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January 11, 2018

Question:What is Margin? and What are margin call and stop out on MT4?

Answer:

Margin is a deposit (as a collateral) made to open a position, selling or buying, and maintain the opened position.

Margin is not a fee or transaction cost: it is a part of account balance.

However, you need to be using your margin carefully as it may increase profit potential just as much as it may cause risk of loss.

Margin Call and Stop Out

When the ratio of Margin to Equity comes below the Margin Call Level, there will be warning red sign on the Trading terminal.

When the ratio of Margin to Equity comes below the Stop Out Level, there will be compulsory closures of open position, starting from the position with biggest losses, just like stop loss execution.

Margin Call Level is to be 50%, Stop Out Level is to be 30%.

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