Margin Level is a function to limit your losses from getting deeper, and this is very important in your risk management control role.

Margin Level can also function as your 2nd STOP LOSS.

The Margin Level formula can be calculated from “Equity” divided by “Used Margin” then multiplied by 100% (Equity / Margin x 100%)

A good margin level provided by a brokerage company must be a Margin Level of 100%, because there are some brokers that provide margin levels below 100% or even 0%, with the aim that if you lose money you can immediately run out.

Then How does this Margin Level function?

if your trading position experiences floating loss and your equity drops until it touches the same number or below your Used Margin (the margin used) or touches the 100% margin level indication or below, there will be a Stop Out or Margin Call in which all open trading positions You can be forced to close by the system so that you don’t experience any deeper losses, and the remaining money from the Used Margin will be returned to you (so you still have money left over that you can use to trade again).

In addition, the purpose of this margin level is also to protect you whether intentionally or unintentionally (because it is still common) but you use the full lot, then if you lose money, your funds will not be sold out.

With this correct margin level feature, traders are also encouraged to be aware and to be able to trade in a healthy manner with a reasonable lot volume in accordance with their equity capital capacity, and even if the position is open, the lot volume volume can be protected by stopping out at the 100% margin level at broker system.

because a lot of traders (especially those who are beginners) whose capital is always used up and can never profit properly, this is often caused because he opened a position with an oversized lot volume that is not healthy and eventually continues to run out.

Example of the Role of Margin Level Protection at 100%
For example leverage 1: 400 with a capital of 1000 USD, and you are trading with a volume of 3 regular lots in EUR / USD currency (when the running price is at 1.2) then the margin used is around 900, and if you are hit by a stopout at a margin level of 100% then all your open positions will be closed automatically and the loss of funds is only around 100 USD, while the remaining approximately 900 USD is returned to you.

Now compare if there is no 100% margin level, then if you lose, your capital will run out and become 0 without remainder.

So with a 100% margin level it is also a safety or a substitute for the second stop loss for protection so that your capital does not run out, and also encouraged to always use the appropriate and healthy volume lot.

In addition, with this 100% margin level feature you can use it as a different trading strategy application by utilizing the role of full lot, but not too risky, because there is margin level protection in order to reduce losses. It is like risking $ 100 but can generate profits that are many times more than that. (see the application example above so you have an idea)

NOTE: The broker stopout system will be active to close all your open trading positions if the margin level indicator touches at 100% or less, and you need to know that if there are too many open positions in your trading account, the broker system needs time to close one. one by force, so that the results of the numbers will not be possible to fit at 100%, but can be less or more.

You can see the% Margin Level when your trading account has an open floating position

One key to success in trading is located in your money management control, and margin level is one of the tools to control it, but if the margin level is made below 100% or even 0% then it will not be useful, and cause your capital can be depleted without remaining.

Leverage is also related to margin level.

If your broker’s margin level is 100% then leverage can function properly as protection, but if your broker’s margin level is 0% then this leverage will not work. Because leverage is basically the leverage to determine how big the risk is if a margin call or stopout occurs. And the higher the leverage, the risk of losing capital can also be even greater. Ideally leverage is in the range of 1: 50 or 1: 200 so that your trading can be with a healthy lot volume. Or if you want a little high risk, you can leverage 1: 400.

Only large and regulated brokers provide a 100% margin level. small brokers don’t provide that.

But don’t worry if you use a small broker for your trading, we hoteaforex provides a capable tool for your risk management.

Hopefully from our explanation above it can help you understand the true meaning of Margin Level and Leverage, because it is related to Risk Management that determines the success or failure of your trading.

Level 1: Baby (Enthusiastic Beginner)

At this stage, traders are usually in a period of enthusiasm for the first time to know forex. Usually traders at this stage is a new trader who knows forex, whether it’s from the internet, books, seminar workshops or from friends. In this stage, traders will assume that trading can bring tremendous profits and they will assume they can get rich quick from forex. All things about forex look so beautiful at this beginner stage. Things that often do not occur to the traders at this stage is a high risk factor of forex.

Many of the traders at this stage will start experimenting with trading. At that time, they will estimate price movements, in the absence of clear directions or rules of their trading, leading to speculation (gambling).

Some of the lucky ones will be able to make big profits in some trades. They start thinking that making money in forex is very easy. At that point, sometimes they will start doubling the position when entering the market and playing hajar while there is capital. Traders who suffer losses tend to double positions in hopes of turning back. But what happens is the greater the loss, until finally Margin Call.

And this can happen repeatedly and subconsciously can become habit and trading rules for a trader.

