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Thread: Margin Call and stop-out

  1. #1
    Super Moderator RoboForex Trader's Avatar
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    Margin Call and stop-out

    Lots of beginners are often confused about the concepts and terms. Let’s go to the page http://www.roboforex.com/beginner/glossary/

    Margin Call
    It’s the broker or dealer requirement for to deposit additional cash or other assets to guarantee discharge of obligations for a loss-making position of the client.

    Stop out
    It’s an order for the forced closure of positions without the customer's consent or any prior notice in case of a shortage of funds to maintain an open position.

    In case of funds shortage position is going to be eliminated and Margin Call comes. And during an account is coming near Stop Out, the Margin Call is declared, - it’s time for trader to make a decision whether to deposit an account or just waiting for Stop Out. The difference is that in case of the Margin Call transaction is still visible on the account but colored with red on the terminal display. This is a kind of warning level, beyond which the Stop Out can follow.

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  2. #3461
    Trader Silhouette's Avatar
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    Quote Originally Posted by Leonvic View Post
    Each forex broker has their margin requirement, when I was trading with high lot, what I will notice is red within column that display the position I have opened, the account balance and the margin, it used to be very annoying seeing those red light blinking consistently, sometimes price would move and this will stop but when I believe that everything is getting better, then another news would come and result in a wipe of my account, now I don't want to have a stop out and margin call, I have changed my ways to prevent this experience.
    Margin requirement per trade has various amount depending on our choice of leverage. The bigger we choose to trade, the less margin market will take from our account and the more dangerous our account will be. I prefer trading with small leverage to avoid placing more orders at the same time when I want to trade in safe approach.

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    rules made to be followed, not to be broken

  3. #3462
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    Margin call is not a good experience to behold as a trader, but most of the times, we are the ones that make ourself to get such experience, so I think that when a trader is serious about the market, they should make use of the demo account to learn, the demo account will help us to figure things out and help us know what we should avoid and then what we should ensure that we don't do, most of them all is taking huge risks, that is the cause of the loses.

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  4. #3463
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    Quote Originally Posted by Makaveli View Post
    Margin call is not a good experience to behold as a trader, but most of the times, we are the ones that make ourself to get such experience, so I think that when a trader is serious about the market, they should make use of the demo account to learn, the demo account will help us to figure things out and help us know what we should avoid and then what we should ensure that we don't do, most of them all is taking huge risks, that is the cause of the loses.
    But, you know a trader who has been disciplined enough will be able to learn from the mistakes they have made in the past and then get to see the reason why they have gotten the margin call in the past and then correct it. But the trader who hasn't learned, the trader who has not learned from the past one will keep on having it. I think also that most of us at some point in time have got the margin call losses.

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  5. #3464
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    Quote Originally Posted by Striker$ View Post
    But, you know a trader who has been disciplined enough will be able to learn from the mistakes they have made in the past and then get to see the reason why they have gotten the margin call in the past and then correct it. But the trader who hasn't learned, the trader who has not learned from the past one will keep on having it. I think also that most of us at some point in time have got the margin call losses.
    Yes discipline is needed throughout, even to timely learn from many mistakes we all make during trading, like I learned to trade with smaller lots. We need to leave enough margin to support our trades, because we often see that after moving some pips against us, the market turns in our favor. Many of us fail to keep up their discipline in the heat of trading and risk management stands neglected which paves way for stop outs and margin calls.

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  6. #3465
    Trader Lyon's Avatar
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    There are things that we can put in control. Margin call means that you have lost all your money and that is caused when the trader is not serious about the market, it happens when the trader wants to make fast money from the market. We all should get to have a better idea about how we should take trades in the market. I don't like trading with the use of bad trading method. I also ensure to take care of risk managements and then open trades wisely.

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  7. #3466
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    There is always the message that the margin call is often trying to pass out and until the trader has acknowledged the message and then try to make adjustment when trading, only then will they be able to trade the market. Margin call needs to be avoided in such a way that the trader should really get to make sure that they are making use of risk management at all times. Also, depending on quality trading will help.

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  8. #3467
    Trader Toyen's Avatar
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    Quote Originally Posted by Striker$ View Post
    There is always the message that the margin call is often trying to pass out and until the trader has acknowledged the message and then try to make adjustment when trading, only then will they be able to trade the market. Margin call needs to be avoided in such a way that the trader should really get to make sure that they are making use of risk management at all times. Also, depending on quality trading will help.
    In the instance of your observation, there is nothing a trader can do again, they are at the mercy of the market when their account hit the margin call. The margin call will happen, and subsequently, the stop-out will follow it. The best thing which traders can do is to avoid the margin call from the onset. They should apply money and risk management to their trading, that is the only solution i know possible here.

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  9. #3468
    Trader Yayami's Avatar
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    Quote Originally Posted by Toyen View Post
    In the instance of your observation, there is nothing a trader can do again, they are at the mercy of the market when their account hit the margin call. The margin call will happen, and subsequently, the stop-out will follow it. The best thing which traders can do is to avoid the margin call from the onset. They should apply money and risk management to their trading, that is the only solution i know possible here.
    usually the process will happen, most of the time when traders hit margin call they'll eventually hit stop out in the next minute or hour. it's obvious to know because market keeps moving against our trade and make our losses become even bigger each second it moves. this is a perfect timing for traders to start recovering their mindset in trading and back to their main learning again because there's not much they can do to save their account while it's on margin call state.

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  10. #3469
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    To develop in forex trading business as a trader, we need to learn and know some good certain things about the business. Margin call occurs when the trader is not careful enough, when the trader is making poor trading decisions and not making adequate planning. It is essential for every trader in the business to ensure that they have risk management planning before carrying out on any trades in the market.

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  11. #3470
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    Traders that actually plan to earn well in forex should realize that they need to minimize their risk and sure make good and better plans to develop themselves and have a consistent way to earn well. Keep in mind that always do trading with good risk management, it is good for you to have a good experience in forex trade because am really suffering from margin call and stop out.

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