Short Selling Maintenance Margin Calculator Calculate your maintenance margin for short selling, short selling is also a big challenge
Calculate the current maintenance margin for short selling and shorting, and how much the price needs to rise before additional margin is required. The following calculations do not include handling fees and tax rates. If you are looking for a calculator related to long positions or margin trading, please visit Margin Call Calculator.
How to use the Short Selling Maintenance Margin Calculator (Short Selling Break-Even Calculator)
If you only want to calculate the price that will cause the maintenance margin to be insufficient, simply enter the selling price and quantity
Is there a break-even risk for short selling?
A: Of course, short selling is also a credit transaction!
People who are engaged in credit transactions should have heard of the "overall collateral maintenance ratio", which means that the credit transaction situation under your account needs to be calculated in combination. In other words, "margin trading" and "short selling" will actually be added up for maintenance margin calculation. When the maintenance margin ratio is less than 130% (varies by country/region), you will face the risk of forced liquidation/closing.
Although the overall maintenance margin ratio is calculated by combining margin trading and short selling, we have already introduced the maintenance margin calculation method for margin trading last time. This time we will focus on the maintenance margin calculation method for short selling.
The formula for the maintenance margin ratio for short selling is: (Original Market Value of Collateral + Initial Margin - Additional Margin) / Latest Stock Market Value
- Original Market Value of Collateral: The total market value when the short selling transaction is completed
- Initial Margin: The margin required for the first transaction (usually 90%)
- Additional Margin: Additional margin added later
When the maintenance margin ratio is lower than the set lower limit, you will receive a notice to pay additional margin and be informed that you must pay the margin within a certain number of days, otherwise the short selling position will be forcibly closed, and the margin trading position will be forcibly sold!
How much margin do you need to pay?
A: At least need to return to the set lower limit of the maintenance margin ratio, but this does not mean that the additional margin payment order will be cancelled
In fact, the regulations in various countries and regions are different. Many times, you need to raise the maintenance margin ratio to a fixed value or higher to truly cancel the additional margin payment order. Otherwise, if the maintenance margin ratio continues to decline in a short period of time, the institution has the right to cut your position on the same day!
Afterword
Short selling is also a big challenge
Many stock market veterans should have engaged in short selling transactions, especially when the trend is facing a bear market. However, short selling transactions also require attention to many aspects. When it is really time to stop loss, stop loss, and grasp your own operating principles, you can travel freely in the turbulent stock market.
If I have time later, I will also write a blog post to introduce the Short Selling Maintenance Margin Calculator tool in detail. Stay tuned.