Margin, margin call and stop out level/ what they mean exactly
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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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    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. 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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    when we get the margin call then i think it is very hard to return back or we invest some more money in the trading and being a trader if we face such kind of the situation then we must stop it as soon as possible because with the market we have the possibility to make the money and also get back our profit so the stop out i think the good option if we continue loss in the trading and not need to wait the margin call.

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    In case you have not head of it probably because you are new to the market, they are the two key words that traders often use to quantify their failure in the market. There are lots of traders that do not handle their trading account very well, for this reason, a red line will show under their trade, this means margin call, its a warning. After a continuous losses too, stop out will come, and the trader will lose almost everything.

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    Once you are experiencing margin calls or stop out, it's translate to the inability to continue trading due to lack of funds. It's actually right we understand the real process for us to trade good and realize for sure that money management is the sure key to survive in our trade. No one is happy to experience margin calls and I think we should properly plan our trade and work hard to see our goals can be achieved at the very right time in this business.

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    Quote Originally Posted by sheza View Post
    when we get the margin call then i think it is very hard to return back or we invest some more money in the trading and being a trader if we face such kind of the situation then we must stop it as soon as possible because with the market we have the possibility to make the money and also get back our profit so the stop out i think the good option if we continue loss in the trading and not need to wait the margin call.
    when we got the margin call, the best thing we should do is to stay away from the market for several hours, or until we feel relax and cool off our head from such stressful feeling and tension. the next step we should do is to review our losing trades then make some evaluations about them. Once we find the mistakes, then we can figure the solution about them. Once the problems solved, the final thing we should do is to re enter the market again with confidence. No need to worry about our past since we already learned from it.

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    [lang=id]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.[/lang]

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    Quote Originally Posted by Azis Muslim View Post
    [lang=id]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.[/lang]
    When we face margin calls, I think we should not deposit more money but look for mistakes that made us lose this much money. Every trader should learn from his losses instead of getting depressed from it then only he will be able to become a successful trader else he will never be able to learn the strings to the forex market. He should learn from these mistakes and not do them in future.

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    Quote Originally Posted by ChandniNight View Post
    When we face margin calls, I think we should not deposit more money but look for mistakes that made us lose this much money. Every trader should learn from his losses instead of getting depressed from it then only he will be able to become a successful trader else he will never be able to learn the strings to the forex market. He should learn from these mistakes and not do them in future.
    Your advice here is actually against the advice I have being hearing from the professional traders and even the broker. If the account of the trader has reached margin call, it is just the place where traders can add more funds, but such traders should know that they have a sustainable stop loss, and shun the careless way they formerly mishandled the market before they had the previous margin call.

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    Margin calls in this business shows there is no money to futher carry out our trade. No trader should pray for margin calls that's why they have to understand the need to work hard in this business. If we can properly enjoy this trade in the right way, we will have the opportunity to enjoy this trade. Let's know how to manage this risk in forex and try not to trade with greed that could really cause loss for a trader.

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