Whenever a trader is about to open a position on a specific pair of trading instrument, a certain portion of capital will be set aside margin deposit in order to maintain the opened position while the rest of the capital will remain in the “Free Margin” area ready to be utilized by the trader for more trading positions to be opened. Traders can keep track of their Used Margin and Free Margin in their Accounts Windows of the MetaTrader 4 Platform.
As the topic of Margin continues, Margin Call or MC can be describes as an event where a trader faced severe losses in their trading that put them on the verge of entering a negative balance in his trading account. This is where MC will occur in order to prevent the trader’s account from turning into negative balance and thus preventing the trader from losing all his capital. This is a very important safety features which prevent trader from greater risks as they made their trading with large leverage in a greatly fluctuate environment.
In actual situation, Margin Call or MC is an embedded safety feature that prevents traders from losing more of their deposited. If an account’s equity or the total value of account falls below the margin requirement of approximately 30% of the Used Margin, the system would automatically close all positions until the situation is under control in order to protect the trader from entering a negative balance.