Category: 6. Margin Trading 101

How to Avoid a Margin Call

Trading on margin is a way for traders with limited capital to make significant profits (or losses). If you fail to understand the concept of margin or not knowing what to do when faced with a margin call from your broker, you will definitely experience the shock of your trading...
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Margin Jargon Cheat Sheet

As you dive into the world of margin trading, it may feel like you have to learn an entirely new language to truly understand what’s going on. Just as with any specialized area, margin trading comes with its own terminology and jargon. Here’s a handy cheat sheet to the...
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The Relationship Between Margin and Leverage

What is the relationship between Margin and Leverage? You use margin to create leverage. Leverage is the increased “trading power” that is available when using a margin account. Leverage allows you to trade positions LARGER than the amount of money in your trading account. Leverage is expressed as a ratio. Leverage is...
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Trading Scenario: What Happens If You Trade With Just $100?

What happens if you open a trading account with just $100? Or €100? Or £100? Since margin trading allows you to open trades with just a small amount of money, it’s certainly possible to start trading forex with a $100 deposit. But should you? Let’s see what can happen if you do....
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Margin Call Level at 100% and Stop Out Level at 50%

Different retail forex brokers and CFD providers have different margin call policies. Some only operate only with Margin Calls, while others define separate Margin Call and Stop Out Levels. In the previous lesson, we went through a trading scenario where you were using a broker that operated with a Margin Call only. In...
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Margin Call Level at 100% and No Separate Stop Out Level

Let’s now take all the margin jargon you’ve learned from the previous lessons and apply them by looking at trading scenarios with different Margin Call and Stop Out Levels. Different retail forex brokers and CFD providers have different margin call policies. Some only operate only with Margin Calls, while others...
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What is a Stop Out Level?

What does “Stop Out Level” or “Stop Out” mean? The Stop Out Level is similar to the Margin Call Level, which was covered in the previous lesson, except that it’s much worse! In forex trading, a Stop Out Level is when your Margin Level falls to a specific percentage (%) level in...
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What is a Margin Call Level?

What does “Margin Call Level” or “Margin Call” mean? In forex trading, the Margin Call Level is when the Margin Level has reached a specific level or threshold. When this threshold is reached, you are in danger of the POSSIBILITY of having some or all of your positions forcibly closed (or “liquidated“). The Margin Level...
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What is Margin Level?

What does “Margin Level” mean? The Margin Level is the percentage (%) value based on the amount of Equity versus Used Margin. Margin Level allows you to know how much of your funds are available for new trades. The higher the Margin Level, the more Free Margin you have available to...
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