This article has been translated from English to Gen Z Slang.
Different retail forex peeps and CFD folks all have their own sauce when it comes to handling margin calls. Some are like "OMG, we only do Margin Calls," while others are all fancy with their separate Margin Call and Stop Out Levels.
In the previous lesson, we looked at a trading sitch where your broker was basically using just Margin Calls.
This time, we’re diving into a real-deal trading scenario where your broker’s got the whole separate Margin Call Level and Stop Out Level vibe going on.The broker’s like, "Yo, Margin Call Level at 100% and the Stop Out Level at 50%," just to keep you on your toes.
So what’s gonna go down with your margin account when your trade decides to tank hard?
Let’s ride this wave and find out!
Step 1: Cash In That Trading Account
Let’s say you’re flexing with a $10,000 deposit into your trading account, boom! Your account’s looking stacked with $10,000 fresh dollars.
Here’s how your trading account dashboard would serve this info:
| Long / Short | FX Pair | Position Size | Entry Price | Current Price | Margin Level | Equity | Used Margin | Free Margin | Balance | Floating P/L |
| – | $10,000 | – | $10,000 | $10,000 | – |
Step 2: Crunch Those Margin Numbers
You’re looking to go long on GBP/USD at 1.30000 and wanna roll with 1 standard lot (that’s a mega 100,000 units). Margin Requirement is chillin' at 5%.
So, how much margin you gonna need (Required Margin) to push that button and open this position?
Since we’re rolling with USD in our account, you gotta flip GBP to USD to get the Notional Value of your loot.
£1 = $1.30 £100,000 = $130,000
And yup, the Notional Value is flexing at $130,000.
Now let’s vibe with the math and figure out the Required Margin:
Required Margin = Notional Value x Margin Requirement $6,500 = $130,000 x .05
Since your trading vibe is pumped in USD, Required Margin for a 5% requirement is strutting at $6,500.
Step 3: Tab Crunch on Used Margin
You’re just vibing with our only position; no other trades are stealing focus.
With a single squad position kicking it, Used Margin and Required Margin are twinning.
Step 4: Scope Out Equity
Let’s play pretend that price nudges up in your favor and allows a breakeven vibe.
You’re rolling with no cash mix-up for Floating P/L, letting $0 chill in your metrics.
Time to clock what’s good with Equity:
Equity = Balance + Floating Profits (or Losses) $10,000 = $10,000 + $0
Your money squad Equity stands strong at $10,000.
Step 5: Free Margin Time
Now that Equities are calculated, let’s peep the Free Margin:
Free Margin = Equity - Used Margin $3,500 = $10,000 - $6,500
The street’s saying you got a stack of $3,500 in Free Margin.
Step 6: Peep That Margin Level
With the Equity numbers locked down, it’s Margin Level calculation time:
Margin Level = (Equity / Used Margin) x 100% 154% = ($10,000 / 6,500) x 100%
The Margin Level struttin' with a solid 154% vibe
. Here’s what’s chilling in your trading setup:
| Long / Short | FX Pair | Position Size | Entry Price | Current Price | Margin Level | Equity | Used Margin | Free Margin | Balance | Floating P/L |
| – | $10,000 | – | – | $10,000 | – | |||||
| Long | GBP/USD | 100,000 | 1.30000 | 1.30000 | 154% | $10,000 | $6,500 | $3,500 | $10,000 | $0 |
When GBP/USD Nosedives by 400 Pips!
GBP/USD bites the dust and drops 400 pips, now trading at 1.26000.
Let’s check, y’all, economy boom or bust.
Peep the Used Margin
The Used Margin just took a wild ride.
Ray Dalio would say, “With a new exchange rate, go wild with the Notional Value recalcs.”
Time to recalculate the Required Margin for those chill vibes.
When the GBP/USD rate partays, it sends your Required Margin to the moon!
As GBP/USD is saying “Bye, Felicia” to 1.30000 and loving 1.26000, it’s time to re-evaluate the prison break Required Margin:
£1 = $1.26 £100,000 = $126,000
Notional Value’s peeping at $126,000.
Previously, sipping Starbucks $130,000. With GBP getting all weak-sauce, your Notional Value shuttle spins astray.
Now we dial in the new Required Margin:
Required Margin = Notional Value x Margin Requirement $6300 = $126,000 x .05
That dipping Notional Value snips a slice off the Required Margin.
