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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. #301
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    In terms of difference yes they are different but means the same thing cause a margin call or stopout means loss as long as you are losing money it could result to margin call or stopout what we need do is to try and avoid them in our trading because they means nothing good if we want to trade and succeed we need a good system to prevent margin call and stopout.

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  3. #302
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    In a simple way to define it, it means the level when we will loss to and then all trades will be closed, this is what we have to avoid, with that been said, we have to know of the right means by which we can trade. Using money and risk management in trading and also trading with quality and discipline to pick the more strong setups and avoiding the not obvious ones.

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  4. #303
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    margin call is an alarm for a trader to stop his trade it comes from the server which manages our account through different organizations when we have low balance in our account and have no enough money to keep up our trade then margin call comes it is very dangerous for a trader so always use stop loss to avoid this situation and save your trade.

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  5. #304
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    Margin is the amount of money required of a trader by a broker to hold a position and this depends largely on the leverage chosen while opening the account . The higher the leverage chosen the the lower the margin required of a trader and also the lower the leverage chosen , the higher the margin . If you are a beginner trader , I will advise you opt for lower leverage so that more margin will be required of you when taking a position ( You will understand the advantage of this better later in the process of trading ). Marin call is a situation where you do not have enough free margin to support you open trades and you are left with tow options : it is either you make more deposit into your account or you close some trades in case you have more than one trades running in the market and failure to do that will cause broker or dealer to close your ope trades by force and this is what is called stop out in forex trading

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  6. #305
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    Quote Originally Posted by layigold View Post
    I will advise you opt for lower leverage so that more margin will be required of you when taking a position ( You will understand the advantage of this better later in the process of trading ).
    I have a different view about it because even when we opt or lower or higher leverage when one don't know how to trade, then they don't know how to trade and nothing will really work for them so if a trader is willing to make money from the forex trading market, that way learning and mastering their trading strategy should be the first goal they have in mind.

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  7. #306
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    Risk management is good and with it we can avoid margin calls in forex. I don't see why even after hard lessons, some traders still don't learn to avoid greed in their trade. They are just more focused to make fast money in this business and this makes it difficult from them to maintain a good trade. We should stay focus to learn about forex and see risk management as something that we have to work better for so we can maintain good safety of our capital.

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  8. #307
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    margin call and stop out is very dangerous for a trader account it comes from the server which manages our account at back through organizations when we have no money in our account to proceed our trade further. to stop this situation in your trade you must place a stop loss which act as a savior for your trade and minimize your risk.

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  9. #308
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    margin call and stop are bad situation for any trader because this means that the trader lost the most amount of his money or all of them and it is hard to return it again, the trader needs to trade properly to avoid margin call and make profits from the market, the trader should also trade with low risk to avoid big loses that may happen anytime.

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  10. #309
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    If a trader has gotten margin call, it means they have done something they shouldn't have done and they will loss their money to that. However a trader who wants to make money from the market has to learn and know how they can putt in money and risk management to work at all times. Forex is never easy business, if we ain't ready to get the good practice the losses will be much.

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  11. #310
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    This is an interesting explanation give by you. Margin call is just an informer that we are closing towards a stop out. It is also an informer of our flawed trading methods that brought us to this state.Risk management definitely helps us to control the risk in our trading so that our money is more safe. Because Risk management just limits the possibility of making loss on a particular trade such that we could maximize profits on that trade.

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