hi folks,
i have a question about margin calls. the explanation here does not match with mine 
OANDA gives you a margin closeout (or call) when you’ve lost 50% of your used margin:
1.000 Euro equity, 50:1 --> i go long with 50.000 units EUR/USD @ 1.5000
EUR/USD drops to 1.48515 and i lose 500 Euro.
for me, this doesn’t correspond with the explanation on babypips.
can somebody please explain it to me?
many thanks!
btw- why is it 1.48515 and not 1.4850 (=1%)?
Whenever your trade ran your used margin of 50 units down to 25, your trade would close.
And to lose 500E on a 50 unit trade, would need a 2,500 pip move. Not your 148.5 pip move
Oanda’s “units” are dollars. A 50 unit trade is a $50 margin, and on the EUR/USD would equate to about twenty cents a pip. $0.20 * 148.5 pips negative in your hypothetical trade would result in a +/-$29.00 loss.
oh i’m sorry… it’s not 50.000, it is 50,000 :21:
Use good money management and that calculation will be unnecesary.
Just remember, a margin call is mor about the broker protecting themselves, not you. If you ever receive a margin call, there is something fundamentally wrong with how your money management is set up.
Unless you run a martingale system, which will one day bleed you dry. I like my %risk based on account balance method. Very stable, cannot go too wrong if I totally screw up a setup, and account destruction/margin calls will not happen
That’s not correct. As with all brokers, Oanda’s units are in the base currency, so 50 EUR/USD would be 50 euros, roughly $62 at recent exchange rates. If you have a dollar denominated account your margin requirement will be based on the latter number.
ok, assuming i have a EUR account, would my explanation of a margin call be correct?
it’s not about trading, it’s about fundamentals i need for a paper…
Actually, to be technically correct, Oanda does a forced liquidation at the 50% cut-off. They do a margin call notification before that if your equity stays below a certain level (I forget what it is off-hand) for a given period, but that isn’t the automatic close-out seen at 50%.
But, you are correct on the automatic close out. With a 1000 euro starting balance, you’d be closed out after losing 500 euros. And your math looks to be correct. Just realize that how many pips will produce a 500 euro loss will vary with the EUR/USD exchange rate.
This I knew… That’s what I get for a quick post on an iPhone doing math in my head.
So I was double wrong, because the OP was using 50k units…
Some days you’re the dog, some days you’re the hydrant:D
Thanks!
thx for your reply!
but this is not the same definition of a margin call than here: Forex Margin Call Explained - BabyPips.com
is it?
is it? :51: