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What Is Forex Margin Call, And How To Avoid Margin Call In Forex Trading?

Blockhead

Active member
Margin call should be taken as a signal from your broker that your minimum deposit amount requirement is not enough. Margin call should not be ignored if you do not want to face heavy losses.
 

Polakandil

Well-known member
Maybe all traders, who joined in trading have been getting experience to margin call account, but then is how the trader get a lesson from margin call, sometimes margin call occurs because start from own mistake and not because external factor, the mistake can be greedy, over trading, trading without risk management, etc. If the mistake from own selves, traders need to overcome them using their minds not emotions.
 

Sacralgia

Member
A margin call occurs when the account requires additional cash, i.e. you have exhausted your margin. When a margin call occurs, a trader's positions are liquidated or closed out.
Using leverage effectively is a wonderful method to prevent margin calls. The idea is that the more leverage employed in relation to the amount deposited, the less useful margin a trader has to absorb any losses.
 

Symphony

Member
In simple words, a ‘margin call’ means when the account needs more capital.
In order to trade through your live forex account, you must have a significant amount of capital in your account to begin with, this is called the ‘margin’ of your account. The Margin call occurs when trading losses lower the usable margin below an acceptable threshold specified by the broker. Thus margin call is the indication to fill in capital above your margin level so that you can continue trading.
 

Textuary

Member
Yes! When margin call occurs traders can either choose to add funds in the trading account to avoid stop-out or close the position.
 
Margin calls are important in a trade to avoid draining the whole trading account. Traders must add funds to keep the trade open or close his trading position in order to avoid excessive losses.
 

Cataclasm

Member
I think risk management is very important when you are trading with leverage. A poor risk management plan often results in a margin call situation when you lose leveraged trades. You should be able to cut your losses early and only use optimal leverage in the first place.
 
Thankfully, we have margin calls in forex that alert us when we need to add more money to our trading account. But, getting margin calls is not good for trading, as it means your strategies aren’t working the way you have wanted them to.
 

Polakandil

Well-known member
Thankfully, we have margin calls in forex that alert us when we need to add more money to our trading account. But, getting margin calls is not good for trading, as it means your strategies aren’t working the way you have wanted them to.

No anyone traders want to get a margin call account, there is so many reasons why traders face a margin call, mainly because the free margin is below the margin call level, the broker will automatically close order one by one until the free margin is above the margin call level. For more reason, the cause of margin calls is trading high risk using big lot size and over-trading.
 

PriceNTime

Active member
Important thread for newcomers to read and understand. So many automatically say that high leverage is risky. I say that misuse of high leverage is risky. Once you understand margin and ensure you use it wisely, higher leverage can be a very powerful tool for you.
 

Polakandil

Well-known member
Important thread for newcomers to read and understand. So many automatically say that high leverage is risky. I say that misuse of high leverage is risky. Once you understand margin and ensure you use it wisely, higher leverage can be a very powerful tool for you.

Leverage is associated with risk, although possible to boost high profit using high leverage but too risky. However, if a trader can control their trades, high leverage is not big deal, high leverage allows traders to use a bigger position size and it will quickly reduce the free margin and when the margin call level is achieved automatically broker closed orders one by one until the margin level above margin call level threshold.
 
Traders who use leverage need to meet the margin requirement set by their broker. And they get a margin call notification from the broker when their capital amount falls below the margin requirement in case of a loss. This situation should be avoided at all costs by managing the risk effectively and putting stop losses in every trade.
 
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