Assume you are a successful retired British spy who now spends his time trading currencies. Therefore it is the Equity, NOT the Balance that is used to determine Usable Margin. Your Equity will also determine if and when a Margin Call is reached. As long as your Equity margin call forex adalahny greater than your Used Margin, you will not have Margin Call.
As soon as your Equity equals or falls below your Used Margin, you will receive a margin call. Your Equity would remain unchanged at 10,000. USD because that’s just how you roll. But this example does not end with such a fairy tale. You are long 80 lots, so you will see your Equity fall along with it.
8,000, you will have a Margin Call. This means that some or all of your 80 lot position will immediately be closed at the current market price. Assuming you bought all 80 lots at the same price, a Margin Call will trigger if your trade moves 25 pips against you. USD can move that much in its sleep! How did we come up with 25 pips?
1 and you have a position open consisting of 80 freakin’ mini lots. 00 and you will receive a MARGIN CALL! Of course, you’re a veteran international spy and you’ve faced much bigger calamities. You’ve got ice in your veins and your heart rate is still 55 bpm. USD moves 25 PIPS, or less than . USD to move 25 pips in a couple seconds during a major economic data release, and definitely that much within a trading day.
To simplify the example, we didn’t even factor in the spread, but we will now to make this example super realistic. USD really only has to move 22 pips, NOT 25 pips before a margin call. This is what could happen if you don’t understand the mechanics of margin and how to use leverage. 10,000, you were at least able to weather 25 pips before his margin call.
How Much Trading Capital Do You Need For Forex Trading? Are You Doubling Your Risk Without Knowing It? Genius is one percent inspiration and ninety-nine percent perspiration. We introduce people to the world of currency trading, and provide educational content to help them learn how to become profitable traders. We’re also a community of traders that support each other on our daily trading journey. How and Why Does It Happen? So the simplest answer to the question “What is a margin call” is that it’s a demand from your broker to put more money in your account if you want to continue to trade.
The more complicated question is: how and why does this happen? Most Americans are familiar with the real estate market, where the majority of residential purchases require the buyer to put up a minimum of 20 percent of the value of the house before the mortgage company supplies the remaining 80 percent. That’s effectively five to one leveraging. Consider also that the mortgage industry also has extensive qualifications you need to meet to take out the loan in the first place, beginning with proof of income. Your mortgage payments can only total around 30 to 40 percent of annual household earnings. You also have to have a relatively extensive record of paying your bills on time. Contrast that with the forex where the only thing you need to open your account is an ID and a credit or debit card.