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Margin Levels and Margin Calls

  • #21
  • Jan 1, 2023 11:16am Jan 1, 2023 11:16am
Quoting ForexWindo
Hi, I'm new to Forex and just started working my way through babypips but I have a question that I can't seem to find an answer to. According to ibfx (not sure if url link is permissible here), margin level is defined as: margin level = current equity in the account / current amount of margin in use I've heard that brokers will make margin calls when margin levels are at 50%, sometimes 80%. I do not understand why this is the case. I would think that as long as the equity in the account is equal to or greater than the amount required to open the...
.. And more (worse !) , The leverage given by brokers could be decreased at some of session time for lack of liquidity and this could be critical

and dangerous if/when you have semi high lot size position and if it'd decrease you will see that your position sooner goes to below free margin

level and finally stopped out when you don't see any considering (even not more than 1 pip !) market price move in the chart !!!

This would occur even in good top ten broker too ! not every single day but at nearly holidays time and of course in scam brokers

So be careful not all your potential fortune deposit to an account and take position not more than 20 percent in aggressive plan in a low amount account

and not more than 5 at a medium one ($1000 ~ $3000) . Good luck
  • #22
  • Jan 23, 2024 12:08am Jan 23, 2024 12:08am
The margin level is the ratio of your account equity to the used margin, expressed as a percentage. If your margin level drops below a certain point (usually 100%), it triggers a margin call. This is like a safety net set by your broker to prevent your account from going into negative territory.

You can check this article to learn more about margin level:
https://insights.primecodex.com/marg...el-definition/
  • #23
  • May 29, 2024 5:24am May 29, 2024 5:24am
Hi, for everyone who is looking to understand the fundamentals of margin in forex trading, you can check this article;

https://insights.primecodex.com/marg...el-definition/
  • #24
  • Last Post: Jun 1, 2024 8:54am Jun 1, 2024 8:54am
Quoting ForexWindo
Hi, I'm new to Forex and just started working my way through babypips but I have a question that I can't seem to find an answer to. According to ibfx (not sure if url link is permissible here), margin level is defined as: margin level = current equity in the account / current amount of margin in use I've heard that brokers will make margin calls when margin levels are at 50%, sometimes 80%. I do not understand why this is the case. I would think that as long as the equity in the account is equal to or greater than the amount required to open the...
Basically they protect themselves against sudden price movements, where the loss can exceed your margin and they will have to either sue you or cover the loss with their money with their counterparty.
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