Follow

What is a Margin Call?

A margin call occurs when, for example, a position you have is going against you. The Margin call will occur when a trading account no longer has enough equity to support the open trades.

 

Example: If you are using 200:1 leverage and you have a $20 account and use $10 to open a position, your trade size on the market would be $2000. Each pip would be worth approx. 20 cents. If the market moved against you by 50 pips, that would be a floating loss of $10.

 

Since $10 are required to keep your trade open, at a floating loss of $10.01, you will no longer have enough margin to keep your trade open and a margin call will occur. A margin call means that your broker might close your position to further protect your account.

0 Comments

Please sign in to leave a comment.