Margin Call? Take it Easy!

To start Forex trading, you need not only money, but also techniques and skills. If you are deep in loss, your account would be blown up. In such a high-risk industry, it is indispensable to know the reasons for being wiped out and how to avoid such misfortune. This article will you give you some understanding.

1. What is a margin call?

In short, when your loss exceeds the account balance, you blow up your account. In a wild market, if you have little usable margin left and your trade is against the trend, then due to the leverage, you can easily get wiped out.

2. Why you get a margin call?

First, you invest a huge chunk of your account balance on a single trade. The reason behind is that you want to get rich overnight.

Second, you stay married to your position. Even though you realize that your trade is against the trend, you can’t close it, you still hold on to it. So, getting wiped out is inevitable.

Third, you don’t have a stop-loss order placed. Some have the idea of leaving things to chance, they expect the market to move as they wished. This is a very wrong thinking in the Forex market. No one can be a successful trader just relying on sheer luck.  

Fourth, over-trading. Some investors think that they can make more profits by trading more, so they trade frequently, but the results are often disappointing. Therefore, over-trading is also not desirable.

3. How to avoid a margin call？

Whatever the situation may be, most investors don’t want to blow up their accounts. Yet in reality many got wiped out, so how to avoid this:

First, stop blindly following others. Many investors have no confidence in themselves. Being credulous, they like copy trading. But the market is always changing and no one can predict its moves. Therefore, investors should have their own opinions and learn to analyze the market themselves.

Second, manage your positions reasonably, trade lightly and trade less. Trading heavily is the main reason for getting wiped out. Try not to use high leverage. Don’t get misled by the idea to get rich overnight.

Third, place a stop-loss order. Chance favors the prepared mind. To trade Forex, one should get used to have stop-loss orders placed when initiating trades, otherwise you would regret when your are forced to close your positions.