A margin callA margin call is an action taken by the broker to close your... More is an action taken by the brokerWhat is an online broker? In online trading, a broker is a ... More to close your trade when the amount of moneyMoney is a generally accepted medium of exchange to buy and... More in your account can no longer take any losses you may incur. If your drops below your initial marginWhat is margin? In online trading, Margin is the amount a tr... More, the will close several or even all of your open . They will close at least as many positions as is necessary to eliminate any risk of the account balance dropping below the minimum margin requirement.
Margin calls, therefore, eliminate the possibility of a traderWhat is a trader? A trader is a person who buys and sells... More owing more than they can afford to pay back on losing trades.
For example, let’s assume your account balance is $1,200 and your account is 100:1. If you open a position with a standard of EUR/USDEUR/USD is a currency pair consisting of the euro and t... More, you are required to have an initial margin of $1,000.
In this case, every time the drops by one against the , you will incur a loss of $10. If the EUR/USD then drops 20 pips, your loss would be $200.
At this time you still have enough money in your original account, as $1,200 – $200 = $1,000. However, if the EUR/USD falls by 1 more pip, you will drop below the margin requirements and your EUR/USD position will automatically be closed.
This closing of the open position is the margin call.
