4 Ways to Avoid Margin Calls
The term MC is often a thing that is very hated by forex traders. They try to stay away from the phenomenon. Actually what is an MC?
MC is a term from Margin Call, which means a call to stop from a broker. This account is used to pay for lost money. Well, the name of the loss must be tried and violated by business people.
MC means that the total loss in your account is used up to $ 0. The question that needs to be emphasized here is the account or MC account experience or Margin Call ?. It’s actually quite easy to answer this point. When you use a margin that is too large and without good money management planning. Is this necessary? the name of the business must require management so that the business is successful.
Forex trading without good management.
Most beginner traders often ignore erratic market movements. They sometimes install Entries using large lots. They don’t take the risk of losing first. In their minds only how they can get some results with only one entry position. This is certainly true when someone knows a business that provides high profits, in this case forex.
The things that distinguish professional traders are not in terms of the quality of their technical trade. But professional traders understand good money management.
High leverage can provide a higher percentage of profit. Like a double-edged sword, high leverage can also provide unlimited losses until your funds run out.
Account with high leverage.
Use accounts that have high leverage. Of course the feeling of wanting to install excessive lots can be anytime. So when you open a new account, make sure you use it according to your trading plan. Because it is also useful for maintaining the discipline and psychology of mental trading.
Avoiding Margin Calls.
Well, to stay away from the MC, of course we also have to think of the Risk: Reward ratio. That is, if your business wants to grow, there must be only one way. That is to increase profits and minimize losses.
The Importance of Stop Loss and Take Profit
In forex trading there are 2 useful features to make your business grow healthily. Namely using the Stop loss and Take Profit feature. It is also important to maintain the discipline and psychology of your trade. To find out what Stop Loss and Take profit you can read in other posts.
Calculate the loss you want to bear
Before you open an entry position, the thing you need to do is calculate the loss you want to bear. When you calculate losses, measure how many pips the number of times Lot will trade.
For example, you want to open an entry position and only want to lose $ 50. Now when you enter the entry position, what is your stop loss pips? For example, you place a stop loss of 50 pips, then the reasonable lot you use is $ 1 per point. So when the price moves minus 50 points, you only lose $ 50, it’s easy isn’t it.
Well, that’s tips on how to avoid margin or MC calls in your account. Remember, make sure you pay attention to the points above if you don’t want to be approached by a Margin Call.