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    Thread: What is the diffrence between a Margin Call and a Stop Out?

    1. #11
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      What is the diffrence between a Margin Call and a Stop Out?
      The both makes same meaning but can be well differenciated as follows :

      Margin calls: A process where there is no more money to continue a trade. This comes up when the capital is too low to carry on with the risk we have set them to carry in our trade. So when the market is against us and our capital depreciated to the level to which it can't continue a placed trade, we will be safe to say we have experienced margin calls due to shortage of funds.

      Stop out : This occurs when margin calls is experienced and here the market automatically exit us out. With this exit that falls in place, we will be safe to say that stop out have occur in this trade. Once stop out occurs, our trade is no longer active but will experienced eject in the forex market. So it means we cant even place a new trade due to margin calls and the stop out we have experienced until we invest fresh funds.


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      Timon (05-19-2018)

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      There is a relationship between margin call and stop out because one actually leads to the other, nobody enjoys having a margin call because it means we will be unable to trade over a period of time which will be really unfortunate, to prevent your account from a margin call or maybe hitting a stop out level, you should only trade what you can afford. Manage your money in a logical way, you should always use leverage that will not make you leave control of your account in any way.

      Stop out could imply that you may still have the chance to trade the account again especially if your leverage was previously low, you could increase the leverage to a higher level so that you can have free margin to enter another trade and possibly think of ways to recover your losses, if not the next available option is to deposit a fresh set of money before trading.


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      Leonvic90 (05-20-2018), Neriah (05-20-2018), Oghale (05-20-2018)

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      There's small different between margin call and stop our but i will explain it simply to you :

      1- Margin call : we always get it when we open more trades or one trade with very big lot and after opening these lots if the market moved against us and made our floating loss 90% we always get the margin call and it mean that you only have 10% in your account and you have two choices in this case the first choice is to leave your trades and if the luck with you and the market moved with you again your margin will rise or the other choice is to increase your balance by making new deposit to protect your account from the loss and this is what margin call mean .

      2- Stop out : it means that you opened also more trades or one trade with very high risk then the market moved against you and suddenly you lost all the balance that you have it in your account in this case your trades will be closed automatically from the broker because your balance became zero so they stop all your trades and this is the stop out .

      This is the different between stop out that make all your trades closed automatically and the margin call that only call you to make new deposit because you have only 10% .


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      Well there will be one different between margin call and stop out. If you get margin call then you can't open any order. But if you get stop out, you still be able to make an order but your equity is low. In InstaForex, the stop out level is 10% and this is good for me since I use 1:1000 leverage. What I can do now is to always follow proper money management so that I will be able to stay away from getting stop out or margin call. If you ask how many I already faced stop out and margin call then my answer will be too many margin calls and stop out that I already faced. Well, I don't give up since this business is good for me.


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