Why do small capital in forex tend to be frequent Margin call?
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  • #1 Collapse

    Why do small capital in forex tend to be frequent Margin call?
    We know that many beginners, including me, once assumed that trading was not using a large amount of capital, besides not having a strategy and mm, also not experienced, but if you have a small capital it often happens mc, tabpa, you haven't done wd, why is that?
  • <a href="https://www.instaforex.org/ru/?x=ruforum">InstaForex</a>
  • #2 Collapse

    Why do small capital in forex tend to be frequent MC?
    actually not only small investors, big investors if they don't know how to trade properly and correctly they will also end up with MC. Therefore, to avoid MC itself, yes by learning about how to trade properly and correctly, both from technique and mentally to can consistently run tradesThere are procedures so that we can avoid being exposed to MC, namely in terms of technique, we must be willing to patiently practice demo accounts so that they can produce profitable techniques and skills and that certainly takes a long time, both learning and testing. also from a mental point of view, we must be able to train it so we can always be consistent with the technique and be able to maintain our emotions and psychology while trading. We can do this with an understanding of the risks of trading and building a good mindset. so trading safely and comfortably based on MM which is tight will prevent us from high-risk trading which can minimize our exposure to MC. And if these two things can be mastered and we are able to apply them intrading , we can be sure that we will avoid MC and will instead be able to generate consistent profits from trading . so I think that both small and large capital are not a problem or tend to cause MC. The real problem is ourselves where we don't know about this business and can't yet. manage capital well.


    The best solution to keep trading capital minimal so that it can continue to exist is to treat trading accountslike a large company that must be managed properly and wisely in order to develop properly with the amount of profit that is in line with the risks taken. Don't be shy or insecure if your trading capital is still minimal, because with the support of sufficient trading skills and experience , I really believe that we can develop and increase trading capital slowly from the profits generated.

    Conclusion
    Capital has no effect, it is the SKILL behavior that affects our trading performance . So if we just trade on a small account carelessly, let alone large funds. Samimawon.
    If you really want to continue doing dangerous activities in tradingsuch as using excessive leverage, we should channel that desire. Allocate funds for the "pleasure" activity. but remember not too large a percentage of the funds allocated to these "fun" accounts. We have to realize that maybe some traders like adrenaline, therefore, (in my opinion) it must be channeled and not to burst on the accounts that we have guarded.
    Tacaz Trading Journal

    Nothing is true everything is permitted!

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    • #3 Collapse

      Margin call

      What is margin call ?
      Margin call is a warning or call from the broker that you are dealing with, through its platform, to inform you that the floating losses in your trading account reached to unacceptable level and that you should add more funds to your account before the floating losses reach to the stop out level, because when the floating losses in your account reach to the stop out level, this gives the broker the right to close all your losing trades at big losses to leave your account with $0 or with very small capital doesn't exceed 5% from your trading balance.

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      Why do small capital in Forex tend to be frequent margin call ?
      One of the most important factor of success in Forex trading is the trading with a good trading plan for achieving a specific daily level of profits, such as 1%. And this means that your commitment with that daily level can help you to achieve around 20% monthly. So, when you trade with small capital, such as $50 or $100, this means that you will be able to only achieve from $10 to $20 per month. And this makes most of traders who trade with small capital don't satisfy with the small profits that they can achieve with their small capital with their commitment with their trading plan, making them avoid the commitment with rules of their trading plan in order to trade with higher risk to achieve higher profits from their trading. And this typically make them get huge floating losses in their account when the market moves against them, leading them to face a margin call. So, the Forex trader should commitment with rules of his trading plan during the trading in order to avoid facing margin call, even if his commitment will bring him very small profits, because this will be better than losing his money during the trading.
      My Trading Journal

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      • #4 Collapse

        WHY TRADING WITH SMALL CAPITAL TENDS TO LEAD TO MARGIN CALL

        Trading with a small capital will most times not give good results, not only in the forex trading business but also with other businesses as well. This is the reason you see even big companies and corporation always seeking funds in one way or the other. For any business to thrive having a good trading capital is important. Now when we come into the forex trading business, you will see a lot of forex traders trade the demo trading account with huge success but they fail to repeat the same success in the real live trading. The reason is because they do not have the huge capital deposited in the demo account in the real live money account. Find below the reasons why small capital accounts tend to end up in margin calls.

        1. DESIRE TO MAKE GOOD PROFIT: The forex business is one business where the participant believe they can earn good money irrespective of the size of their trading capital. The leverage opportunity offered by the brokerage firms further increases this desire.

        2. USE OF HIGH LOT SIZES: With the desire to earn good profits come the temptation to use high lots while trading. Of course, it will be difficult for any trader to use good money management with a $10 trading account. It is not uncommon to see traders divide their total funds by 20 to arrive at the lot size to use. Here the risk is too high as price could fluctuate 50 pips or even more before moving in the direction of the trend. When this happens a 20 pips account would be margin-called easily.

        3. NON-USE OF STOP LOSS: Most traders who trade the small capital account will most likely not set any stop loss. It is not uncommon to see them allow their trades run without stop loss. And they are right, where do you set a stop loss when all the funds is just 20 pips. A friend of mine once joked that his total trading capital was the stop loss. In such cases when the trade goes wrong, the account gets margin-called.

        4. ANXIETY: The trader with a small capital is always in haste to trade and make profits. Probably the small amount he invested is not a money he could afford to lose. It might be his feeding money or even rent. So he gets anxious to get the money back with some profits. Where anxiety is involved, the trader enters trades in haste at wrong times. Such wrong trades will eventually lead to a waste of the total investment.

        Hence, trading with a small capital account is never the best. Traders should secure around $500 if there trading would be worthwhile. A trade needs at least a 10 cent per pip lot size for the best results to be possible.
        Covid-19 will not wipe out humanity! Let's fight this common foe together. Together we win this war! Please apply WHO recommendations on keeping safe!
        Hedging Edge: Heading For $6 Million!

