Talking about margin calls is endless. Margin calls are like warning letters before you are expelled from school or work. According to Baby Pips, A Margin Call is when your broker notifies you that your Margin Level has fallen below the required minimum level. It’s pretty scary, right?
However, it is also a way that makes your trading better. If you are no longer able to change it then you will be expelled. In forex trading, you must be prepared to accept the bitterness of failure or loss.
Why do you experience a warning margin call?
Before knowing how to avoid margin calls, you should understand the causes of margin calls when trading. Thus, you can get smarter in avoiding ‘suspension letters’ in your trading.
Check out these several reasons why do you experience a margin call:
Not install stop loss
A trader who lets his trading position suffer a large loss also has the potential to experience a margin call. The greater your loss value will also be followed by endless free margins little by little. This will lead to your meeting with a margin call.
Too many open positions
Traders who open trading positions or use lots that are too large tend to be susceptible to margin calls. Trading with open many positions is tempting. You will get a large profit opportunity. However, behind large profits, large losses also await you. The price changes can cause big losses if you open too many positions.
Deposit value too low
Many brokers in forex trading allow traders to trade with a minimum deposit value. This is very interesting for novice traders. However, you must be vigilant. If your funds are too small, it means you will more easily run out of free margin. As a result, the opportunity to meet with a margin call is even greater.
Read more: Keep Smile When Trading!
