Does anyone know how free margin actually work

Trading Discussion Risk Management Practices
1

Dear members,

Suppose i have 100 dollars, open position with 50 dollars,
now my free margin is 50 dollar and equity is 100, as equity goes down free margin also do same
I want this 50 dollar position to move in full jurisdiction ( with 100 leverage. stop loss and take profit 100 pips down and up)
position go against me now my equity is 80 dollars and free margin is 30.

  1. Can i open another 50 dollar position as my free margin is 30,
  2. if not this mean for position of 50 dollar , broker froze another 50 dollar from my account.
  3. if i open position with full amount of my account, free margin is zero now, will he go in negative when position go against me.
2

This explanation might help you:

Leverage, Margin, Balance, Equity, Free Margin, Margin Call And Stop Out Level In Forex Trading

3

Every trader knows these definitions, none of these explain my problems i written above, even the traders trading from months didn’t know them , they are just trading without complete study of forex.

4

Malikdon1: In your example in the original post, you have free margin of $30 now. You can open a new position using this $30 and that will reduce your free margin to $0. From this point on, it depends on your broker rules regarding Margin Call and Automatic Close Out of positions. Some brokers will give Margin Call when the Equity reaches 25% of used margin. Also the broker will automatically close out your position if your position loss reaches 100% of used margin to protect themselves.

Hope this helps.

5

All you asked for is described in my link.

Margin is used to open trades, as it is your leveraged money.
Therefore you can only use free margin to open new positions, that’s simple logic.

Equity is defined as balance plus pending profi / loss.
Free margin is your equity minus the margin allready in use.

And with these few logical definitions you should know: no, you can’t open another 50$-position with just 30$ of free margin.

7

Pasting in unaccredited paragraphs from Investopedia isn’t “foum posting”, James. It just has the potential to cause the forum’s owners copyright problems, and it really helps nobody. If you want to “look like an expert”, that [U]isn’t[/U] the way to go about it.