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        • #5 Collapse

          What is a Margin call
          Margin call is what traders do not wish to get because it signifies losses from the traders trading activities. The margin will be encountered by a trader when there is no more sufficient amount of money in his trading Capital that will enable the teasing account to accommodate further trading exercises.

          The Margin call is a warning that is issued by the brokers to the forex traders, notifying them that they are short of funds in their trading account due to losses and therefore they could not carry out further trading activities unless they top up the trading account with further trading Capital to enable then carry out further trading activities.

          Why small trading Capital experience frequent margin call
          The volume of the trading Capital is important when it comes to accommodating a certain amount of trades. The trades that the forex traders places in the forex market are done so through the use of the trading Capital and this is assisted by the forex broker through the system of leverage and margin. When the trading account Capital is very large, there will be room for more margin and therefore more trades can be accommodated by the trading Capital but when the trading Capital is very small, there won't be much funds to accommodate trades therefore any little losses will lead to wiping out of the trading account based on the fact that it is small, hence the small trading capital witness a margin frequently more than the trading account with large trading Capital.

          In general, losses caused the margin calls in any given account and we all know that a small trading Capital will not be able to absorb much losses and therefore the account witnesses a margin call as frequently as possible unless the trader is careful enough and has gained alot of forex trading experience which will enable to compound the trading profits made from the small trading Capital and amass it inot large Capital within some period of time.

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          • #6 Collapse

            I don't feel that small capital always pushes us to the margin call because with high equity also we can see this and that mainly happens to me .Me comfortable with 100 to 200$ equity but when ever i started to trade with 500 to 1000$ ,i just get lost .So here all the things depends upon the individual how we are handling the situations and for thus we may consider some matter where small capitals can kill the equity in faster pace.

            1. Frustration :- Many traders as they dreams bigger when they start trading with small amount ,they gets very frustrated and thinks to multiple that amount faster so in this process instead they lose the equity in no time .With any amount we have to be positive into the market because if we can utilize the skill and show our capabilities ,we can surely make to the target one day .We have to be practical and should know that from which amount what is the appropriate return we can get the most ,otherwise we will get the jolt which can totally demolish our trading career .

            2.No follow up rules ;- Maximum traders thinks that as they are trading with tiny equity there is no need to follow the rules and regulations and for that they just try to try some luck in this market and blindly start trading thinking that if luck can be there side within small span they can make some big profit .But they should know that always in a constant manner luck will not favor you and fo that as a trader we have to work as per the principle to make some decent return with small capital.
            KALEX TRADING JOURNAL-LEARN AND EARN

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            • #7 Collapse

              In the forex business, we listen to this term margin calls frequently. So here I will discuss margin call, what is a margin call?

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              This term is usually used in forex trading and it is an alarming situation for any trader to face a margin call. In easy words I will try to explain about margin calls, e.g any traders who have 100$ capital in trading account and he/she open any trade and his/her trades goes in loss and when the floating loss of trade exceed more than 90% and remaining capital less than 10% at that time a red bar appears which highlighted that now trading account is in a danger zone, so either deposit more money or trade will automatically close in the loss by the broker, this is called a margin call. Every broker has there own limit for margin call as I notice in Instaforex, trader face margin call when their loss increase from 91% and reaming capital less than 9%, and like this every broker has a different limit.

              Why does small capital in forex tend to be a frequent Margin call?
              It is true that small capital in the forex business tends to be a frequent margin call, and there are many reasons behind this issue, so here I will note down some reasons.

              Lack of knowledge: Forex business is not easy business and without proper learning, no one gets to succeed in this business so this is an important factor that people ignore and face huge loss here and even face the result of a margin call. Those peoples who join the forex business must have knowledge about this business. This business is not only a buy or sells the game.

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              Poor planning: Traders face margin calls because when they open a trade they ignore planning related to their trades, as they don't know market trend, don't touch financial event in the market, not know about there target and even not know about the volatility of the market which causes a big loss.

              Not use stop loss: Those traders who have small capital in there account they trade like do or die, and not use stop loss in their trades which cause a margin call, and I think if traders just focus on stop loss they can survive for a long time in forex trading and not face margin call situation.

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              Over trading and greed: Due to the opening of the market 24/5, the forex market gives a lot of opportunities for opening of new trades, and many time traders are doing good trading and earning good profit, but due to over trading some time not get the right idea, and due to greed open a wrong trade which gives margin call.

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              Big lot size: Those traders who have small capital can not control their emotions, and want big profit and use big lot size which ultimately causes an instant margin call so when open any trade try to use money management and use possible small lot size. The small lot size is a friend of all traders.

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              Conclusion:
              If traders want to avoid from margin call in there account either they have small capital or big capital then follow some basic rule.
              1 Learn forex business.
              2 Trade with small lot size.
              3 Use stop loss.
              4 No greed.
              5 Emotionless trading.
              "Satisfaction is more important than your success"
              My Latest Trading journal update is below
              https://forum.mt5.com/showthread.php...1#post15175534

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              • #8 Collapse

                If you have small capital in forex then you can never become a good trailer among yourself and you may not get good because If you want to earn well, then you have to have good capital for this too. This is why I want all the people to work hard and work well So that from where he can do something or the other, the more you work in the voice, the more success it becomes. We also have to do something in it so that we can also do some games in it so that we were successful in it because tomorrow it is not known For this, the more he works hard for it, the more successful he can become in it. Just we should never dare, if I lose courage, we never fail in it, rather we should try to improve the work in it so that we can make a successful send in it. The more we work in it, the more we do some knowledge in it. So just work hard and work well, the more you work with each other, the better you will be able to do some game in it. So in the bus If we lose courage in this, then we can fail in this at any time, we should do such a thing in which success always prevails and in Amit can live on very good profit. Overall, if you want to be a good trader in this, then you will have to work hard for this, so in this way we will also be successful in it. So we should never lose courage but we need that we can trade well in it like a good trader.In this, just do your work better, as much as you can do your work in good meeting among yourself, you have to do some balls in it, just we have to do our work better, I have to do more

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                • #9 Collapse

                  Originally posted by ayan555 View Post
                  In the forex business, we listen to this term margin calls frequently. So here I will discuss margin call, what is a margin call?

