The broker's automated closing of your positions the moment account equity breaches a risk threshold, with no call and no discretion.
Retail futures platforms do not phone you. Risk engines monitor equity against requirements tick by tick and flatten positions when the line is crossed, often with market orders in whatever liquidity exists at that second.
The liquidation itself frequently marks the worst price of the move, because every over-leveraged account in the same product gets flattened at the same moment. Prop accounts add their own tighter version at the daily-drawdown limit.
Example: an account with $2,500 and three MES contracts hits the $2,000 maintenance floor after a 33-point drop; the engine sells all three at market during a fast tick, realising more loss than the threshold implied.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.Equity curve and drawdown. An account balance plotted month by month. The fall from the $16,000 peak to the $12,000 trough is a 25% drawdown, and the shaded area lasts until the balance climbs back to the old peak.
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