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