                  [ATTACH=CONFIG]287942[/ATTACH]

                  This term is usually used in forex trading and it is an alarming situation for any trader to face a margin call. In easy words I will try to explain about margin calls, e.g any traders who have 100$ capital in trading account and he/she open any trade and his/her trades goes in loss and when the floating loss of trade exceed more than 90% and remaining capital less than 10% at that time a red bar appears which highlighted that now trading account is in a danger zone, so either deposit more money or trade will automatically close in the loss by the broker, this is called a margin call. Every broker has there own limit for margin call as I notice in Instaforex, trader face margin call when their loss increase from 91% and reaming capital less than 9%, and like this every broker has a different limit.

                  Why does small capital in forex tend to be a frequent Margin call?
                  It is true that small capital in the forex business tends to be a frequent margin call, and there are many reasons behind this issue, so here I will note down some reasons.

                  Lack of knowledge: Forex business is not easy business and without proper learning, no one gets to succeed in this business so this is an important factor that people ignore and face huge loss here and even face the result of a margin call. Those peoples who join the forex business must have knowledge about this business. This business is not only a buy or sells the game.

                  [ATTACH]287943[/ATTACH]

                  Poor planning: Traders face margin calls because when they open a trade they ignore planning related to their trades, as they don't know market trend, don't touch financial event in the market, not know about there target and even not know about the volatility of the market which causes a big loss.

                  Not use stop loss: Those traders who have small capital in there account they trade like do or die, and not use stop loss in their trades which cause a margin call, and I think if traders just focus on stop loss they can survive for a long time in forex trading and not face margin call situation.

                  [ATTACH]287944[/ATTACH]

                  Over trading and greed: Due to the opening of the market 24/5, the forex market gives a lot of opportunities for opening of new trades, and many time traders are doing good trading and earning good profit, but due to over trading some time not get the right idea, and due to greed open a wrong trade which gives margin call.

                  [ATTACH]287945[/ATTACH]

                  Big lot size: Those traders who have small capital can not control their emotions, and want big profit and use big lot size which ultimately causes an instant margin call so when open any trade try to use money management and use possible small lot size. The small lot size is a friend of all traders.

                  [ATTACH]287950[/ATTACH]

                  Conclusion:
                  If traders want to avoid from margin call in there account either they have small capital or big capital then follow some basic rule.
                  1 Learn forex business.
                  2 Trade with small lot size.
                  3 Use stop loss.
                  4 No greed.
                  5 Emotionless trading.
                  Hi my dear mate hope you are fine and you can trade well dear i am glade to you because you are sharing your good knowledge skill about margin call and also i apperciate your explaning skill in easy wording thank you and wish you best of luck.

                  Comment

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                  • #10 Collapse

                    Forex trading is one of the best professions to make a good income. But most of the traders often lose money in the forex market. There are a lot of factors that determine the losses faced by forex traders. The most common reason is the lack of a proper trading plan and strategy. Traders often go for trading without analyzing the market and in the end, they failed to survive in the market.

                    One of the common reasons is the lack of magin money. This situation occurs when a trader trades with small capital. When a trader opens orders with small capital a huge portion of the equity goes to the used margin. And the trader left with a very small free margin. Obviously, this type of trades won't last for long. In case the price goes against the trading position remaining free margin gets used up. And in the end, the trader gets a margin call.

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                    This is very important for a trader to trade with small lot size orders. Particularly at the time when a trader trade with small capital. But with small capital traders often go for gambling. Because they find it really difficult to stick with discipline. They want a quick result and want to increase the equity with short cut methods.

                    No trader can be successful if he or she does not follow the proper risk-reward ratio. Due to a lack of funds or capital a trader really finds it difficult to follow any risk-reward to the trading account. Because to absorb some losses in the form of stop losses is also required good capital. Most of the small capital holders are new traders and they have a poor mindset and with no prior experience, they always get a margin call.

                    Why does small capital in forex tend to be a frequent Margin call?

                    As discussed above the most common reason for getting a margin call is the lack of capital. There are a lot of other inter-related factors that can be considered for getting a margin call by any trader.

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                    1) High leverage: Small capital holders tend to go for high leverage. Because it increases the capability to open big lot size orders. Most of the small capital holders want to make good money by opening big lot size orders. But there is a risk of such trades and this should be avoided.

                    No matter whether a trader has low capital or large capital. If the trader is very new to the forex trading field then he or she should try to trade with low leverage. This will help the trader to reduce the lot size and thus there will be very fewer chances of getting a margin call.

                    High leverage definitely gives us the power to open a big lot size order. But if a trader is really committed to staying for long into the forex trading profession then high-risk trading should be avoided. Even we've increased the leverage for our trades if we control our bad habit of opening high lot size orders. We can certainly minimize getting high loss in the form of a margin call.

                    2) Lack of risk management: This is one of the most common reasons for getting a margin call. A small capital trader should try to follow risk management. Because it'll help the trader to lose only a certain percentage of the equity. If a trader fixes the risk percentage by following risk management then there would be no chances of getting a margin call.

                    Due to a lack of proper understanding, most of the traders do not follow risk management into their trades. They do not ready to accept even small losses. And that's why they always go for high-risk trading and try to hold losing trades. Without risk management, a trader can't calculate the lot size, stop loss level, take profit pips, etc.

