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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. #791
    Trader Sixteen's Avatar
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    The real reason we should be trading is to build a strong profitable method that would give us a great chance to make profits from our trade. Margin calls is necessary for us to overcome that's why we must however have a plan to manage risk and see we can build a strong trade that that will lead us through profits. We have the opportunity in this market to earn from it and it will be the right thing for us to make plans to manage this investment and have a perfect way to see we can handle risk appropriately. Stop loss should be followed and we should understand this and have a plan to manage up our risk.

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  3. #792
    Trader ola4real's Avatar
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    Quote Originally Posted by Sixteen View Post
    The real reason we should be trading is to build a strong profitable method that would give us a great chance to make profits from our trade. Margin calls is necessary for us to overcome that's why we must however have a plan to manage risk and see we can build a strong trade that that will lead us through profits. We have the opportunity in this market to earn from it and it will be the right thing for us to make plans to manage this investment and have a perfect way to see we can handle risk appropriately. Stop loss should be followed and we should understand this and have a plan to manage up our risk.
    Forex traders who do not have the profitable forex strategies will be the victim of the margin call. The forex traders who are not managing their trading correctly or are taking too much risk while trading will be the victim of the margin call too. The solution to this is for the forex trader to gain experience through more learning. The learning can go a long way in opening the eye of the trader to see the forex field clearer, this will now suggests the best things to do in this business to the trader.

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  4. #793
    Trader Toyen's Avatar
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    Quote Originally Posted by ola4real View Post
    Forex traders who do not have the profitable forex strategies will be the victim of the margin call. The forex traders who are not managing their trading correctly or are taking too much risk while trading will be the victim of the margin call too. The solution to this is for the forex trader to gain experience through more learning. The learning can go a long way in opening the eye of the trader to see the forex field clearer, this will now suggests the best things to do in this business to the trader.
    You can not be profiting and be having margin call, but that will happen only when you have the expedience and have the necessary management and trading strategies that you are using with that experience. To trade the market is never easy, and that explains the reason that traders are having margin call in this market. More experience and training is needed, and traders have likewise have to work effective on their management.

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  5. #794
    Trader Silhouette's Avatar
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    Quote Originally Posted by Toyen View Post
    You can not be profiting and be having margin call, but that will happen only when you have the expedience and have the necessary management and trading strategies that you are using with that experience. To trade the market is never easy, and that explains the reason that traders are having margin call in this market. More experience and training is needed, and traders have likewise have to work effective on their management.
    Once traders get margin call, it's a simple sign to tell them they're not applying a well planning with money and risk management. Or worse, they don't have one since they're just a beginner. Normally traders who has enough experiences won't get any margin call anymore but still if they're getting it all over again, there's something wrong with their managements. Maybe they're just too greedy and trade with big lot size which market easily take away their trades in small pips against their trade and lose them.

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  6. #795
    Trader Lyon's Avatar
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    Quote Originally Posted by Silhouette View Post
    Once traders get margin call, it's a simple sign to tell them they're not applying a well planning with money and risk management. Or worse, they don't have one since they're just a beginner. Normally traders who has enough experiences won't get any margin call anymore but still if they're getting it all over again, there's something wrong with their managements. Maybe they're just too greedy and trade with big lot size which market easily take away their trades in small pips against their trade and lose them.
    I think we should start from the fact that when a trader is not getting it correct when trading and then they lost to the market. I think they should think about the fact that they don't have a good strategy to start with. Because a good trading strategy will help a trader to make good decisions. Margin call can be avoided with the best trading strategy and then get to avoid the use of little time frames.

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  7. #796
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    Personally I have had Margin call and stop out on my little and risky accounts with deposit 100 dollars. The main reason was bad money and risk management because I used 0,1 lot in so little accounts. I understand that I have been doing wrong but little accounts are burned very often due to traders risk much with little money and want earn big.

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  8. #797
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    Explain them to you briefly Margin Call is that level where your account capital or the balance does not happen to be able to sustain your trade and you will be facing a stop out if you do not close the trade where as Margin Call is a short of signal that you need to put in more money where as margin is that amount of money which you can use in order to open new trades and you have enough capital to sustain them.

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  9. #798
    Trader ola4real's Avatar
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    Quote Originally Posted by Krosneles View Post
    Personally I have had Margin call and stop out on my little and risky accounts with deposit 100 dollars. The main reason was bad money and risk management because I used 0,1 lot in so little accounts. I understand that I have been doing wrong but little accounts are burned very often due to traders risk much with little money and want earn big.
    Sorry for the loss you get. By now, you would have learned your lesson. I want you to know that there are two most important elements of trading who could cause margin call or stop-out for traders who did not use them well. The elements of trading are strategy of the trader and the management of the account of that trader. If the forex traders is smart, disciplined and careful from now till infinity, but lack good strategy and management in their forex account, their end result will be loss.

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  10. #799
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    Quote Originally Posted by ola4real View Post
    Sorry for the loss you get. By now, you would have learned your lesson. I want you to know that there are two most important elements of trading who could cause margin call or stop-out for traders who did not use them well. The elements of trading are strategy of the trader and the management of the account of that trader. If the forex traders is smart, disciplined and careful from now till infinity, but lack good strategy and management in their forex account, their end result will be loss.
    Thank you for compassion but I do not regret about this bad my experience of getting stop outs. I had little size accounts that had been burned and stop outs gave me the lessons what not to do or that losing orders should be cut immidiately and good money management should be used. I think that everybody has this bad experience and good lesson for the future.

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  11. #800
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    Quote Originally Posted by Krosneles View Post
    Thank you for compassion but I do not regret about this bad my experience of getting stop outs. I had little size accounts that had been burned and stop outs gave me the lessons what not to do or that losing orders should be cut immidiately and good money management should be used. I think that everybody has this bad experience and good lesson for the future.
    It is good if we dont feel bad about the stop out we get but then we have to not compromize with our learning and taking lessons from that stop out. If we dont want to get that margin call again, we need to make up our mind to always strictly follow the rules of risk management. So everybody should take it seriously and focus on the risk they are taking and their profit targets too.

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