Margin Call Forex

What Is Margin Call Forex And 4 Ways To Avoid Them For Beginners | Tekno ANtero

For a trader, be it forex, stocks, crypto or gold. All of them have the same risk, which can be hit by a margin call. Conditions in which the balance and margin in the trading account are unable to withstand minuses or losses. Even if you get a margin call, the balance can become zero, aka it’s all gone.

Online trading does have a very high risk, and that risk is getting a margin call. If you don’t learn forex trading well, of course this will often happen.


Then, what is a margin call? 

What is a margin call in forex and stocks?

How to avoid margin calls?


We will discuss the three questions above in full at this opportunity.

What Is Margin Call Forex And Stocks?

Forex Margin Calls

Margin Call is a warning from the broker that the balance and margin are no longer able to hold a minus due to the market moving in the opposite direction to the entries made.

Simple example:

You take a long position while trading, and seems to be moving down. If you experience a big minus, up to 60% then this margin call warning will be given. Then, if minus trading reaches 100%, then the trading account balance will be zero.

Margin call itself has its own settings. You can set the warning at what percentage level. It can be 50%, 60% or 70%. According to the wishes of each trader.

This is a forex trading condition or risk that all traders in the world hate the most. That is, their balance runs out and even becomes zero due to a margin call.

Margin calls, both in forex and stocks, have the same application. Namely when you use an account with this type of margin trading. Likewise if you are trading crypto, a type of crypto futures trading that uses margin and leverage.

For a novice trader or investor, please avoid this type of account using margin trading. Because with margin, you can open much bigger entries, and of course the risks are bigger.

For beginner, it is better to have spot crypto market or stock investment. This will not experience a margin call, as long as the asset still has a price, then you can wait at any time for the asset’s price to rise again and then sell it.

80% of novice forex traders fail in trading due to margin calls. Then how to prevent this? Let’s see some tips below.


Tips To Avoid Margin Calls

There are several things you can do to avoid margin calls. This works well in forex, stocks, crypto or gold. Just a few things, including:


1. Use Good Money Management

The first is using good money management. Namely the use of standard lots in accordance with the capital owned.

This is the main key for you to avoid margin calls. The bigger your capital by using a smaller lot size will keep you away from margin calls.

For example, there are 3 traders trade with details:

  • Trader A, Trading capital 1000$, using lot 0.01
  • Trader B, Capital 50$, using lot 0.01
  • Trader C, Capital 100$, using lot 0.1


Of the three traders above, which one is most at risk of being hit by a margin call? Of course, this is trader C. And the trader with the smallest margin call risk is trader A, because he has a very large balance and margin but uses a small lot size.

So, pay close attention to your use of lots in trading. At a minimum, use a lot of 1:10,000. This means that if you have a balance of 500$, then the maximum lot used is 0.05.


2. Maintain Trading Psychology

The second way for a trader to avoid margin calls is to maintain good trading psychology. Namely keeping yourself from being emotional, greedy, and being able to control yourself well.

Many people are actually good at analyzing the market, unfortunately not many traders are able to control their trading psychology well.

Connection The psychology of trading with margin calls is very close. For example, if someone is greedy, an over lot will be easily hit by a margin call. Also people who want revenge on the market, the result is continuous margin calls.

In essence, with you control yourself well. Then the trading process will be much lower risk and can even make you consistent profits in the future.


3. Learn to use a clear trading system

Someone who often experiences margin calls, is usually also caused by not having a clear trading system. This includes not using a stop loss when opening a position.

The trading system is a reference, when to open entries and when to close entries. When to keep profits and when to limit losses.

By having a clear trading system, a trader can lose because of a stop loss. But that’s much better than getting a margin call, of course.


4. Discipline

The last thing is to be disciplined in applying some of the things above. This is quite a challenge for a beginner.

When you are disciplined in money management, discipline in maintaining trading psychology and implementing a trading system. Then you will be far from what is called a margin call and can even become a trader with consistent profits in the future.

Alright buddy, that’s all for sharing from us on this occasion. Hopefully it can provide benefits and greetings of success from the blog.