                    Suppose we're trading with very small capital if we follow proper money management then we can able to grow our account size. In other words, risk management helps us to grow our balance in a trading account. For example, if we opt for a 1:2 risk-reward ratio. Even we've $100 equity we can easily manage our trades. We'll lose only $1 i.e. 1% of our $100 equity in every trade we do. And the profit will be $2 in case our trading orders hit take profit level.

                    This way we can able to grow our trading account. Even we lose 50% of our trades we'll be in good profit. Suppose we've traded 10 trades, lost 5 of them i.e. 1% loss in each trade. And won 5 trades with 2% profit in each trade. In such a situation, our losing amount would be $5 and the winning amount will be $10. So here we've added $5 in our equity with a $100 initial deposit.

                    3) No stop loss: This is a big mistake not to put stop loss into our trades. Particularly those traders who are trading with low capital must use stop loss to their trading positions. One of the reasons for getting a margin call is the lack of proper stop loss. Even we're not trading with proper money management we should at least try to put stop loss into our trades.

                    Sometimes due to high volatile markets or certain economic events price moves in both directions. This can cause heavy losses and also a trader might get a margin call. No matter what is our equity we should try to put stop loss. Even we lose some of our amount in the form of stop loss we'll get numerous opportunities to trade and easily able to recover the losses.

                    Most of the traders do not put stop loss into their trading positions because they do not like to lose even a single dollar. That's why they often failed to maintain good discipline in forex trading. Stop loss helps us to cope with any bad market condition. We can easily stop our trading account from getting a margin call just by putting stop loss into our trading positions.

                    4) Frequent trading: Because of low capital a trader might go for frequent trading. This is also called as overtrading. This is not a great sign of a good trader to go for frequent trading. However, there is no harm in doing frequent trading if a trader is a scalper. But it also requires a high level of knowledge and practice to the scalp in the forex market.

                    The forex market won't show good momentum all the time. Also to get a good entry-level requires good analysis. If a trader goes for frequent trading then good analysis won't take place and thus the trader could face frequent losses. Even a trader put stop losses into trading positions the trader may face in a series and thus get nearer to margin call level.

                    5) No proper analysis: A big number of traders never able to do a proper analysis. Because they are very new to the forex trading field. Due to the lack of proper analysis, many traders failed to survive. This is one of the factors we can consider for getting margin calls by low capital traders.

                    Traders tend to go for trading in a hurry. They never realize that this could result in bad trading decisions. They, not even try to spend some time analyzing the trend. Because of wrong decisions due to poor analysis, they get into a bad trap of trading. Also, many traders do not try to look at the latest economic events and thus get an entry at the wrong time i.e. during economic data releases.

                    6) Greed, Fear, and emotional distress: Those traders who trade with low capital always have mental distress. They feel low because of low income from their tradings. So they often go for high risk and lead to a margin call. Due to greed also traders often use big lot size orders in order to gain more profit in less time. They get frustrated because with little capital they feel helpless and try to increase the equity from trading with high risk.

                    We should accept that this is not easy to control emotions while involving in forex trading. But here we've to be strong enough to control any type of emotion. If we can't control greed or fear then we'll never able to control our losses too. As a human, we've to be very careful to make decisions based on any types of emotion. Magin call often occurs due to wrong decisions because of trading with emotion.

                    7) Multiple trading orders: One of the most common mistakes made by a trader is to open multiple orders at a time. Due to the low margin, it is not recommended to open too many positions at a time. This could impact negatively and the trader may fail to survive at the end. Even a trader opens low lot size orders but with too many opened positions the overall lot size may increase. And this could lead to a margin call.

                    We often see that traders can't hold profitable trades for long. They don't try to hold trading positions till taking profit levels. This happens due to the fear of loss. They want to book profit as soon as possible and close orders with little profit. On the other hand, they try to hold losing positions for long. They never think of cutting losses if they find a change in trends. Also, they don't feel appropriate to put stop losses. As a result, they face a margin call. Actually, they fear losing even a small amount in the form of stop loss or cut loss options.

                    8) Stressful mind: Those who trade with low funds always trade with a stressful mind. This might be due to the financial burden on them. They are poor traders who cannot afford to fund their account balance. Or they are low-income group people and trying to start forex trading with minimum capital. So they always trade with a different mindset. Their main focus is to gain profit but not on proper trading or money management. They don't have to require patience to wait for the correct opportunity for trading. And thus they trade without proper trading objectives and get margin calls.

                    9) Wrong perception about forex trading: Most of the people have the wrong perception about the forex trading profession. They believe that forex trading is a place to gamble money. Their intention is also to gamble their deposited money. They don't believe in any strategy or trading plan. That's why they always go for high-risk trades even they do not have enough margin. They try to risk the whole account in a hope that if they win then it'll be big enough to pay their expenses.

                    Actually, they are not rich people. They are gamblers who are ready to lose amount for the sake of gambling in the forex trading profession. They are addicted to gambling activities. And they find the forex trading platform an opportunity to gamble their money.

                    10) Wrongly chosen broker: Some brokers won't allow a trader to trade with minimum lot size. For example, we can't open a 0.01 lot size order and we should trade with 0.10 lot size order only. In such a situation, a trader forcefully trades with 0.10 lot size, and sometimes this amount of lot size won't allow us to open any other position.
                    Before investing with any forex broker we should try to trade in a demo account. Because the demo is free to use and we'll able to understand what is the minimum lot size allowed in that particular trading account. Also, we'll able to understand how much capital will be sufficient to start real trading.

                    11) Wrong trading account: Small capital account holder should go for a cent account. Because here a trader can easily manage trades with minimum equity. But most of the trader go for other types of trading account. And they even struggle to trade with 0.01 lot size orders. Every forex trader provides different types of trading accounts. A trader should choose the right type of trading account before starting real tradings.