This stage will generally last for 1-6 months.

Level 2: Child (System and Indicator Finder)

At this stage, traders will begin to realize that forex trading is not as easy as they imagine. This is where they feel that their knowledge of forex is not enough. Next, they will start reading ebooks, websites, books as well as visiting forex forums. At this stage the trader will become a system hunter, indicator and robot. Traders will try to find holy grail (who do not know about the Holy Grail, read my article about Mental Holy Grail that makes forex trader can not succeed) and assume that which determines the success of a trader is because there is a magic system that can generate profits.

This is where traders begin to fill the full chart with various indicators and start to be familiar with terms like Moving Average, Support & Resistance, Fibonacci, Stochastic, MACD, RSI, etc. At this stage, traders will continue to move from one system to another while continuing to search for other trading systems. Traders will learn about how best rule to enter position based on indicator. Not infrequently you even buy some trading signal service from several websites. After dozens or hundreds of times trying different systems and nothing works, those who give up will say “Forex Trading is not for me”.

This stage is the stage that most spend a lot of money and time. This stage can last for 3 months to years. This level is the most important before you can go to the next level and there are only less than 30% who made it through this stage in the world of forex. If you are a stubborn person and feel you know everything, then you can never be a successful forex trader.

Level 3: Teen (Trader Starting Own Trading System)

At this stage, the trader already has trading rules and is consistent with his trading rules. Traders are starting to realize that there is no such thing as holy grail in forex. Therefore they begin to use rules that match their own psychology and trading style. Traders at this stage are also less likely to use indicators and re-use basic indicators such as moving averages on their trading systems. Most traders at this level also are not in a position based on emotion because they know they can not predict the market.

Those who are in this stage also no longer calculate the rate of return based on trades per tradenya, but calculate it in a period such as weekly or monthly. Here traders have started to realize that trading is about consistency and discipline. There are times when traders at this stage still like to impose a position even though it is not in accordance with the trading rules. Traders also like to watch charts for hours every day just to wait for floating plus or minus.

If you are already in this stage, you are close to the stage where you will be able to trade for living.

Level 4: Adult (A Successful Forex Trader and Trade for Living)

At this stage, traders will enter positions based on the system they use. They will do the cut loss as easy as they do take profit (really without emotion). The feeling of gaining 200 pips will be the same as when you get 10 pips. At this stage they also no longer enter a position that does not follow the trading rules. Traders here also do not see too many charts and only trade on certain hours only. They started to enjoy trade as a job.

Traders will begin to feel what’s going on in the market and know exactly what to do. At this stage, you will feel that trading is something that just ordinary even tend to be boring.

One of the main obstacles to the success of a forex trader is mental. If likened, forex that can be likened to a martial armed competition. The key to success in winning a battle in competition is of course not just relying on weapons, but also people who use them. Weapons as good as anything will be useless if the person using the less able to use the weapon. Similarly, forex. So far the forex beginner traders always have the same question: “What is the best and most consistent trading system?”, “How can I profit only with what indicator?”, “The best MA for H1 timeframe, H4 what is it?” , and various other questions about it. In this case it is clear that what the forex trader thinks is just that if they find a great system, then they must be successful in forex. This is what people often call the Mental Holy Grail. The Holy Grail is a term often referred to in the trading and investment community. For most traders, holy grail is a magical trading system that provides a formula or secret to generate profits with very little risk or no risk at all.

If you still think like that and you are really serious to wrestle forex as your main income, immediately throw away mental holy grail this. As I explained earlier, like in a martial fight, sometimes people who only use wood can win against people who use samurai weapons or other great weapons. There are even people who only have empty-handed hands can also be a winner. Inside forex, there are also some traders who chartnya naked (no indicators at all) and can consistently bring profit. So the bottom line here is success in the forex world depends on 80% of the trader itself and 20% is the forex trading system.

The book that explains very well on this is the Book of Peak Performance Forex Trading by Yeo Keong Hee.

For those who believe in the existence of holy grail will assume that market movement is predictable and we can take advantage of it. Although the forex market is not completely random, it will be very difficult to predict the movement of the market. If you still think that the market is really predictable, I suggest you stop trading forex right now and run other businesses as earnings. What I need to emphasize here is that although the market is not fully random, but the market is also unpredictable like science like physics and mathematics. In every market movement there is always a chance we will be wrong.

A good Trading System does not always consistently generate buy signals when prices are low and sell signals when prices are expensive. A good trading system is to meet the following elements:

– Recognize the possibility of entering a position with a large (uncertain) opportunity for profit.
– Have a good system to control the risk (a clear plan for loss if the price moves against the direction)
– The system helps the trader to be self disciplined and stick to the rules.

