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Margin Levels and Margin Calls 19 replies

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Understanding Margin and Margin Calls 0 replies

Why let yourself be margin called?

  • Post #1
  • Quote
  • First Post: Nov 21, 2007 5:50am Nov 21, 2007 5:50am
Time and time again I see posts where people say they got a margin call... My big question is WHY???????!!!!!!!

Think about it folks, if you're being margin called that is the worst thing possible in your account. You are left to the mercy of your broker to close your positions for you at major losses. This reeks of poor money management!!!!! Not just poor, downright irresponsible!!! Wake up people, control your money! If you're not in control, then somebody else is and if somebody else is in control of your money, then just give it away. Please, I'll take it. Hmmm, maybe I do since I actually make a living doing this.... which means I make the profits you lose.... maybe I should just shut my mouth and let you guys that let yourself be margin called keep on doing it.

Seriously folks, don't let this happen to you. If you run the risk of being margin called every time you trade then your re-examine your money management. Even in almost the worst case scenarios, with proper money management and portfolio management & balancing... you should never be margin called. I can think of maybe only 1 or 2 times in all my trading that I got margin called and that was in my early days. Let this be a lesson to you! Never get margin called. Figure it out, do whatever, but do what it takes to avoid margin calls, even if you have to sell it off first.

A little friendly advice from a fellow trader who is tired of seeing people say they got margin called... its just plain NOT RIGHT!

GirlFlyer
If you can expand on this topic, this would be very much welcomed in the members section.

Thanks
yes girlflyer, i agree with you. I think a lot of newbies get carried away and refuse to accept a loss until they have no choice. Solid Risk Management is definately the key to success.
Well said girlflyer. It's a sad statement when your broker does more to protect your money than you have up to the point of the call.
Most people (95% here) are not math graduated.

!
Trainee at UBS Investment Banking
Quoting peterM
yes girlflyer, i agree with you. I think a lot of newbies get carried away and refuse to accept a loss until they have no choice. Solid Risk Management is definately the key to success.
Yep... just think of all the people who still held on to their dot com stocks in 2000, thinking "it will bounce back up", while the NASDAQ plummets and half their portfolio files for bankruptcy.
Quoting th_ngue21
Most people (95% here) are not math graduated.

!
You don't need to be a math grad to understand you need to protect your money.
Hello,

I have yet to experience a margin call but I do still struggle with letting go of a bad trade and cutting my losses short. I am either( or both)...an obsessive optimist or a fool. I am doing pretty well but once in a while this ugly habit creeps up. Please those of you who do not suffer from this bad habit or have been able to control it...please give me the antidote.


Unus pro omnibus, omnes pro uno
Quoting moneda
Hello,

I have yet to experience a margin call but I do still struggle with letting go of a bad trade and cutting my losses short. I am either( or both)...an obsessive optimist or a fool. I am doing pretty well but once in a while this ugly habit creeps up. Please those of you who do not suffer from this bad habit or have been able to control it...please give me the antidote.


antidote is use a stoploss

tht way it'll close whether u want to close it or not

I had the same problem
Quoting Badmash
antidote is use a stoploss

tht way it'll close whether u want to close it or not

I had the same problem
Yeah, using a stop loss order far away, and not touching it until the trade ends, is one way to help such a bad habit. In fact, that was the original intention of a stop loss, but too many traders use it as a "lazy man's exit signal"
There is one word to explain it; Ego. That's in my opinion anyways.
I dream, therefore I become.
Quoting mike w
There is one word to explain it; Ego. That's in my opinion anyways.
or maybe stupidity. Let me see now....

Lets say that "reasonable" MM as a % of account is 2-4%. So if i am "at risk" of a margin call, i am risking not th 2 -4 % but rather nearly 100%. A little screwed up imo. Reminds me of me a while back...

There was a thread that i read where a guy was having huge returns and someone checked the statement that he was trading 1 MINI per $1000 of account for GBY....and no defined stop.

Maybe both Mike....ego and stupdity.
Quoting moneda
Hello,

I have yet to experience a margin call but I do still struggle with letting go of a bad trade and cutting my losses short. I am either( or both)...an obsessive optimist or a fool. I am doing pretty well but once in a while this ugly habit creeps up. Please those of you who do not suffer from this bad habit or have been able to control it...please give me the antidote.



A Clear and well written trading plan that includes clear entries, exitis, and SL...and the discipline to follow it!

Go get em...

Jimno
Margin call is most of the time the result of overleveraging. In second position would be not cutting the loss.
Quoting moneda
Hello,

I have yet to experience a margin call but I do still struggle with letting go of a bad trade and cutting my losses short. I am either( or both)...an obsessive optimist or a fool. I am doing pretty well but once in a while this ugly habit creeps up. Please those of you who do not suffer from this bad habit or have been able to control it...please give me the antidote.


The antidote is attached to your shoulders. You have to decide why you are trading. If it for entertainment and to announce the occasional winning trade here on FF then continue trading as you have done. If it is a business and you wish to supplement your income or live as a professional then you must control your losses. No one can make that choice for you. Neither scenario is terribly bad, you just need to decide where you are going to take this.
With no math..... you should not be doing forex... period !!!

Quoting th_ngue21
Most people (95% here) are not math graduated.

!
You should only be risking 1-3 % of your account at any one time... the only way you could get a margin call then is if you don't use a stop, and then go on vacation...

This means.... when you place your trade... if it goes all the way to your stop, you should only lose max 1-3% of your account.... a margin call should not even be a thought... you MUST calculate !!! This means simple math !!! If you don't understand this math, you are still in junior high school, or failed some really important classes !!!

If you don't know these things... stop trading until you understand them... if you need help.... get it !!!! Before you lose all your money !!!

Quoting peterM
yes girlflyer, i agree with you. I think a lot of newbies get carried away and refuse to accept a loss until they have no choice. Solid Risk Management is definately the key to success.
  • Post #18
  • Quote
  • Edited at 7:25pm Nov 21, 2007 6:00pm | Edited at 7:25pm
Quoting Tiki Trader
With no math..... you should not be doing forex... period !!!
FOREX IS NOT SCIENCE! FOREX IS ART FOR ME! {Offensive word removed } THEORY USE INTELIGENCE AND INSPIRATION
For starters many traders do not even know all nessecary details about their broker's margin call policy

Second of all they don't have an specific plans on where to get out , they just start a trade and see what it does

I think it does not matter whether you are risking 2% or 20% with one trade but you should know the level at which you are not interested to maintain that position anymore instead of hoping for the best all the time
I like to keep things simple. I trade the setups I see. I Use stops incremental stops and TPs and tend not to watch price too often whilst in a trade as there is not much point, as the decision is made to trade. Even if I lose it is not a bad trade, because I traded my setup.
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