                    Ways to protect the low funded account from getting a margin call
                    • The trader should avoid a high lot size order and keep enough free margin.
                    • Stop loss is mandatory for every trader including low funded account holder.
                    • Risk management teaches us how much we're willing to lose in every trade, also helps us to avoid a margin call.
                    • We shouldn't go for multiple orders at a time. Even we get a good opportunity to trade we should avoid opening multiple orders to save our trading account from getting a margin call.
                    • Overtrading is not always recommended because there is no guarantee that we'll able to make a profit from every single trade.
                    • Every trader should try to risk only 0.5% if the account balance is extremely low. Otherwise, a 1% risk is recommended to avoid a margin call.
                    • A low account balance holder should try to make more than 2% profit from every trade. If it is possible then 4% to 5% profit can do better to accumulate more from a few trades only.
                    • Every trader should try to look at a long timeframe and only try to trade on a strong trend. This could help the trader to gain more profits from every single trade.
                    • A low account holder shouldn't try to trade on a low liquidity market. Only in a good trending market, it is good to trade and to make a profit.
                    • Avoid stressful mind while trading with a low account balance. Only then it is possible to take proper decisions and to keep patience while the accumulation profit.


                    Why traders do trade with small capital?

                    Every trader would like to earn a lot from their forex trading profession. But this also requires a lot of experience and a stable mind. Those who are good at trading could start with small capital. And they can eventually able to grow their account size.

                    But most of the traders come with low capital trading account because of a few reasons. Either they have failed earlier or they are looking for some source of earning with minimal investment. Their main goal is to trade and make a lot of money in a few days. We can consider the following people who always trade with low capital.

                    1) New Traders: Most of the new traders start forex trading with low capital. So they are not that experienced to trade with low capital and to make regular profit. They lack consistency and thus most of the time they go for high-risk tradings. These traders often get margin calls because of a lack of experience and lack of proper funding.

                    2) Poor Traders: Forex trading is no doubt give us an opportunity to earn good money. So most of the people come to forex trading to earn a lot of money. These are poor traders and they are more inclined towards high-risk trades. Because they don't have much patience to wait for any correction. They can't fund their trading account with good balance and always try to gamble their money and thus get a margin call.

                    3) Jobless People: Forex trading is a good option for jobless people. But these people can't avoid greed and thus go for big risk trading. Also, they can't fund their trading account with enough funds. So there is a no-risk no gain situation for them. And most of the time they try to risk their whole account and get a margin call.

                    4) Who has lost a lot earlier: Most of the failed trader come up with small account balance. But their mentality never changes. They try to revenge the market and try to recover their earlier losses. So these people often failed to survive because of such a mindset and end up getting a margin call.

                    5) Have other sources of income: These traders never take forex trading seriously. They trade like playing casino and gamble their money. They don't think much even they failed to survive by getting a margin call. They have other sources of income so they don't give more priority in good trading. They never try to look at the good potential of perfect trading. Nobody can change their mindset because they are already earning from their job or business.

                    6) Students: Students often do the trade for day to day expenses. But their investment is very less compare to others. They don't have much pressure to make money. They just try to trade as a hobby. Even they fail they never regret much due to their responsibility status. Their parents are already earning and paying the fee so they feel free and trade without following proper discipline. They always face a margin call due to high-risk trades and with the low capital account.

                    7) Less experienced traders: Due to lack of proper experience most of the traders afraid to fund more amounts into their forex trading account. Obviously, this is a common thing that less experienced traders should try to trade with small capital. But they do mistakes because of less experience, they go for high-risk trades despite low account capital. And finally, get a margin call.

                    8) Failed traders: A certain group of traders never able to make money. Whenever they try to trade they fail to survive. They can't able to recognize the actual reason for failing. They often come up with small account balances and try to trade again and again. But they repeat the same mistake and lose the whole account. They get margin call all the time because they are never able to find their own mistakes.

                    9) Those who want to gamble money: Gambler mindset people should avoid trading. But nobody can stop them to take high-risk trades. They come up with low account balances and try to gamble and get a margin call. They are very different from other traders because they consider the forex trading platform as a gambling platform. Nobody can help them to get a margin call in such a gambling mindset.

                    10) Low-income group people: A group of new traders emerges every day by looking at the lucrative nature of the forex market. But these people are from low-income groups. They do not have sufficient money to make a deposit to their trading account. That's why they always feel that by taking the high risk they will earn a lot of money. So they always go for high-risk trades and in the end, they get a margin call.

                    Conclusion: Forex trading is not that easy and it requires a lot of knowledge. One of the common mistakes done by most of the traders is that they often go for high-risk trading. They can understand that by taking the high risk they can lose the whole account. But they are fearless people and go for high risk in their trades.

                    This type of way of habits by any common trader is not acceptable even he or she has deposited a good amount. But with the low account holders, it is even worst to trade with high risk. Because it is every trader's responsibility to trade with low risk. Professional traders always suggest trading with minimal risk. But few traders do not understand how to trade with minimal risk, actually, they always come with a gambling mindset.

                    Every trader must keep enough free margin to cope with the volatile nature of the forex market. So better to open only one order at a time with minimum lot size volume. This could be tiresome to get a small profit with every successful trades. But after a couple of weeks or even after a few months the account balance would increase to many folds.

                    A trader should try to control the emotion during trades. The trader should try to manage tradings according to available equity and balance. If a trader does not find comfortable to trade with low balance then he or she should avoid trading. If a trader trade with proper strategy and good money management then small equity can become bigger. It may take time but this is what the forex trading profession requires to be successful in this field.

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                    • #11 Collapse

                      Why do small capital in forex tend to be frequent Margin call?

