of borrowed money to control a larger position than they'd otherwise by able to control with their own invested capital. For example, when your account leverage is 100:1, you can buy 100 by paying. As you can see, your Usable Margin is now.00 and you will receive a margin call! Free Margin: Free margin is the money that is not engaged in any trade and you can use it to take more positions. When you have some open positions and for example they are 1,500 in profit in total, then your account equity is your account balance plus 1,500. Equity: Equity is your account balance plus the floating profit/loss of your open positions. I know that nobody pays US dollar to buy US dollar. Leveraging your account to the highest 200:1 ratio means that even with a slight drop in the currency exchange price can wipe out your account's usable margin (balance). Balance: Is the total amount of the money you have in your account before taking any position. If you close this position, the 500 profit will be added to your account balance and so your account balance will become 5,500.
This means that EUR/USD really only has to move 22 pips, NOT 25 pips before a margin call. When you dont, you cant take any new positions. If you close the position, the profit/loss of the position will be added to or deducted from your account balance, and the new account balance will be displayed. The average leverage you get while trading forex is very high and often between 50:1 and 200:1 (sometimes even more 400:1). You blew 20 of your trading account! Download Our E-book For free and Don't Miss Our New Articles! Margin level is the ratio of the equity to the margin: (Equity / Margin) x 100 Margin level is very important. If your open positions make money, the more they go to profit, the greater equity you will have, and so you will have more free margin. As a result, they dont know how to calculate the size of their positions. If EUR/USD goes down 1 pip, your equity decreases.
Forex Margin Call Explained
Forex Margin and Margin Call Explained - FX Trading
Forex Leverage and Margin Explained