How to protect yourself from the margin call
Everyone has heard of the term margin call. This is nothing but closing your trades to protect your trading capital. The margin greatly depends on the type of broker you are trading with. If you trade with a low-end broker, you can even blow up the trading account getting a margin call. On the other hand, if you trade with a high-end broker, you are going to get a margin call when the free margin falls below their required amount to keep a trade open. Today, we are going to give you some amazing tips that will keep your funds safe from the margin call.
Table of Contents
Trade with low risk
You should always trade the market with low risk so that you don’t have to lose a large amount of capital. In each trade, never risk more than 2% of your account balance. By doing so, you can easily reduce the risk to a great extent. Some traders often risk more than 2% in each trade. Thus, when they lose trade, they become frustrated and try to recover the loss by using an aggressive trading strategy. But the use of aggressive strategy is another common reason for getting a margin call. You should always use a safe approach in trading so that you don’t have to lose a big portion of your trading capital. Before you place any trade, make sure you are not taking more than 4% risk in any trade. By doing so, you can ensure the safety of your investment.
Trade with candlestick pattern
Trading with the candlestick pattern is called a price action trading system. With the help of this system, you can execute quality trades without risking too much because the stop loss will be placed based on the tail of the candlestick, you won’t have to risk a big amount of money to increase the lot size. However, you should use a professional trading platform like SaxoTraderPro to ensure the quality of your trade setups. Find more info about the market condition so that you don’t have face trouble when dealing with the complex candlestick pattern. Be safe with your trading approach and stick to your goals.
Stop trading the major reversal
Trying to trade the major reversal always results in a frequent loss. The highly-trained traders never trade the market based on reversal signals since they know it can result in frequent loss. Try to find the trend in the higher period and execute the orders with discipline. By doing so, you can eliminate the high-risk factors in trading. When you trade the market with low risk, chances of blowing up the trading account or getting a margin call is almost nil. So, learn about the safe approach to keep your fund safe.
Be a disciplined trader
You can’t afford to break the rules at trading because if you do so, you are going to lose most of the time. When you lose too many trades, you will eventually get a margin call at trading. So, how can you protect your trading capital and keep your fund safe? To keep your fund safe, you have to learn about discipline. Open a trading journal so that you can keep a record of each trade. Forget the fact that you are trading the market with a leverage account. Just like the traditional investors at Saxo, focus on the quality of your trades. If you can make quality executions in each trade, you won’t have to think about big losses.
Being a trader you should never think about margin call. Remember, a margin call occurs only to protect your capital from hitting the negative balance. You should be more careful about the safety of your investment from the start of your career. Never use insane leverage as it boosts the chances of making a big mistake.