                      In forex trading business the success of every trader depends on on how best the trader is able subject himself to good learning and acquire the necessary knowledge and experience in the market in the market . . Trader with an huge capital or small balance without the appropriate knowledge in the business can never be a successful one . and that is why knowledge and experience is what it takes to be successful not the amount of capital you have in the market .

                      WHY DO SMALL CAPITAL IN FOREX TRADING BUSINESS TEND TO BE FREQUENT IN MARGIN CALL .

                      The answer to this question is yes and at the same time no . Because the best answer to this question is double facet answer . Below are the possible answer to the question .

                      WHAT IS MARGIN CALL IN FOREX TRADING MARKET .

                      Margin call is one of the ugly and unwanted market situation . This is a case ,where the trader losses in the market and the broker now bring it to his notice that is account is no more sufficient in making further trade ,that the trader needs to refund and top up in other to be able to continue with the trade .

                      REASON WHY TRADING WITH SMALL CAPITAL MAY NOT LEAD TO MARGIN CALL .

                      (1) LEARNING .

                      Trader that make learning his number one priority will be able to have needful in the market . That is knowledge and experience that take in having a best result in market . Therefore any trader that is trading with small capital and have this in the market will be able tio survive the wrought of margin call in the market .

                      (2) PRACTICE .

                      Thorough practice by the trader equip him against all odd in the market . And having this attribute of excessive practice enable the trader to develop good trading strategy and plan and also to develop good trading habit. Having this in the market will prevent the trader from taking any ugly step step that may lead him to margin call in the market .

                      (3) DEVELOPING GOOD TRADING STRATEGY AND PLAN

                      This set a standard for the trader to follow in the market ,and prevent him from trading anyhow without definite platform or standard to it in the market . This will equally prevent the trader trading with small account in reaching a margin call .

                      (4) GOOD MONEY AND RISK MANAGEMENT .

                      Trader with good knowledge on how to manage his risk and money in the market , even if trading with smallest capital ever think of in the market with good risk and money management culture will be able to escape margin call in the market .

                      (5) DISCIPLINE .

                      Trader with good sense of discipline in the market will take every trade with caution and will never trade against his strategy . Sequel to this , such a trader will escape or not even go near reaching margin call in the market .


                      Regards the above submission , i believe trader with small capital will never sink in the pool of margin call in the market, if key to the factors above . Though am not disputing the fact that some trader do fall the pit of margin call if trading with small capital in the market This is possible as a result of the below reason .

                      REASON WHY TRADER WITH SMALL CAPITAL LEAD TO MARGIN CALL .

                      (1) GREEDINESS.

                      A greed trader trading with small capital in the market will lead him to margin call in no time because out of his greediness he enter trade with high lot size that his account can not accommodate, this result of which lead him to margin call in no time in the market .

                      (2) POOR MONEY MANAGEMENT .

                      Trader that trade without good money risk management will lead to margin call as he will be place trading trade outside the box of his capital capacity and lead to margin call in no time .

                      (3) TRADING WITHOUT STRATEGY AND PLAN .

                      Trader that trade the market without good strategy is like a blind man because he has no knowledge of where his heading to and this will automatically makes him to take decision without direction in the market and this will easily lead him to margin call .

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                      • #12 Collapse

                        WHY THOSE WITH TINY ACCOUNT GETS MARGIN CALL OFTEN?

                        There is a phenomenon in the forex trading world where those who only have small capital in their trading account very often get margin call. This has been the case for as long as the retail traders found the liberated retail forex trading decades ago. In fact, this is the reason why the U.S., which is the world leader in the number of retail forex traders back then, proposed and eventually passed a law that forever changed the retail forex trading landscape there.

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                        The Reasons

                        Surveys showed that there are several prominent reasons that really cause this phenomenon and this has been true since then and here is the list:

                        Reason #1. Big leverage. This is definitely the number one reason why people with tiny accounts often get margin call. Why is it? People who only have a tiny account tend to use the maximum leverage that the broker offered because they think this is the fastest way to grow their trading account. This is why the retail forex trading in the U.S. soil was devastated because the government pushed the “Dodd–Frank Wall Street Reform and Consumer Protection Act” which ultimately targets the ability for forex brokers to offer very big leverage which at that time went up to 1:400. As a result, bucket shops that really do not have big capital went bankrupt one by one because their main selling point is the ability for clients to use those big leverages. The use of leverage can indeed bring profit very quickly but there is a flip side to that and that is the destruction of the trading account.

                        Reason #2. Get rich quick ads. This is also one of the biggest reasons why the industry suffered. Initially, the brokerages bombarded all the media outlets with advertisements that basically said you can make a lot of money quick. With the amount of money poured in all the main business channels on tv eventually the commoners were attracted to try their fortune in this new craze which is forex trading. A lot of unsuspecting new “traders” ended up losing a lot of money and this situation forced the U.S. government to regulate how the brokerages can use specific wordings in their ads and banned the use of any suggestive words that might lead people to think that they can get a lot of money by trading forex. Also, disclaimers must be put to warn new ‘traders” about the real consequences of trading in the forex market and of the use of leverage. Many of these people don’t really have professional training and just try their luck which ultimately resulted in getting margin call often.

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                        Reason #3. Conflict of interest. This used to be the case back then but today there is less risk of this happening because today’s forex brokers mainly already adopted a different business model. Back then, the brokers were mainly bucket shops where they essentially trade against their clients. So this means when the client takes a buy position the broker will be the one who sells to the client and when the client sells the position the broker will be the one who takes the other side of trade which is the buying position. Of course, with this business model the brokers naturally hate the professional traders who keep making big money from the market. So, the brokers are happy to endorse any aggressive trading strategy in their training materials or share success stories to push this agenda to the new untrained clients. This business model is known as a dealing desk business (DD) model. However, today’s brokers adopted either Straight Through Processing (STP) or Electronic Communication Network (ECN) and so, it’s very rare to find brokers with DD business model which also means you don’t need to worry about the broker’s conflict of interest.

