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Thread: Margin, margin call and stop out level/ what they mean exactly

  1. #1
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    Margin, margin call and stop out level/ what they mean exactly

    I have notived that a lot of members in the forum are confused with the terms margin call and stop out. Many consider the margin call itself as the blowing of account. Though there is a close relation between these terms they dont mean exactly the same,

    Margin: Trading on margin is a big advantage in Forex trading. This means that to trade $100000 worth of currency you need not invest $100000 in your trading account. We all know that Roboforex offers 1:1000 leverage and so you can just invest $100 to trade $100000 worth of currency. In other words you can say that Roboforex requires its traders to keep a minimum margin of .1% margin to support your trades

    Margin call and stop out: As traders of Roboforex you must be aware that at what stage you will receive a margin call and what level you account will blow. In the pro cent account of Roboforex you have at margin call a 40% and the stop out level is 10%.

    So what does this mean exactly? in simple words if I try to explain, in the course of trading if your equity drops to or below 40% of the minimum margin required to open the trades, you will receive a margin call and when your equity further drops to 10% of the margin required than you experience the stop out which is more commonly known as account blowing. So you can understand that the leverage you chose have a say as to when you will receive the margin call and when your account is stopped out. When you get the margin call you may decide to deposit more funds to avert the stop out level or simply wait for the future to unfold a recovery or a stop out.

    As every trader can understand that both margin calls and stop outs are terrible things during trading and the best safeguard against them is to properly follow a risk and money management system.

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  2. #11
    Trader cutiekc's Avatar
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    Margin call or stopout just mean that we have lost all our money and we need to reinvest, well, this is never a good thing when trading, therefore I will advice that we learn all that needs to be learned on the demo trading account and even loss our money on the demo trading account then we can become successful on the real trading account and avoid losing our money on the real account.

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  3. #12
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    Quote Originally Posted by Bhave4U View Post
    I have notived that a lot of members in the forum are confused with the terms margin call and stop out. Many consider the margin call itself as the blowing of account. Though there is a close relation between these terms they dont mean exactly the same,

    Margin: Trading on margin is a big advantage in Forex trading. This means that to trade $100000 worth of currency you need not invest $100000 in your trading account. We all know that Roboforex offers 1:1000 leverage and so you can just invest $100 to trade $100000 worth of currency. In other words you can say that Roboforex requires its traders to keep a minimum margin of .1% margin to support your trades

    Margin call and stop out: As traders of Roboforex you must be aware that at what stage you will receive a margin call and what level you account will blow. In the pro cent account of Roboforex you have at margin call a 40% and the stop out level is 10%.

    So what does this mean exactly? in simple words if I try to explain, in the course of trading if your equity drops to or below 40% of the minimum margin required to open the trades, you will receive a margin call and when your equity further drops to 10% of the margin required than you experience the stop out which is more commonly known as account blowing. So you can understand that the leverage you chose have a say as to when you will receive the margin call and when your account is stopped out. When you get the margin call you may decide to deposit more funds to avert the stop out level or simply wait for the future to unfold a recovery or a stop out.

    As every trader can understand that both margin calls and stop outs are terrible things during trading and the best safeguard against them is to properly follow a risk and money management system.
    good informations and thanks for sharing it as itis helpful for the traders, i always prefer to avoid margin call because it is the worst situation that the trader can face, the trader can trade with safety plan to be able to save his money from big loses and keep survival in the market and can be able to make good income from the market.

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  4. #13
    Trader Senorita's Avatar
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    We lost all our funds when we experience margin calls or stop out. In this situation a trader won't be able to trade any longer because there won't be enough money to open up a new position. No trader will like to encounter margin calls in their trade and for this I think it's better they develop in a sound level on how to minimize their risk on every trade with the ability of dealing with greed in a disciplined way.

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  5. #14
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    When an open trade fail to continue due to low funds it automatically cause stop out which is also known as margin calls. We don't wish to experience this but when it happens, it means we can no longer trade unless we will introduce new funds into our trading account. It's good we know how to manage our emotions in forex and work on how to avoid huge greed that could easily cause margin calls for a trader when they are not careful.

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  6. #15
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    I think if put the stop loss in the trading then we avoid form the margin call and i think it is very necessary as compared to make the profit that we survive in the market and it is only possible when we mange the risk factor in the trading and have good money management in the business because we never eliminate the risk in the trading but we can mange and for that we need to have the better knowledge of the trading.

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  7. #16
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    [lang=ar]In my opinion the trading without regarding the margin levels may cause us a lot of [problems so all of the effective trading strategies can be very good when they planned for and well regarding the trading strategies ,and apply the god results[/lang]

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  8. #17
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    Quote Originally Posted by nosa33 View Post
    [lang=ar]In my opinion the trading without regarding the margin levels may cause us a lot of [problems so all of the effective trading strategies can be very good when they planned for and well regarding the trading strategies ,and apply the god results[/lang]
    Yes forex can be a great earning source for us.forex is the largest market around the world. we can earn unlimited money from this business but at the same time it also has risk involved and we can lose all our money here. so everybody should take it seriously and focus on the risk they are taking, their money in account and their profit targets.

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  9. #18
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    komalam, this is a big business and we are free to manage and maximize ourselves for making unlimited income. but traders need to do trading carefully with good knowledge and skill as preparation because at another side that firex give us unlimited risk too. on this side. we stand between both of them and we have to make the situation is good. so with take this business seriously from beginning will put us on good position where profit is higher than loses

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  10. #19
    Trader Batavia's Avatar
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    so you have to be careful in this trade, with the margin we earn advantage of every trade and does not need a very large capital since replaced with leverage, but for a margin call and stop out is that you lose all your capital in this trade or bankrupt, it is suggested to use with good margins and did not do over-trading...

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  11. #20
    Trader Senorita's Avatar
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    Quote Originally Posted by sheza View Post
    I think if put the stop loss in the trading then we avoid form the margin call and i think it is very necessary as compared to make the profit that we survive in the market and it is only possible when we mange the risk factor in the trading and have good money management in the business because we never eliminate the risk in the trading but we can mange and for that we need to have the better knowledge of the trading.
    Stop loss might help you avoid stop out but it could still keep you closer from getting margin calls in your next trade. This is why I am a fan of risk management. We will more likely to survive margin calls if we can be very patient in our trade and get to make it necessary to trade with good risk management trading method. It's good for sure and we should know how to plan good for the best performance in forex.

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