I was reading a document the other day about the
risks involved when trading, and there was a statement
that said:
"the possibility exists that you could sustain a
total loss of all initially deposited margin funds and be
required to deposit additional funds to maintain your
position with the broker."
This makes perfect sense, but the last part of the
statement troubled me a bit.
"If you fail to meet any margin calls within the time
prescribed, your trading position may be liquidated and
you may be responsible for any resulting losses, including
amounts potentially more than your deposit."
Is this saying that if you deposited "x" amount into a
trading account and one of your trades went bad, the
broker can allow the trade to continue negatively in
excess of the amount in your account, and then hold you
responsible for the excess amount?
I didn't think this was possible, but now I'm concerned.
Thanks!
risks involved when trading, and there was a statement
that said:
"the possibility exists that you could sustain a
total loss of all initially deposited margin funds and be
required to deposit additional funds to maintain your
position with the broker."
This makes perfect sense, but the last part of the
statement troubled me a bit.
"If you fail to meet any margin calls within the time
prescribed, your trading position may be liquidated and
you may be responsible for any resulting losses, including
amounts potentially more than your deposit."
Is this saying that if you deposited "x" amount into a
trading account and one of your trades went bad, the
broker can allow the trade to continue negatively in
excess of the amount in your account, and then hold you
responsible for the excess amount?
I didn't think this was possible, but now I'm concerned.
Thanks!