I emailed my broker to find out if I can do this and this is their reply. We have a Max Daily Loss feature, which you can request via e-mail or via the live chat (Mon-Fri 9:00 am - 5:00 am EST). When your Day Realized or Day Unrealized hits the max loss amount, all of your positions will be sold and your account will be placed into Liquidate-Only mode. You would not be able to enter any new positions for the remainder of the day. It seems they give you a choice of setting your Daily Max Loss at either day realized or day unrealized or both (I am not sure) Isn't it a terrible idea to set it at day unrealized? What if it was afterhours and a $5 stock only had like $1 on the bid side. So does the broker sells my position at $1 because my day unrealize on the stock is 80% down and triggers my DML? That makes no sense.
What asset class is this? With our max loss setting for equities and futures, it prevents new opening orders but does not liquidate.
Equities and your system seems way better. Maybe I will suggest this to my broker but I highly doubt they have the coders to implement something this intelligent.
IMO, the FCMs that off that level of margin do so to cater to day traders because they lack the capital to cater to traders with overnight positions. For EOD positions, your FCM needs to match your margin requirement with 8% of their capital. The FCMs with well under $25mm, most with less than $6mm, can't offer that service, so they offer this type of leverage. (Wedbush has just over $200mm) IMO that level of leverage is nuts. ES margin is just under 5% of the notional value of the S&P. $500 of margin is only 0.003 of the notional value. I'm amazed that the CME allows this. We are more conservative, especially when the trader uses all their margin on one symbol. We also require $10,000 to start. Sometimes if the trader only requests one symbol, we might only approve them at 50% of SPAN to start and move to 25 % later. We just have no interest in that level of risk to us, as if your account drops below zero, we are next in line for losses.
Apparently, my broker uses both day realize and day unrealize to calculate Daily Max loss. They do have the option to put me in liquidate only mode which gives me the chance to sell my own positions instead of leaving it in their own hands.