Forex is the biggest trading platform that allows individuals to earn profit in less possible time. But earning money in this market is not as easy as it sounds. It is a highly volatile market situation where traders may face significant loss if they are not well-acquainted with the various facts and protocols of forex trading business. So, if you are a beginner who finds this marketplace an interesting one to invest, arm yourself with forex training course. I am saying this from my own experience as I have been practising trading from the last five years.
In the forex trading, margin call stop out forex is the most important factor in which you must gather sufficient knowledge. However, as a beginner, you may not be familiar with these terms. So, here I will give you some important information on margin call and stop out forex.
What is margin call?
Margin call refers to the possible outcome of trading when open trades start notifying traders that they require maintenance. It is important that clients must monitor their trading account constantly and react quickly either at the time of closing a position or topping up the balance of their account.
In ECN trading, the margin call takes place when the marginal level of the account falls below 100 which mean the level stands to zero marginal ratio. Therefore, as soon as the equity balances, either in the form of profit or loss, falls below the marginal requirement of the account, a client is directed to equalise his trading account.
What is stop out forex?
Stop out is the position where a broker closes his client’s losing trading position due to insufficient balance in the marginal account. The option takes place automatically when the marginal level of the trader’s account falls below 50%. This means as soon as the equity level falls below 50% of the margin which is used in opening up a trading position, the broker closes it to prevent his client from debt.
Margin call stop out forex – precise information
When you place stop loss order on your open positions and leave the market, there is high possibility of getting margin call. If the usable amount of your margin account goes below 30% of the required margin amount for opening up a position, you will either get a warning call or your broker will close positions. This entire situation depends mainly on brokers.
For some brokers, the margin call and stop out forex coincide. If the stop out or margin call are both at 30%, then your position will get closed automatically and you will get no margin call forex. If your margin call is at 30% and your stop out at 15%, then you will get the first warning call. After that if you close your position immediately, you will be left with the fraction of amount you had before opening up a position. But don’t over judge the situation because it is better to be left with some money than no money.
Margin call stop out forex are the characteristics of customer oriented approach in ECN trading market. Both these options offer a certain level of security to traders’ accounts and create a good platform for broker and client interaction and co-operation. If you can manage your account collectively, you will get no margin call forex. On the other hand, if you are likely to lose an open trade, you will be notified with a warning call to save your position.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.