Forex trading for beginners part 5 how margin trading works examples of why and when margin call and stop out happens. At the level of margin in one hundred percent the trader uses margin initially available.
What is equity and free margin.
Forex margin level explained. The implication is if a broker requires 1 margin the trader will have a leverage ratio of 1001 on a 100 deposit which is the margin the trader can trade up to 10000 9900! will be a free margin from the broker. When the level reaches a certain value set by the broker any transactions entered into the trader will be closed to prevent further losses. For example most forex brokers say they require 2 1 5 or 25 margin.
If the forex margin level dips below 100 the broker generally prohibits the opening of new trades and may place you on margin call. The margin level is the percentage value based on the amount of equity versus used margin. Based on the margin required by your broker you can calculate the maximum leverage you can wield with your trading account.
Margin level allows you to know how much of your funds are available for new trades. The forex margin level is the percentage value based on the amount of accessible usable margin versus used margin. In such cases for continuation of trade trader needs to replenish his deposit.
The forex margin level will equal 125 and is abo! ve the 100 level. The higher the margin level the more free ma! rgin you have available to trade. In other words it is the ratio of equity to margin and is calculated in the following way.
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