About liquidation even without leverage

ofinance · Apr 16, 2020

In a margin account Is it possible to have positions liquidated even without using margin? Let's say i have $10,000 and buy 100 IBM at $100, if IBM falls to $50 do i get liquidated even though iam not using leverage? I know it wouldn't happen in a cash account but how about a margin account?

newwurldmn · Apr 16, 2020

ofinance said:
In a margin account Is it possible to have positions liquidated even without using margin? Let's say i have $10,000 and buy 100 IBM at $100, if IBM falls to $50 do i get liquidated even though iam not using leverage? I know it wouldn't happen in a cash account but how about a margin account?

No

ofinance · Apr 16, 2020

newwurldmn said:
No

I hope you are correct

in another thread someone said that there is liquidation if net liquidation value falls below maintenance margin, well it would happen with a 50% fall.

cvds16 · Apr 16, 2020

there is no such thing as maintenance margin in an account that doesn't use leverage ...

ofinance · Apr 16, 2020

cvds16 said:
there is no such thing as maintenance margin in an account that doesn't use leverage ...

When you go to tws there is a value in maintenance margin even without using leverage but maybe the IB algorithm doesn't take it into account when all positions are fully paid for.

newwurldmn · Apr 16, 2020

ofinance said:
I hope you are correct in another thread someone said that there is liquidation if net liquidation value falls below maintenance margin, well it would happen with a 50% fall.

No it wouldn’t.
Net liq would equal 2x the new maintenance margin in your scenario.