                        Reason #4. Wrong expectation. This is tied in with the advertisement by the brokers. Even though the ads from forex brokers these days are all toned down compared to the ads from decades ago you still have people promoting their forex trading activity as a life-changing “business” which is actually not. It’s very important to note that forex is a speculation activity which involves the use of technical analysis to exploit the movement of price in the market. The majority of forex “traders” these days are included in this group and naturally, all the new people coming into this new world fall into this category too. The expectation of these new people is they will be able to make money fast and achieve financial freedom. The word “financial freedom” is no longer heard that often these days but this is what affiliates and all the Introducing Brokers (IB) are promoting to get new clients for their brokers. In pursuit of the dream of financial freedom many people abandon the safety of their trading account by trading very aggressively in the hope of achieving the dream as quickly as possible.

                        Reason #5. Ignoring warning. When people are new to this business and already tasted quick profit by sheer luck they often feel invincible and can repeat the process as many times as they want and eventually starts ignoring the advice from those who are experienced and profitable. Of course, we can tell what will be the end of these new traders. This is called the newbie mentality and it is dangerous.

                        Reason #6. Lack proper training. This caused traders to lose money, obviously. If you don’t have proper training in how to make money then you really should not enter the market. A new trader must be trained in several different aspects and this includes the technical analysis aspect, the psychological aspect, fundamental analysis aspect and money management aspect. And then you need to have enough screen time (demo trading) so you won’t encounter any kind of surprises when you finally trade using real money in the real market.
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                        Reason #7. Using very big risk. The problem with traders with tiny accounts is they don’t really if their account is blown because it’s small money anyway. This kind of mentality is very common between those who have high risk tolerance. They think “it’s ok to lose this account because I can fund it again anyway”. Nobody can really dictate how a person should trade in the market and especially if the trader himself chose to be aggressive in his approach to the market.


                        Conclusion.

                        There are a lot of reasons in the list and a trader might have one or two or even all of them happening in their trading career. Some of the reason is from the external while others are from within the trader himself (his own choice). If you want a long, sustainable trading career in forex then you must make improvement(s) and hopefully, you can find this list useful.
                        You only need to read THIS ARTICLE to make money from forex trading,

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                        • #13 Collapse

                          WHY SMALL CAPITAL TEND TO HAVE FREQUENT MARGIN CALL?

                          The factors of production are land, labour capital and enterpreneur. They are so important that for a producer to begin production process, they must have been in place. Not only that, capital as one of them is vital for making an establishment to reach the highest stage of development. Business expansion does not just happen, capital, an asset which is used for creating another asset in production must have been the one that spurs the growth. In this case, anything that is being referred to as a capital must have monetary value which in turn can be converted in the near future to create wealth for business expansion.

                          Online forex trading is a market in which the values of currencies are traded as they rise and fall. The market is so liquid that it is capable of enhancing one an improved standard of living due to over five trillion dollars available for the traders of it to gain from each day all over the world. However, to reap of the large benefit, an account deposit is very important because without that, no gains can happen. There are brokers through which the traders gain access to the liquid market and the exact amount of money each of them required from traders before being allowed to participate in the market is called margin deposit. It is how much a person is able to deposit, of the required margin deposit, that appears as a balance in his live trading account eventually. This amount may be termed capital in forex trading. How important is it?

                          The Importance Of Large Capital For Trading.

                          i. It enhances quick arrival at financial success in a business because as a producer operating a business with a large capital, it always gives one a head start over all others that are deprived of such ability. In addition, a company that has an access to big capital for operating business enjoys both internal and external economies of scale. Conversely, an inadequate capital input causes constant losses for a trader irrespective of educational level of the producer or how long he has been operating in the business. It stymies business growth and makes development an impossibility.

                          Margin Call In Forex Trading.

                          This refers to a prosaic, unwanted situation when the balance in a trader's account has fallen below acceptable or allotted target of leverage and as such being notified by the brokers that a danger of account closure looms. The trader having this experience would be in a dilemma; cut short the extending loss or make a quick deposit in addition to the existing one to increase the account Equity and as such safe the balance from being wiped out completely. For instance, an account with a $100 balance which has an open position running at a loss to the tune of -90 in its "Profit" section is already having the Equity of just $10 which is its available balance. A trader that is experiencing a situation like this is having a margin call and it is calling for an urgent action.

                          Factors Responsible For Margin Call.

                          i. Inexperience: The trade of forex as well as other financial markets does not embrace inexperience. This factor may result in placing positions so blindly leading to margin call and it is a problem that does not make a person secure profit permanently from the financial markets. The victim of it finds himself fluctuating constantly between profit and loss. It can only be remedied by constant searching for knowledge to gain the required experience to make one fit for the trade.
                          ii. Over Trading: This means trading without a check, boundary or limit and it stems from lack of planning. An experienced trader of forex should have determined his exit price from entry price even before making a deal. This is the reason why applying stop loss and take profit is essential for trading. Determining one's exit price and applying either stop loss or take profit or both saves one from this problem.

                          iii. Intense Emotion: Impulsive traders are always the victim of this prosaic situation of margin call. Allowing anxiety to spur one's action in trading makes one become a victim of this circumstance and the emotions of anger, revenge and greed are always responsible for this situation. Always remember that myriads of opportunities are available to benefit from in the market, therefore, trade responsibly.

                          iv. Low Capital Or Balance: Many traders find themselves in this situation due to low capital input. It is always good to have another source of income aside forex trading so as to make quick deposits whenever one finds oneself in this situation. One of the best ways to make consistent profits from this market of forex trading is having a large sum of money as a balance in one's trading account. For instance, a large volume of money that is present in an account stays at times of market volatility when the meager ones vanish within seconds.

