged and
- Their market is currently closed.
The rest of the positions will be closed and re-opened by the system.
The calculation method will be taking into consideration the 75% of the initial volume of the closed positions and it will be reducing it by 1% till it gets to positive Margin. The open price is the price at MCO.
In case of any existing Stop Loss (SL) or Take Profit (TP), the re-opened position(s) will have the same SL/TP rate(s).
The positions that will be opened first will be those with the biggest volume. In case positive margin can’t be reached the positions with lower volume, or all the positions may not be re-opened at all.
In case the market moves too fast and the MCO price is not available, the system may not re-open the relevant position.”
For further details regarding the company’s execution of orders please refer to the Order Execution Policy that forms an integral part of the service agreement.