Liquidation Margin is a method of calculating the customers' equity available to cover losses on their trading account. It includes cash held in the account and the current value of open positions. This calculation ensures that sufficient funds are held in the customer's account to cover potential future losses from these positions.Liquidation margin is a risk management tool that helps equity market participants protect themselves against adverse price movements in the securities they hold in their trading accounts. When used in conjunction with stop-loss orders, liquidation margins can help investors maintain fixed levels of equity and limit potential losses on open positions in their accounts.Liquidation margin is one of the critical concepts in trading. It is a value-based requirement that protects brokers from clients' losses and allows them to manage their risk. At its core, liquidation margin is similar to risk management - traders want to ensure that all accounts are properly funded at all times.