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                          • #14 Collapse

                            Why do small capital in forex tend to be frequent Margin call?
                            Most forex dealers began with little trading capital. either by enlisting forex bonuses by brokers or saving the least measures of cash into a standard trading account. This reality frequently caused the main reason why newbie traders fizzle, because their capital is simply insufficient to withstand the dangers, or so they said. In any case, it is essentially an instance of not realizing how to oversee forex exchanging with little capital.

                            when you have low capital this is not an excuse to getting margin calls in the forex market, there are many traders that started small in the market, but end up becoming successful in the market, so it's not about luck but about techniques and trading mentality.
                            • so why do traders with small capital tend to face margin calls?

                            • poor traders mentality
                            when you as a trader have the idea that if you don't take high risk, you won't be able to make a reasonable profit, this idea often leads to a massive loss in the market and of course margin calls, so in this case, it's not because you have a smaller capital but because of your action, which you can still repeat if you have bigger capital

                            • Poor Conservative Money Management
                            One of the most popular money management is the Two Percent Rule. It is a trading practice where a trader should use no more than 2% of his capital in a position, if you stick to this rule couple with a good trading strategy, your trading account will survive for a long time

                            • Poor Realistic expectation
                            by having a realistic goal in the market, you tend to stick to all the rules and be more patient, but in a situation where you think you can double your capital in few days, and it's likely you won't be able to achieve such goals, there is a chance you will be emotional.

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                            • #15 Collapse

                              Why do small capital investors call margin again and again?

                              In the world of forex trading, there is a pattern where traders have a limited amount of capital in their trading account and often receive margin calls. Until these decades, retailers were able to trade forex for free. That is why the United States, which is now the world leader in returning foreign exchange traders, introduced and ultimately passed legislation that would forever alter the retail forex trading landscape in the region.

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                              There are a variety of reasons to mention, and a trader may have one, two, or all of them at some point during their trading career. Some of the causes are external, while others are internal to the trader (his choice). If you want to have a long and successful Forex trading career, you must change, and hopefully, this list will help you.

                              The main reasons behind this phenomenon:

                              The survey revealed that many significant factors contribute to this phenomenon, which has remained valid since then, and the following is the list:


                              1- One of the key reasons for the market decline is because brokerages initially bombarded all media outlets with ads promising huge profits. Ordinary people were eventually enticed to try their luck in this latest obsession, forex trading, as a result of the money invested in all of the major business networks on television. Many unscrupulous new traders lost a lot of money as a result of this situation, and the US government was forced to regulate how brokers could use specific terms in their advertising, and to outlaw the use of all such useful words. This can lead people to believe that forex trading can make them a lot of money. New "traders" should also refrain from advising about the real risks of investing in the foreign exchange market and using leverage. Many of these individuals lack advanced experience and simply try their luck, which often results in margin calls.

                              2- It used to be that way, but today's forex brokers have adopted a new business model, so it's less likely to happen. Brokers were mainly bucket shops at the time, dealing mostly against their customers. As a result, when the client takes a buying position, the broker is the one who sells to the client, and when the client sells the position, the broker is the one who takes the opposite side of the trade, the purchase position. Naturally, with this business model, brokers despise experienced traders who continue to profit handsomely from the sector. As a result, brokers are willing to include any aggressive trading tactic in their training materials or to share success stories with new untrained clients to further this agenda. The Dealing Desk Company (DD) model is the name for this business model. Today's brokers, on the other hand, use straight-through processing (STP) or an electronic communication network (ECN), and finding brokers that operate under the DD business model is extremely uncommon, which means you won't have to worry about broker conflicts of interest.

                              3- One of the reasons why people with small numbers often receive margin calls is because of this. Why do you like it? People with a limited account take advantage of the broker's full leverage because they believe it is the quickest way to develop their trading account. That's why the retail foreign exchange market in the United States crashed when the government lobbied for the "Dodd-Frank Wall Street Reform and Consumer Protection Act," which favored foreign exchange brokers greatly. The goal for eligibility was 1:400, which had been reached so far. As a result, bucket shops with little resources went out of business one by one, because their key selling point is the willingness of consumers to maximize their purchases. The use of leverage can be very profitable easily, but there is a drawback: the trading account can be destroyed.

                              4- This is due to the use of brokers for advertisements. Even though there are fewer forex broker ads these days than there were decades ago, people are still promoting your foreign trade operation as a life-changing "company." It's important to remember that forex is a trading practice that involves using technical analysis to profit from market price movements. This community includes the vast majority of today's foreign currency "traders," as well as all newcomers to this strange new world. Newcomers are supposed to make fast money and become financially self-sufficient. While the term "financial freedom" is no longer used, affiliates and all introductory brokers (IB) are marketing it to their brokers to attract new clients. Many people risk the protection of their trading account in the search for financial independence, trading relentlessly in the hopes of realizing the dream as quickly as possible.

                              5- When people are new to a company and have already tasted instant money, they always believe that they are invincible and that they can replicate the process as many times as they want, and eventually, they seek the advice of seasoned and successful people. Begin to disregard. We can predict what will happen to these new traders, of course. This is known as the new work attitude, and it is extremely dangerous.

                              6- The issue with small account traders is that if their account is blown up, it is because their account is so small. This attitude is very popular among high-risk individuals. He explained, "It's fine if I lose this account because I can still finance it." Nobody can tell a trader how to trade in the market, particularly if the trader decides to be aggressive in his approach to the market.

                              Traders lost money as a result of this. You should not enter the market if you do not know how to make money. A young entrepreneur should be educated in a variety of areas, including technological analysis, psychology, fundamental analysis, and money management. Then you must put in a lot of screen time (demo trading) so that you are not surprised when you trade with real money in the real market.

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