[English] Lesson #3 – Earn more with leverage: margin, margin call, stop out, and equity

Learn trading with our Forex Basics course for beginners. In episode 3, you will learn how to use leverage to increase your profit and which figures to monitor while trading to make effective decisions.

0:30 Changes in currency pair prices
1:42 Leveraged trading
2:30 Example of trading with leverage: profit and loss
4:36 Margin
6:16 Equity
7:05 Margin level and margin call
8:26 Stop out

#OctaFXForBeginners #ForexTradingForBeginners #HowToTradeForex #fx #Forex

Key takeaways of this lesson:

• If you trade with leverage and your speculation is correct, you will earn more than you could with your initial deposit. However, leveraged trading increases your risks, too. Never invest a significant part of your funds into one trade, no matter how profitable it may seem to you.

• Margin is the amount of money in your account enough to cover the potential loss on Forex. The broker will not execute any order unless you have enough margin to support all your open orders.

• To track the outcome of your open orders, monitor the account equity. Your account balance only reflects the results of your closed orders.

• Margin level shows whether you have enough equity to cover the margin for all your open orders. It is safer to keep your margin level around 500% or higher.

• Margin call warns you that your losses are about to become bigger than the required margin. The margin call is triggered when your margin level hits 25%. When you get a margin call, you should either close your positions with a loss or add extra funds to your account to increase the equity.

• If you neither close your orders nor top up the account after getting the margin call, a stop out will be activated automatically. It closes your orders when your losses become equal to your margin. This way, your broker protects you from the potential losses that you could not cover with your investments. With us as your broker, you can benefit from negative balance protection—even if your equity becomes negative, you will never lose more than you initially invested.

[chitogarcia]

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[arseniotedra]

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