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Margin definition in forex

There are some people who are curious about what a margin definition in forex call is. Here, definition of what is margin call will be discussed briefly. A margin call occurs when a trading account does not have sufficient amount of money anymore to support the trades that are open.

The margin call situation is likely to happen if there are a large number of floating losses. The situation can be illustrated as follows. Each of the pips will be worth more or less 20 cents. From the above illustration, you can see the working system of a margin call.

The definition of what is margin call can also be explained like the following. Now the investors have to either raise the margin that they have posted or close their position. The investors can close out their position both by selling the securities, futures or options if they are long and by buying them back if they are short. However, if none of these is done, the broker can put their securities on the market to meet the margin call. Risk Warning: Trading CFDs is a high risk activity and you may lose more than your initial deposit. You should never invest money that you cannot afford to lose. Please be fully informed regarding the risks and costs associated with trading the financial markets.