What is Auto Square Off?
Auto square off is an automated broker action that closes open positions without trader initiation — typically when MIS intraday cut-off passes, margin falls below requirements, or risk limits are breached. Fills may be at market price during thin liquidity.
What auto square off is
Auto square off removes risk from the broker and clearing system when the client no longer meets product or margin rules. It is common on MIS intraday books and on F&O accounts that run out of margin after adverse MTM. Treat it as an emergency exit, not a strategy.
Indian market context
Indian brokers publish MIS square-off times (often 15:15–15:25 IST). Peak margin and SPAN rules mean intraday F&O also faces margin checks — not only end-of-day MIS. On expiry afternoons, auto square-off queues can widen spreads.
Worked example
| Trigger | Typical outcome |
|---|---|
| MIS past cut-off | Broker market square-off + possible charges |
| Margin shortfall | Partial or full F&O book closed |
| Journal tag | auto-square-off + rule-break |
| Review action | Reduce size or fix product type next session |
Common mistakes
- Trading MIS size as if it were NRML capacity.
- No calendar alert for expiry-day margin spikes.
- Blaming broker slippage without fixing margin buffer policy.
- Failing to separate auto square-off P&L in analytics.
How to validate
- Validate Auto Square Off fills against broker contract notes monthly.
- Measure median slippage in points/₹ for Auto Square Off on Bank Nifty vs mid-caps.
- Flag sessions with abnormal rejections or partial fills for separate review.
- Compare limit vs market tags only on symbols with similar liquidity.
How to track in TradeLyser
- Record order type, limit price, fill price, and latency on the trade.
- Tag “slippage > plan” when Auto Square Off fills worse than expected.
- Monthly slippage report by symbol and order type in analytics.
- Reconcile with broker order log quarterly.
Best practices
- Choose Auto Square Off before the move, not after FOMO entry.
- Default to limits on illiquid mid-caps; markets on urgent exits only.
- Log rejected orders — they reveal unrealistic limit discipline.
- Review slippage in R-multiples, not only rupees.
Common pitfalls
- Chasing with market orders after Auto Square Off already moved.
- Using limits on fast Bank Nifty breaks without timeout rules.
- Not recording partial fills — skews performance stats.
- Assuming broker fills match intended Auto Square Off every time.
How to use this in TradeLyser
Create a TradeLyser filter for exits tagged auto-square-off. If count > 0 per month, cap live size 25% until two clean weeks.
Reference guide
| Context | Value | Reading |
|---|---|---|
| Prevention | Alerts at 80% margin use; exit MIS 20 min early | Ignoring margin alerts during revenge trading |
| Review | Post-mortem every auto square-off same day | Deleting the day from journal because outcome was embarrassing |
Related terms
Margin is the deposit brokers require to hold leveraged positions. It can rise sharply into expiry or on gap moves against you.
Margin call occurs when account equity falls below required margin — add funds or reduce positions.
Mark to market (MTM) is the daily revaluation of open derivatives positions against the exchange settlement or closing price, with profits credited and losses debited to your ledger. On NSE F&O, MTM runs on open futures and options positions so capital reflects current risk, not just entry price.
Risk budget is planned R or rupees you may lose in a period or across active setups.
SPAN (Standard Portfolio Analysis of Risk) margin is the minimum margin NSE clearing requires to hold a derivatives portfolio, computed from scenario-based risk across price and volatility moves. It replaces fixed-percentage margin with a portfolio-aware number that can shrink when you hedge and expand when exposure concentrates.
Square off is the act of closing an open trading position so net exposure returns to zero — selling what you bought or buying back what you sold short. On NSE, intraday MIS positions and many F&O exits are executed as square-off orders before session end or expiry.
Sources & References
- ↗NSE equity derivatives — NSE (accessed 2025-06-01)
FAQ
Does auto square off always happen at market close?
MIS auto square-off is typically near close, but margin-driven square-off can happen anytime during the session when available funds breach requirements.
Can I dispute auto square-off fills?
You can request trade logs from your broker, but prevention is the practical fix — maintain margin buffer and respect MIS cut-offs.
How do I log auto square-off in my journal?
Tag exit as auto-square-off, note planned vs actual exit time, slippage vs mid-price, and link to the rule break (margin, MIS, or time). Review in weekly recap.
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