To lose money in the forex is known to be part of the game. You don’t have to allow it to freak you out, but it does not mean that you can become careless. To lose money and t learn from mistakes is one thing.
To trade carelessly is a different story. If you are not careful, your funds in the account might fall below the amount which is available meaning, margin call. When it happens, your fore broker has a right to shut down some all the positions which are open so that your account doesn’t run to be negative.
A good thing regarding it is that, you will not lose money than what you actually have. The bad thing is that the margin call is not a good thing and the experts at cfd trading South Africa explain why. There is a need to stay away from the margin calls through having to monitor your activities as well as the margin balance. Set loss/stop orders on your positions, minimizing the risk of loss. There are several tools to help you out with all the platforms for trading that have been reviewed online over the years
It is the minimum amount that a trader deposit that is necessary for maintaining the open positions.
It is a message refers to the message from a broker to a trader that says that it is necessary increasing funds on a marginal account.
An indication showing the trader’s account for trading and the state in which it is in. If you do trade on the margin account, you have to ensure that you are aware of the policies of the broker and all the conditions that are written in each tiny font. The last thing that you would want is to find yourself in trouble. An example is during the weekend when a margin might rise from 1% to 2% or go even higher.
The main concept of the money management is in avoiding a risk that goes beyond 1% to 2% of your personal fund on a single trade. It is a principle which might greatly reduce the risk of exposure, as long as only 1% of the first deposit is what is at risk. Even after several trade loses, you are likely going to maintain the majority of the account balance.
Reward to risk ratio means the potential profit compared to the amount that you might lose for any particular trade for example when risking the 100 USD on the position to the potential gain of 300 USD, the reward to risk ratio is 3:1. The ratio 1:2 is considered to be the minimum one needs to aim at for only a third of the positions that would require to be profitable remaining with a break even. The potential loss and profits can be defined through the take profit and stop loss levels.
The take profit and stop loss are orders to position closing when the price reaches a particular level that is predefined. Take profit level and stop loss can be identified with a variety of technical analysis tools.