100% Margin Call: What Does It Mean?
A 100% Margin Call occurs when your account's margin level drops to 100%. This happens when your equity equals your used margin. At this point, Be Prime Broker may notify you that additional funds are needed to keep your positions open. Without immediate action, you risk having your positions automatically closed to prevent further losses.
What Does an 80% Stop Out Mean?
An 80% Stop Out means your account's margin level has fallen to 80%. At this level, Be Prime Broker will begin automatically closing your open positions, starting with the least profitable ones, to free up margin and reduce the risk of further losses. This mechanism protects both the trader and the broker from significant losses.
Comparison Between Margin Call and Stop Out
Margin Call (100%):
- Triggered when the margin level reaches 100%.
- It’s a warning requiring immediate action from the trader.
- Positions are not automatically closed, but funds must be added to avoid reaching the stop-out level.
Stop Out (80%):
- Triggered when the margin level reaches 80%.
- Open positions are automatically closed to free up margin.
- It’s a protective measure implemented by the broker to limit losses.
5 Tips for Traders on Margin Management
- Regularly Monitor Your Margin Level: Always keep track of your account's margin level. Use tools like MetaTrader to check the used margin, free margin, and margin level.
- Use Leverage with Caution: While leverage can increase potential profits, it also amplifies risks. Ensure you use leverage levels you can manage comfortably.
- Set Stop Loss and Take Profit Levels: Configure stop-loss and take-profit orders to manage risk and protect your capital. This helps you control losses and secure gains.
- Maintain Sufficient Funds in Your Account: Avoid trading with the minimum required margin. Keep additional funds in your account to cover adverse market movements and prevent margin calls or stop outs.
- Educate Yourself and Stay Informed: Spend time learning about risk management and trading strategies. Stay updated with market news and technical analysis to make informed decisions.