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A market order was executed which led to negative balance in my account. Why?

A market order gets executed at the best available price after validation. There can be differences in the validation price and the execution price. Some scenarios where market orders with different validation and execution prices will go through are listed below:

Scenario 1: For example, if a contract of Bank Nifty CE closed at Rs. 96.15 and you place a market price AMO of 1000 quantities then the required margin would be Rs. 96,150. If your account has at least Rs. 96,150 then this order will be validated since AMO validation for F&O contracts is dependent on the previous close of the contract. If the contract opens at Rs. 196.15, your account will be debited by Rs. 1,96,150 on execution of the order.

Scenario 2: Similarly, a cash market or F&O order placed at the opening will be validated based on the bid-ask available. However, the execution can take place at a price different from the validation since this is dependent on market factors beyond our control.

The above scenarios can lead to a negative fund balance in your account. In such cases, our RMS team can instantly square off your positions without prior notice.