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  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. #21
    Trader rinaji's Avatar
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    Quote Originally Posted by thenight View Post
    The margin call and stop out is different things. Margin call it means we are losing whole deposit in our account and we can't using that account without make a new deposit. Stop out it different because our order will be closed because we lacking the margin. If we use low leverage usually we still can trade by using existing balance after stop out.
    Are you serious? I think you are wrong, you are completely reversed in understanding the margin call and stop out. What do you call margin call is stopped out, and what do you call a stop out is a margin call.
    Lose all unused margin is a margin call, meaning we still have the rest of the amount "used margin".
    While the stop out is the condition when we've run out of equity, usually stopping at the stop out level is determined by the broker, so the rest of balance is dependent stop out level.

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  3. #22
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    Quote Originally Posted by rinaji View Post
    Are you serious? I think you are wrong, you are completely reversed in understanding the margin call and stop out. What do you call margin call is stopped out, and what do you call a stop out is a margin call.
    Lose all unused margin is a margin call, meaning we still have the rest of the amount "used margin".
    While the stop out is the condition when we've run out of equity, usually stopping at the stop out level is determined by the broker, so the rest of balance is dependent stop out level.

    Stop out is the worst what a trader can expect to happen to his trading capital. Stop out is the automatic closing of our open trades as we do not have sufficient balance to keep them open. Margin call on the other hand is a level where we do not have sufficient margin to open a new trade. We have used all the capital by opening trading positions.

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  4. #23
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    Quote Originally Posted by king22 View Post
    the margin call is an alert from the broker to the trader told him that you dont have enough money to open more position or have any money to continue to open this trade we must study all the leverage and manage the capital to survive in the market for long time without face margin call
    I think that sometimes a trader will need to learn that a margin call is just a warning and that didn't mean that they must to close their position immediately. At least if you have the confidence in holding your position there, then you need to inject some money or else the stop out will be executed. Some trader that ignore this will get immediately bankrupt so this is very important to be watched.

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  5. #24
    Trader opan's Avatar
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    I think the margin call and stop out are two different things, in which the margin call is the condition of our capital is below 10% while the stop out of our capital is not sufficient anymore with a lot that we're trading it. This is why I say two different things, although most people equate this

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    Last edited by opan; 08-31-2013 at 09:39 PM.

  6. #25
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    A margin call is when your account is getting low and getting to the point where you will not have the enough money to meet the margin requirement of the broker. Margin calls can come when you make a trade is too big form you account size and the trade begins to losing.

    i think the stop out order is order that is placed when we have the short amount in the forex trading and it eliminate the margin call.

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  7. #26
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    Quote Originally Posted by sam9630 View Post
    A margin call is when your account is getting low and getting to the point where you will not have the enough money to meet the margin requirement of the broker. Margin calls can come when you make a trade is too big form you account size and the trade begins to losing.

    i think the stop out order is order that is placed when we have the short amount in the forex trading and it eliminate the margin call.
    well, the stop out system will be different for each broker. there are some broker's stop out that will immediately cut off 50% from what left in the account when they actually hit the stop out. I believe that we should have traded smaller in order to avoid this one so that we won't get both margin call and stop out.

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  8. #27
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    Quote Originally Posted by sekiryutei View Post
    well, the stop out system will be different for each broker. there are some broker's stop out that will immediately cut off 50% from what left in the account when they actually hit the stop out. I believe that we should have traded smaller in order to avoid this one so that we won't get both margin call and stop out.
    Different brokers have different levels at which they stop out our account. This is mentioned in their trading conditions. Small lots can help us to manage the risk and avoid stop outs. Taking high risk with greedy intentions is the main cause behind getting stop outs.

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  9. #28
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    Margin call is given by the broker to his client when his trading balance is running out and when you are trading in market you have to avoid margin calls and to do this you have to follow money management rules in your trading so you will be safe..,

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  10. #29
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    Quote Originally Posted by star27 View Post
    Margin call is given by the broker to his client when his trading balance is running out and when you are trading in market you have to avoid margin calls and to do this you have to follow money management rules in your trading so you will be safe..,
    Stop out is the worst that can happen to our trading capital. It occurs when our capital is finished due to a trade or trades going into losses. At this point all our trades are automatically close sas their is no further capital in our account. Margin call is the time when our trades go into the danger.

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  11. #30
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    Margin call situation will arise when traders account is about to run short of margin, which is usually due to wrong analysis by the trader and still not applying adequate risk management. When we are ready to close our trade in small profits, there should be no reason to let our losses grow, and so stop loss is mandatory to keep profitable trading and not let your account go into margin call and face stop out ultimately.

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