To Avoid Margin Calls

Margin calls can happen to anyone, both novice traders and professional traders. Margin call is a scary thing and is avoided by every trader, it is not uncommon to mention that margin call is the angel of death in trading.

A margin call is a warning system indicating that the trading account funds are insufficient to open a position. Traders who receive a margin call notification will be instructed to increase their deposit. If the trader does not deposit the funds back, the trading position will be forcibly closed by the broker. In this condition, the account can no longer be used because the balance runs out and can even be negative. Here's how to avoid margin calls:

Have Money Management

Money management is money management which refers to the financial planning process such as saving, spending, or controlling the use of capital for or investment either individually or in groups. In forex trading, money management is the management of funds in a trader's trading account. This usually includes the number of lots in each trading position, what is the distance between the entry price (open position) and stop loss (SL) and the profit target, as well as the maximum number of trading positions that a trader will open at the same time.

Have Risk Management 

Simply not the most useful profit, the risk measurement that traders need to do first, then the profit will follow by itself. Risk management is the implementation of various policies and procedures to minimize events in accordance with the capacity and quality of work. After the risk has been analyzed, the parties involved with the risk need to make efforts so that the risk does not occur and threaten the sustainability of trade. In this case, the risk manager can help the parties involved in finding solutions to manage risks, such as eliminating potential, minimizing, or transferring to other parties.



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