Mental Holy Grail has always haunted forex traders who believe that once they find a winning formula they will be able to consistently make money in the market. For me this will be a kind of endless renewal. In fact there is no such thing as a secret formula to be able to consistently generate profit in forex. Forex is not only about the system but also the psychology and knowledge of the trader itself.

One of the things that you must learn in forex trading is your attitude in receiving losses. Although this theory seems easy, but still the loss is something that is difficult to accept by both novice traders and experts.

For that we need to learn whose name is attitude to accept defeat. Our attitude in accepting defeat is very important for our trading success. Our mentality is one of the most important factors to be successful in this field. Forex trading is not a struggle to be the best trader, but successful to be able to profit consistently every end of the month.

To be successful in trading, we need to forge and galvanize our mental, emotional, mind, and self-discipline.

In his book Mr lee, there is a very important paragraph on page 19 which states that success in forex is not just for the profit you want to achieve, but also your attitude toward the trading results obtained, whether it is profit or risk loss.

Now think about it. Losing in a sport game or in game without any material loss is sometimes difficult to accept, especially when we lose in a game where there is money lost in it. Of course our emotions at that time will be jumbled and will greatly affect our trading. We need to realize that defeat is unavoidable in trading, however great our analysis, or our trading system. The thing that makes us not develop in forex is our attitude that disappointed at the time of loss and want to avoid loss as much as possible every time we put the position. This is what sometimes makes us often do sabotage in trading. I am personally quite long in this phase when learning to trade. I personally often sabotage when I get a little profit. What happened next turned out to be a bigger profit if I just let it. Vice versa, when I floating loss, I often hard to accept defeat, so I even let the loss becomes big.

For that galvanize mental and self-discipline this becomes one of the most important thing in trading. People often underestimate this, and always look for what system is best and can not loss (holygrail). Though that is not the most important in forex trading. To be able to have the right attitude when receiving this loss would take time and hours to fly. To train this, I personally use the way by trading using a real account. I always open an account with big funds (more than $ 1000) but only trading with 1 microlot (0.01). Trading with real money is different from trading using a demo account. Train your self-discipline until you no longer make decisions because of emotions in trading. If you still violate the rules of your system, install lots more than 0.01 lots, have revenge desire (with double positioning), or start positioning without analysis after just losing, that means you still need more practice and galvanize yourself, because you are not fully ready to jump in the forex market.

Another way that proves to be more effective to overcome this is to look for a semi automatic trading system where we do not have to be in front of the screen every time. Being in front of the screen at any time will usually make us psychologically affected and sabotage our trading.

Trading with not accompanied enough knowledge will generally only lead to long-term losses. Without knowledge, Forex trading can I say no different from gambling. It could be you who are lucky to get a profit at first. But in the long run, I guarantee you will lose. Therefore knowledge of the market is everything. If you are a beginner trader in Forex, do not rush to claim that your trading system is the greatest and so on. In my opinion, no trading system is really perfect. All trading systems must have their own weaknesses and advantages. Any forex trading system must sometimes do not fit applied in a certain period. Therefore it is very important for us for traders to recognize market movements in the market.

On this occasion I want to discuss about the type of Market movement. Knowing this type of market movement is vital in our trading journey. Trading system that we use usually only fits on one type of market movement only. Therefore it is very important to understand is in the current phase whether the market and whether it is appropriate if we apply strategies A, B, C, and so on.

I just got it. Broadly speaking, price movement on the market can be divided into 3, namely:

1. Trending
In this phase, the price will move up or move down continuously. These times are usually the most sought after by the swing traders. There are many strategies that can be applied to this treding market, one of which is MA intersection strategy, breakout strategy, etc. It is not advisable to use a trading system such as martiangle or oscillator based on the current market conditions are trending.

2. Neutral / Sideways
This neutral period in my opinion is more common in the market than the trending period. We tend to be in a market that moves only to that area alone. At the time of this condition, usually traders who use a trading system that is only suitable at the time of trending alone, will incur losses. But there are some trading systems that are powerful enough to be used at market time sideways. One of them is martiangle, a trading system that uses oscilator like stochastic, RSI and some scalping techniques.

3. Wild
This is a period in which the movement of the market is unpredictable. Movement when the market is wild is very large. Can reach 20-50 pips in just minutes. This usually happens because there is important news coming out, such as: Interest rate change, Fed Chairman talking again, Unemployement Claim data out, etc. Even if the fundamental effect is very strong, the price can even move to more than 100 pips in just 5 minutes. At this time, generally traders will avoid the market and not trade at all.