Auto Liquidation Rules

Auto Liquidation Rules

When trading at Edge Clear on certain data providers, your account at the FCM may be subject to certain risk mitigating measures to hopefully avoid the risk of a debit.  These measures usually fall under: 
  1. Minimum Account Balances: A predetermined amount of funding required to be in an account. If account funding falls below this number, your positions and working orders should be liquidated and cancelled.  Once liquidated, the account can be locked for trading. Ex: an account with a $500 minimum account balance falls to a balance of $480 would lead to an account liquidation.
  2. Daily loss limit: A loss amount in a given trading day above the loss limit should trigger the auto-liquidation and the account lock. Ex: An account with a $800 loss limit would be locked if the account lost $810 in a trading day. 
  3. % cash on hand: A certain percentage of the cash on hand amount for that trading day. This amount resets per trading day as the account balance increases or falls.  A loss over this percentage amount would lead to a liquidation and locked account. Ex: An account with an initial balance of $10,000 and a 80% cash limit would need to keep a balance of above $2000 for that trading session to avoid an account liquidation. 
An account below any of these thresholds may be subject to auto-liquidation where all open positions of the account would be closed and any unfilled orders would be canceled. The account should also be locked meaning that no further orders can be placed. When an account is locked, an error message that reads "Orders can only be placed by admin only" when the user attempts to place an order.  If the account setting is not set up to lock the account once liquidated, you should be liquidated immediately if you continue to place orders.  Incurring fees on each trade. 

In order to unlock an account, email your broker and they will reach out to the FCM who will unlock the account for the next session.  

Please note:  There are several risk factors associated with auto liquidation. For instance, an account could be automatically liquidated if Edge Clear and it's FCM received wrong data from the exchanges or that there is a keypunch error in recording the data. Edge Clear and the FCM are not responsible for wrong data it receives from exchanges nor is Edge Clear the FCM responsible for late, lost, misdirected, misdelivered, incomplete, illegible or unintelligible orders; unavailable network connections; failed, incomplete, garbled or delayed computer transmissions; keypunch errors; online failure or other technical malfunctions or disturbances. If the account value changes overnight, the account could be liquidated upon the market open. Market volatility could cause an account to be auto liquidated on short or relatively no notice to Customer. All other risk associated with trading is present even though Edge Clear and the FCM may exercise its rights to auto liquidate. 

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