Monday, June 22, 2009

There's absolutely no need to receive margin calls, ever!

Time and again I hear folks getting margin calls. This usually happens to new traders, although there could be exceptions as well :-)

The reasons are plenty, but probably the most common would be due to NOT using stop loss, or incorrect way to use it.

Almost all brokers allow traders to enter stop loss order, so why not use it?

Again, this comes down to proper use of money management.

If proper money management is used, it's almost impossible to get margin calls.

That being the case, why do we still hear descent folks blowing their accounts in this manner?

Not treating trading as a business could probably be one of the reasons. When you treat it like a business, you would have a trading plan as well, just like having a business plan.

The other would be not giving FOREX trading the respect that it deserves (you know, treating it like a "hobby".....).

This is a TOUGH business with a HIGH failure rate, so due diligence is required.

Just like in any other business.

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