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

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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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    Quote Originally Posted by komalam View Post
    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.
    Getting a condition of Margin call and stop-out is common things to all traders especially if the trader is still a beginner and a new plunge in the real account, it is definitely a time will experience the Margin call to stop out level , sooner or later. In my opinion, the experience of Margin call may not be avoided for traders who are still newbie, because the lack of knowledge about the forex business and majority of all newbie traders still consider forex is a business that can bring money quickly.

    For me margin call even stop out is the worst possible thing that can happen in the business of forex trading, so as traders we have to minimize to get margin call , and in order to minimize it we can apply money management with the best as possible so that our chances of having margin call becomes lower but still can produce optimum profits.

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    If we face such situation like margin call, this means we should deposit more funds to our account in order to increase the margin level and the balance to hold our positions to stay a little longer with increased pips holding. If our account can not hold our negative floating positions, if we do not deposit more funds, then in the next couple pips which increase the negatives positions, market will make us lose our whole money aka stop out. There are always solutions to solve such condition as margin call before it's getting stop out. Try to look for the information from internet.

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    Registered user cutiekc's Avatar
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    Though I am not making much from forex trading, the much I expected, but I am sure that it has been long I had a margin call and that is something to be happy about, knowing that I can not trade and some time in the future I will be able to grow my account and keep on growing it. Learning I have got to know is the key to being successful which we all do need.

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    Quote Originally Posted by cutiekc View Post
    Though I am not making much from forex trading, the much I expected, but I am sure that it has been long I had a margin call and that is something to be happy about, knowing that I can not trade and some time in the future I will be able to grow my account and keep on growing it. Learning I have got to know is the key to being successful which we all do need.
    Yes previously too i got many margin calls. I dont use to use stop loss, so i can't slept till midnight and forget to sleep, but right now i try to manage the risk properly and avoid any kind of frustration. I want have a normal life, sleep well, having good relationship, play with kinds and familys, etc.

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    geddam, i have similar experiences with you and maybe for others too who did trading without stop loss. felt worry for loses and then just kept watching the market but at last there was nothing we can do because just made margin call and blew up the accounts. we have much experiences with loses and blew up the accounts and tried to change this situation with start to use stop loss for trading and follow risk managements then we can sleep and leave our orders on the market

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    Registered user debian's Avatar
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    Quote Originally Posted by geddam View Post
    Yes previously too i got many margin calls. I dont use to use stop loss, so i can't slept till midnight and forget to sleep, but right now i try to manage the risk properly and avoid any kind of frustration. I want have a normal life, sleep well, having good relationship, play with kinds and familys, etc.
    Other than that the MC and S/O often due to circumstances psychology that bad when we analyze the market, so we have to try to remain calm when we want to enter the market, and the discipline in implementing of money management make us become more low possible to get the MC and S/O, despite all that will impact in profits that we will get becomes smaller

    Then although it can not avoid the possibility of margin call and even stop out , but with good MM at least to minimize the possibility of MC and S/O, and no less important is the discipline of applying Money Management, although our analysis has not been too good, but over time, if we often implement Money Managment then our capacity will also be increased, eventually our analysis will be more accurate, should be prioritazed at how to keep our capital to be used for a long time to nore MC and S/O easily , namely by applying good Money Management

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    Registered user musiliu's Avatar
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    the three terms margin, margin call and stop out have different meaning though margin call and stop out are a bit related both the difference between the tow terms can not be overlooked, margin is the purchasing power of your Account you can buy or sell of the volume of your intended trade is equal to or lower than you margin, while margin call is a call from your broker to tell your to deposit more funds to your account so that a current losing trade will not eat all the money in the account while stop out means closing your losing trade automatically by the brokers because their is not enough money in the account yo support further losses.

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    Margin calls occurs if a forex trader can no longer continue on a trade due to the fact that capital for trading is no longer enough to subsidize your loss. So when margin calls occurs, it automatically cause stop out on your trade as your open position will automatically stop with no funds to continue a trade. Traders should be aware of this and make plans to minimize risk.

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    Registered user cutiekc's Avatar
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    Stop out level means that level which your balance will be on and the market has to take off all your trades if you are losing, we need to comprehend the reason why such do happen in the market is because of when traders don't seem to understand the business that much, that is when they loss their money, but when traders gets to understand the business that much and have more better skills they can succeed on the long term.

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    I do not pray to actually have margin calls or stop out in my trade again. I have learnt some bitter lessons in the past and right now I am doing what it's takes to control my emotions and avoid greed which could easily be a huge problem with forex. The best for us right here is to continue to trade good and have better opportunity to improve our skills all the time. Managing of risk is very important because a good risk management will help reduce the risk of trader loosing out their funds and experiencing stop out.

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