Causes of Forex Margin Call

Whilst the attraction of taking on a big position to receive increased profits is quite clear, it should also be noted that a slight movement in the market will result in a much higher loss in an overly leveraged account. Traders always have the option of applying a lower level of leverage to an account or transaction. Doing so may help manage risk, but bear in mind that a lower level of leverage. Most Forex trading software platforms automatically calculate FX margin requirements and check available funds before allowing a trader to enter a new position. This is referred to as used margin.

All things being equal, the free margin is always available to trade upon. The trading platforms used have become very sophisticated calculating these figures in real time so there is no need to calculate them manually. Loading latest analysis Help our agents identify you so they can offer more personalized support. Privacy Policy Legal Documentation. The website is owned and operated by HF Markets Group of companies, which include:. Risk Warning: Trading Leveraged Products such as Forex and Derivatives may not be suitable for all investors as they carry a high degree of risk to your capital.

Forex margin call | What happens when you don’t have enough funds?

Please ensure that you fully understand the risks involved, taking into account your investments objectives and level of experience, before trading, and if necessary, seek independent advice. Please read the full Risk Disclosure. Deposit Options. HotForex Spreads Comparison. MT5 Platforms New! Member of HF Markets Group. Toggle navigation. What is FX Margin? Leveraging Every trader should know what level of risk they wish to take.

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Phone Number:. This is what we use stop losses for, as it gets us out of the market when we are proven incorrect in our analysis.

This is why keeping your margin under control is crucial, because you may not be wrong with your position longer term, but if you are too highly levered, you can be forced to leave the market before the trade has worked itself out. You will have losing trades, so placing massive positions on is a great way to lose your money and blow up your account.

You must keep in mind that the professional trader constantly worries about protecting their account.

Margin Calls Explained

If you place intelligent trades and follow a statistically profitable system, the gains of course will come, over time. However, it would only take the slightest of moves to knock you out of the market due to a margin call. It would take much more in the way of a move against you to make that happen. This is all before trading costs etc. In other words, this gives you the ability to build up your account over time.

The biggest thing you can do is keep your position size reasonable. Trading Forex and other levered markets for that matter is going to be much different than other instruments such as stocks.

What to Look for in a Forex Margin Account

You are borrowing money to play a larger position. However, with leverage that becomes a much more interesting proposition. You are speculating on movement.

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If you are long FedEx at a specific price, you still own that piece of the company regardless of how much it falls. Therefore, you should never over lever, or for that matter add to a losing position. Forex can be very profitable, but you need to be intelligent about all of that power you hold. Christopher Lewis has been trading Forex for several years.

He writes about Forex for many online publications, including his own site, aptly named The Trader Guy. We commit to never sharing or selling your personal information. Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted.