Pending orders and margin

Beginner Questions
1

Hello to all,
Could you please explain to me this sentence. “When you place a pending order, your trading account is not affected because margin is not applied to pending orders.”. This means that the margin is applied once the order is triggered right ? Thanks

2

Hi, in general it means you should be familiar with this page, some introduction will be good too :slight_smile: Regards Greg

3

Hi @ProfesorPips,
I just finished preschool, and all is fine as well as clear except for that point. All in all, I appreciate your passage.

4

ok, so yes, this means that the margin is applied once the order is triggered

5

Thank you.

6

Last time I checked there was a clause in my broker’s T&C’s that prohibited a client from setting large numbers of pending entry orders for which they would have had insufficient margin if triggered. The account can be terminated if this happens.

I remember that I have set orders by mistake for which I had insufficient margin - as soon as the first order price level above my margin limt was hit by the market, that order was of course not executed but all other pending entry orders were also cancelled. I think this included any which actually would not have exceeded the margin limit if they had been triggered first.

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7

Yep, you’ve got it right! When you set a pending order, it doesn’t use any margin just yet. The margin only kicks in once the order is triggered. Thanks for asking!

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