Positions in your account may be automatically liquidated due to various reasons related to account balance, margin requirements, and regulatory compliance. Understanding these reasons and taking preventive measures can help you avoid unexpected liquidations.
Main reasons for automatic liquidation:
- Violation of credit or risk policies
- Failure to meet current Maintenance Margin requirements
- Negative Excess Equity or current Excess Liquidity
- Non-compliance with Regulation T (enforced between 15:50-17:20 ET)
- Negative Special Memorandum Account (SMA) value during Reg T enforcement
- Insufficient equity for futures margin requirements
- Negative cash balance
- Negative settled cash balance
The liquidation process:
- Is performed automatically by the system
- Uses a liquidation algorithm to decide which positions to close
- Can affect any open position, including non-base currency holdings
It is important to note that even cash accounts maintaining only long cash and securities can be subject to liquidation if the cash balance becomes negative.
To avoid forced liquidations:
- Regularly review account balances in the TWS Account Window
- Reduce margin exposure when necessary
- Ensure sufficient funds for Overnight Maintenance margin requirements
- Maintain positive Current Excess Liquidity and SMA
- Keep adequate funds to cover all potential fees, commissions, and margin requirements
Additional Information
- Refer to the Account Window fields guide
- Regularly check the TWS Account Window for detailed margin rules and account status