Margin Call

 What is a margin call?

When a trader uses margin to take advantage of higher trading positions and possibly earn higher payouts, it is generally a good idea to balance the available funds in your account balance (Available Equity) and those taken from the broker (Used Margin), to check . .

The relationship between the two is called the margin level and it allows traders to see whether or not they can open new trades. There are three levels in the margin. The first level is above the 100% margin level where a trader can always open new positions and keep existing ones.

There is exactly the 100% margin level at which a trader can hold positions but not open new ones. Then we have below 100% where traders can't even hold existing positions. Then the forex margin call takes place.

If the margin level drops below 100%, the broker may initiate a margin call, informing the trader to fund their account or close ("liquidate") positions until the margin level is restored at 100%. This is called the margin call level, a point at which the margin call is issued. If a trader does not close positions or deposit funds into his account, the broker may liquidate the trader's positions.

What is Margin and why do I need it?

When you use leverage, you are trading with more capital than you initially deposited. Margin is the amount of money she needs in her trading account to keep her positions open and cover losses.

Can I trade forex without Margin?

Yes, you can choose to trade forex only with your trading account equity and not profit from your trades. Since she would control less money, the potential returns and losses would be smaller.

Trading without margin is usually done by:

Merchants with merchant account balances of $100,000 or more

Those who want to gain more experience with the markets and strategies without risking their entire deposit

People who are not looking to make a living from Forex and want to minimize risk

Understanding margin calls

When an investor pays to buy and sell securities using a combination of their own funds and money borrowed from a broker, it is called margin buying. An investor's net worth in the investment is equal to the market value of the securities minus the amount of funds borrowed from their broker1.

A margin call is triggered when an investor's equity as a percentage of the securities' total market value falls below a certain required percentage (called the margin requirement). If the investor cannot afford to pay the amount necessary to bring the value of their portfolio into the account holding margin, the broker may be forced to liquidate the account securities in the market.

The New York Stock Exchange (NYSE) and the Financial Industry Regulatory Authority (FINRA), the regulator of most securities companies operating in the United States, require investors to own at least 25% of the full value of your securities, with margin.23 Some brokerages require a higher maintenance requirement, up to 30% to 40%.

Obviously, the number and prices of margin calls depend on the percentage of margin preservation and the stock involved Read More Contact us