Forex Trading How It Works
Can you explain margin windows and magin calls to me for forex trading?
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 position that the trade could be sustained.
I can see a margin call if a fluctuation of one pip would bring the equity below this amount but I do not see how a 50% margin affects this.
If someone could provide some example numbers perhaps it would help clear this one up for me.
Thanks,
Fortexwindo
Good answer there.
IF you want to get in depth with Forex Trading though, you might want to go with the nation’s #1 resource, http://www.squidoo.com/Trading_Forex/. It’s packed with a lot of stuff, so plan to take a lot of time going over the information, and you probably will have to purchase a course to really get deep into it, but the #1 courses are listed there as well. take care.
95. How Trading on Margin Works
