They didn't screw you. They let you know their margin rule beforehand.It is your responsibility to meet their requirement, or you can simply choose another broker. If you trade futures, then maintenance margin is 80% of initial margin. Anytime you fall below maintenance margin, brokers have right to liquidate. So why you don't ask exchange not to implement such rule? I don't know why but I know this rule is in brokers' interest. So if I don't like this rule, I just go to some place else to find another broker.
I used "screw" figuratively. I don't mean them literally taking advantage of me. And the "what's fair?" aspect is not even a part of my question. So you don't know the answer to what I'd like to know which is why such policy is in the broker's self-interest.
I know this is because they don't want to take risk. I know some trader's account positions were sold at 70 pips below market price when his account was liquidated. So there may be circumstance that when broker liquidate you positions, they may get a much lower price. If it is lower than your total balance, they will incur loss. Another example is if there is big news coming at weekend, and euro open today evening at 200 pips higher, they also have risk. I don't know the probability of such event, ( or maybe there are many other events that will cause high risk)but brokers may know it and they calculate probability of such risk and implement such rule.
I think you're generally right but 222 pips away from the price, liquidation seems excessively conservative under "normal trading conditions". High volatility/news releases/over the weekend - that makes sense. But normally, the spread is under a pip on EURUSD. Why don't they use something like 50% Margin Level or 20%? Seems like that would still offer an adequate volatility buffer to ensure they are never exposed to loss. They monitor trading conditions in real-time so they always know what kind of a risk environment we are in.
My two offshore brokers set liquidation level at 60% and 15% of margin. So oanda is just conservative. For example, interactivebrokers set futures margin at higher than exchange margin, while AMP has ES intraday margin at as low as $300, which is about 1/10 of exchange margin. So if I don't like IB, I simply go to AMP.
At current levels, $300 is about 1/20th exchange overnight margin per ES contract. Add 10% for the initial.
Could it be because Oanda wants your account to last longer so they could skim more off the spread/commissions before you go bust? If you go bust in 1 trade - you will likely not trade for a while. On the other hand they're a bucket shop - i.e. counterparty to your trades so why not have you go bust right away for the whole whammy? hmmmm.
$300 is for intraday margin, so it should correspond to intraday exchange margin, which is 1/2 overnight margin.
Your broker is offering you a discounted margin for trading during the day session. The CME has no such structure in place. Current exchange minimum margin for a retail poke like you or I is $6,300. Come closing time, YOU are on the hook for the full initial margin of $6,930 per contract. There is no day margin only ZUUL! https://www.cmegroup.com/trading/eq...ce_bonds.html#pageNumber=1&sortField=exchange
It used to have daytrading margin but later exchange modified it. So it is subject to each broker to set its daytrading margin. Most retail futures brokers set daytrading margin at $500.