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Margin call
Margin call (Margin call) is a protective reaction of the broker or the broker for a loss trading client. Each company shall publish information on what level in percentage of the Deposit is considered extreme. It is worth noting that Margin call is the place to be for margin trading, when a trader uses borrowed capital, and not just their own funds. DC is absolutely not interested in their own losses, and therefore, as soon as the situation on the client's account will be dangerous to the capital of DTS, the company immediately forcibly close positions of the speculator.

The Margin call level

Consider the example below clearly to be seen, how it is possible to determine the level of Margin call. Let the speculator have a Deposit with a balance of 500 USD. The account leverage is 1:100. A trader can purchase 500*100=50,000. In this 500 USD will be spent, the speculator, that is 1% and USD 49500 use of brokerage funds.

As mentioned above, the DTS are not interested to risk their funds, and therefore, as soon as the trading loss will start to get close to 500 USD, the transaction can be forcibly closed. The purpose of this operation is simple, not to give a loss to capture the capital of the company.

DC claim about the level of margin call percentage, e.g. 40%. This means that if you encounter a situation when the trader has on Deposit will be less than 40% of the amount that was frozen as collateral in the trade, the organization has the right to fix the damage that they did not continue to grow, and would not reach the tools of DTS. In our example, all of the speculator was the key. Thus, as soon as the money on Deposit will be less than 200 USD (40% of your Deposit 500 USD), the company is likely to be close losses, thereby protecting capital.

How not to meet uncle Kolya?

Currency speculators often jokingly referred to as a margin call uncle Kolya. So, if You hear in conversation that someone came to visit Kohl's Margin, uncle Kolya, Kolya, etc., keep in mind that this is the limit. In order to less likely to meet such a trading character, you should understand and remember few features.

1. do not open positions using all your capital as collateral. Always trade should be a "safety cushion". This term is often referred that part of the funds in the account, which is not involved in the process of opening the position. That is, if we return to the example analyzed above, having the Deposit of $ 500, you can buy a smaller amount of the trading instrument. Instead of buying 50000 USD, the currency speculator could buy, for example, 10,000 USD. In this case, the collateral would be 100 USD 9900 USD borrowings, and USD 400 remained free.

2. knowing the level of "Kohl" DC, people can make decisions for Deposit additional funds as it deems necessary to avoid the sad situation. As you know, who informed, that is armed. Not a serious approach to the matter, if the trades on a margin call will be for the trader the real surprise.

Enough to know trading conditions, the company through which the person works to understand the risk during the drawdown. Greed is just not likely to affect the trading results. Do not try to use all available on the Deposit funds to open large positions. The slightest shift in the market price against the deal may lead to fixation loss.

Category: Forex | Added by: (05.11.2017)
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