Margin Terminology.

Here is more margin terminology.

Margin Call

DEFINITION:

A Margin Call occurs when you have breached the Margin Call Level but is still above the Stop Out Level.

A Margin Call is a WARNING.  It is telling you that your account isn’t doing too well.

And that your open positions are close to being liquidated at market price.

You are still allowed to keep your current positions open, but you can’t open new positions.

Stop Out

DEFINITION:

A Stop Out happens once the Stop Out Level is breached.

When a stop out happens, your open positions will be automatically closed (“liquidated”) to prevent a negative account balance.

A Trader’s Job

A trader’s job is to take losses. A losing trade doesn’t imply you did anything wrong.

The hard part about trading is that you can do the right thing and still lose money.

There is not a direct feedback loop that tells you, “good job.”

I only have control over the orders I place. I don’t have control over the outcome of trades.

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