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How much liquidity is safe?

BiyaPay
Published on 2024-12-06 Updated on 2024-12-06

Residual liquidity in a stock account is an important indicator of the safety of your account’s funds. The higher the remaining liquidity, the more funds you have available to deal with market volatility and secure your existing positions. Here are some reference criteria for residual liquidity in stocks:

  • High security: Residual liquidity is greater than 50%, which means that your account has sufficient funds to withstand market fluctuations. If you use leverage or margin trading, it can effectively reduce the risk of forced liquidation.
  • Medium security: Residual liquidity is between 30%-50% and remains relatively safe, but you need to be aware of the risk of market volatility and ensure that you have sufficient funds to deal with potential margin calls.
  • Low security: Residual liquidity is less than 30%, especially close to 15%-20%, which means that the account is under pressure. If there is a high volatility in the market, your position may be at risk of being liquidated.