Understanding Margin Rules in Leveraged Trading
Leveraged trading is an investment strategy that gives the trader the ability to control large positions using a smaller amount of capital. This strategy allows for increased returns but also carries more risk. It is important to note that in leveraged trading, it is the responsibility of the trader to actively manage any open positions, and be mindful of the required margin level to maintain those positions at all times. Understanding the margin rules of your trading account is crucial for the successful management of risk in leveraged tradings.
Margin Rules for Evaluations and Simulated Funded Demo Accounts:
If your margin level hits 110%, you will get a Margin Call and you will not be able to open any new trades. A Margin Call is often used as an alert for the trader that additional funds are needed in the trading account to continue with the current open positions.
In the event that your margin level falls below 100%, a Stop Out will occur. A Stop Out is the automated feature that closes the least profitable positions on your Virtual trading account, liquidating the virtual simulated losing trades to prevent further simulated virtual losses.
In order to maintain and manage your margin levels, it may be necessary to reduce the margin you're using by reducing the lot sizing of your positions. It is strongly recommended that traders use proper risk management and utilize stop losses to avoid Margin Calls on the account. Your available margin is calculated based on your current demo account balance.
We hope that this article has been informative and has provided you with a better understanding of leverage trading and the margin rules of your demo trading account.
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