Gain insights on the essential concepts for managing risk and equity in trading.
What is Margin?
Margin is the amount of money required to open or maintain a position. Margin requirements can vary depending on the market you are trading, where you hold your account and the size of your trade. If you do not have sufficient free equity available, you cannot open a position on the trading platform.
The free margin amount shown in the trading platform is the amount you have available to use should you wish to open additional positions.
Margin is normally expressed as a percentage of a position size (e.g. 33.3%). It can be calculated using the following formula:
Margin Requirement = (current market price x volume) / account leverage
Example:
EUR/USD is quoted at the current market price of 1.18158, your account has a leverage of 1:500 and you would like to trade one standard lot.
Your margin calculation would be:
(1.18158 x 100,000) / 500 = $236.32
In this example, the margin on this position would be $236.32. Therefore, to open a position of this size, you would require at least $236.32 in free equity in your trading account.
What is a Margin Call?
A margin call occurs when a trader's account equity falls below the required margin level. This situation typically arises when market movements go against the trader's positions, reducing the account's equity.
We operate an automated ‘margin call’ mechanism to mitigate the risk of an account falling into a negative balance. Generally, to manage this risk, we take the following measures:
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If the margin required to maintain an open position(s) takes up 100% of the funds shown in an account, the account is regarded as being on margin call;
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If the funds available in an account only cover 80% or less of the margin requirements for open positions, you will automatically receive a visual message on MT4 or MT5 asking you to consider taking appropriate action, which can include depositing further funds or reducing exposure.
What is the Stop-out Level at Blueberry?
All Blueberry accounts have a stop-out level of 50%. This means that your trade(s) will be stopped out when an account’s margin percentage reaches 50%.
Any open trades will be automatically closed in order of magnitude until the account’s margin level returns to over 50%.
Please keep in mind that it is always your responsibility to monitor your own positions. Blueberry cannot guarantee the fulfilment of stop-losses.