What's Forex Margin Call Meaning? - Forex Margin Call Example
What Happens When Free Forex Margin Runs Out?
A forex margin call is when a forex trader's account free forex margin goes below the required forex margin level that is set by the broker. This means that because the free forex margin in the trader's account has gone below required forex margin level then trader gets a forex margin call and some of the open trades in forex trader's are closed by the broker until this forex margin level goes back up to above required forex margin percentage region.
Some of the open trades may be closed or all of the open trades may be closed-out if this forex margin call is automatically executed by forex broker.
What's Forex Trading Margin Requirement Level?
Now if Your Forex Leverage is 100:1
When trading if you have $1,000 and use leverage of 100:1 and buy 1 standard forex lot for $100,000 your forex margin on this forex trade transaction is $1000 dollars in your forex account, this is the money that you will lose is your open forex trade goes against you the other $99,000 that is borrowed, forex broker will close out the open trades automatically using a Forex Margin Call once your $1,000 has been taken by the market.
But this is if your forex broker has set 0% Forex Margin Requirement before closing your forex trades automatically using this Margin Call.
What's 20% Forex Margin Requirement Level?
For 20% forex margin requirement before closing your forex trades automatically using a Forex Margin Call, then your forex trades will be closed once your account balance gets to $200 - at $200 you will get a forex margin call.
What is 50% Forex Margin Requirement Level?
For 50% requirement of this level before closing your forex trades automatically using a FX margin call, then your open trades will be closed once your account balance gets to $500 - at $500 you will get a forex margin call.
What is 100% Forex Margin Requirement Level?
If the broker sets 100% forex margin requirement of this level before closing out your open trades automatically using a Forex Margin Call - at $1,000 you'll get a forex margin call, then your forex trades will be closed once your forex account balance gets to $1,000: Meaning the forex trades will close-out as soon as you execute a 1 standard forex lot on this forex account because even if you pay 10 dollars spreads your forex account balance will get to $990 & the needed forex margin requirement percent is 100% that is 1,000 dollars, therefore your open forex trade orders will immediately get closed using a Forex Margin Call once your forex margin requirement falls below 100%.
Most forex brokers do not set 100% forex margin requirement, but there are those forex brokers that set 100% forex margin requirement aren't suitable for you at all, even those that set 50% forex margin requirement are still not suitable. Select those set 20% FX margin trading requirements, in fact, those brokers who set it at 20% Forex Margin Requirement are the best because the likely hood they closeout your trade using a Forex Margin Call is reduced as shown in the example above.
To Learn More about Forex Leverage & Margin - Read the Learn Forex Topics Below:
Forex Leverage & Margin Discussed
