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Thread: Margin Call and stop-out

  1. #1
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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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    Quote Originally Posted by guru View Post
    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.
    Margin call is an alarm we receive when our trading balance is running out and our account is in danger. While stop is that which occurs when our worst fears come true. Stop out is nothing but losing our entire balance and the automatic closing of our trades.

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    Quote Originally Posted by forexfighter007 View Post
    Margin call is an alarm we receive when our trading balance is running out and our account is in danger. While stop is that which occurs when our worst fears come true. Stop out is nothing but losing our entire balance and the automatic closing of our trades.
    Yes stop out happens when broker closes your traders in order to not less losses grow above your deposit balance. And margin call means that you are about to lose your balance and so either you make some deposit to add margin, or close trades booking big losses and save whatever little you can or leave your trades to be closed automatically at stop out level.

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    I think the best leverage is 1:200, so we have to use a maximum leverage of capital is so bad, you can not say that I had a lot of margin calls, but it is really a disaster for any business to be able to trade, but if you are a beginner trader, to the great mistakes could be learned.

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    Quote Originally Posted by kamrul View Post
    I think the best leverage is 1:200, so we have to use a maximum leverage of capital is so bad, you can not say that I had a lot of margin calls, but it is really a disaster for any business to be able to trade, but if you are a beginner trader, to the great mistakes could be learned.
    I think regardless of the leverage that we have used in the forex trading does not guarantee we will be safe in the forex trade master, to use leverage if I thought it was more in focus again in accordance with the strategy used by each trader. if I prefer leverage 1:1000 because I feel more free strategies in implementing my strategy, the important thing is money management should be rigorous to avoid a margin call.

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  6. #35
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    You must know that this varies among the brokers of the market, and be sure that it is the margin call that will come first before the stop out, When the margin call bells rings , that is when you will see your account having the red light, which definitely means danger, but it is warning per se. The final cut off operation is the stop out, this is what i ever hate to see, i do not think that you can see nay of these if you are handling a proper trading affair.

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    At the first time i am also confuse about Margin call and stop out but after learned for period of time then i can more understand about them. Both margin call and stop out are about insufficient funds on our trading account and we need to make new deposit if necessary.

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    Quote Originally Posted by topman View Post
    At the first time i am also confuse about Margin call and stop out but after learned for period of time then i can more understand about them. Both margin call and stop out are about insufficient funds on our trading account and we need to make new deposit if necessary.
    After stop out there is not much use of depositing additional amount as your trades already got closed. But margin call is prior stage to stop out, e.g. if stop out level is 10% margin call level may be 30% or similar. So on getting a margin call you have some time to decide to deposit more money in your account and keep your account safe from blowing or plan some thing else that you think suitable.

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  9. #38
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    Stop out Level I think is controlled by the broker when your margin is not adequate fro trading the broker does not allow you to execute the trade and when you do have balance and there is a huge loss that eats up your margin, its call margin call.

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  10. #39
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    Quote Originally Posted by RoboForex Trader View Post
    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.
    Nice thread. I know the difference between a margin call and stop out, now. There are many differences in the calculation of margin to margin call and stop out. I have not had any experience trading forex in Roboforex, whether the stop out automatically exit the market when the margin reaches 0 or wait for the market closed?

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  11. #40
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    Mostly margin call cause the distructions and it's the most worst thing that newbeis faces because of bad risk and money management and not useing stop loss and take profit tools and etc if we have wrong positon cut loss at the time and smartly also use stop loss and take profit to get good results with our confident strategy.

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