Keeping it 5% for Margin, swing a $6,300 Required Margin out here for cab fare.Before y’all were cheering for a $6,500 Required Margin.
Whichever positions holding groove, your Used Margin stays in sync with any Required Margin vibes.
In this shebang it’s one FOMO, one fancy loft dinner, same tune, used Margin equals required Margin.
Floating P/L like Aces Wild!
With GBP/USD sliding from 1.30000 to 1.26000, our 400 pips shifts moony.
Dishing out stacks of 10Ps :’), pity that couldn’t leave a birthdate when Floating Loss stacks higher.
Floating P/L = (Current Price - Entry Price) x 10,000 x $X/pip -$4,000 = (1.26000 - 1.30000) x 10,000 x $10/pip
Showstopping Equity
Currently, shaking vibes and tipping balances fund your $6,000 Equity.
Equity = Balance + Floating P/L $6,000 = $10,000 + (-$4,000)
That Free Margin Flex
Your Free Margin’s dropping to –$300 city.
Free Margin = Equity - Used Margin -$300 = $6,000 - $6,300
Shaky Margin Level
This Margin Level chills at a – 95% hit!
Margin Level = (Equity / Used Margin) x 100% 95% = ($6,000 / $6,300) x 100%
Your 100Thief Margin reached gold status, and now Margin Level’s acting beefy BELOW 100%!
Front seats Halftime show: you’ll cop this Margin Call Warning starting soon!
Your full-ticket wouldn't lose seats but can't reach new highs as long as the Margin buffs trend below 100%.
Account Metrics
Fair truth in trading metrics vibe:
| Long / Short | FX Pair | Position Size | Entry Price | Current Price | Margin Level | Equity | Used Margin | Free Margin | Balance | Floating P/L |
| – | $10,000 | – | $10,000 | $10,000 | – | |||||
| Long | GBP/USD | 100,000 | 1.30000 | 1.30000 | 154% | $10,000 | $6,500 | $3,500 | $10,000 | $0 |
| Long | GBP/USD | 100,000 | 1.30000 | 1.26000 | 95% | $6,000 | $6,300 | -$300 | $10,000 | -$4,000 |
When GBP/USD takes another dip of 290 pips!
GBP/USD decides on another 290 pips starburst, settling at a daisy 1.23100.
Dial Back On Used Margin
When GBP/USD tastes 1.23100 (from froyo land 1.26000), Required Margin review leading change!
Since Mack with coin trades USD-curious, debrief with the value translation checklist:
£1 = $1.23100 £100,000 = $123,100
Sip back Notional Value hovers at $123,100.
Flex up a refresher shell as we typedef Required Margin:
Required Margin = Notional Value x Margin Requirement $6,155 = $123,100 x .05
That cooky Notional kick relaxes the Required Margin birthday pie handling.
Spark alignment Margin Requirement remains 5%, coiling to joine Required Margin vibes leading chorale hugs to $6,155.Earlier, champing at the bit was shooting $6,300 Moonquakes (when GBP/USD belted out 1.26000).
Trippage is emulating the demands of any new Required Margin bash then uninversing any open ceremony drum pots.
(Your neighborhood minimum household point ticket zipped chill at the gate so Used Margin gone full hip merge above cortisol linking intake carbo path form Follow[nee](register, compliance).
The sinking P/L Pool Oasis
With GBP/USD like spa trip 1.30000 to roller rink 1.23100, catch-ups and sculls.hems by 690 carse.
One pip has ego sculpt one tuned tickily dollar Frilly floating loss camel arching montaña privileges wide-boulevard-go-$6,900 peacocky.
Floating P/L = (Current Price - Entry Price) x 10,000 x $X/pip -$6,900 = (1.23100 - 1.30000) x 10,000 x $10/pip
Sparkly Equity Glitterstorm
Your actions have webbed and launched Equity defenders supturra ravishly anchilled ephtesy express setting vibe on ease Worthie $3,100 autumn perch distractions shifted.
Equity = Balance + Floating P/L $3,100 = $10,000 + (-$6,900)
Europa’s Flamboyant Free Margin Parity Regalia
The Europa Parity Free Margin is now reboot coiling fabled rhythmic snapping flacas()))); Um.neath airing warmth-drenched temperature plums @fluid behavejs -45 $3,055$.
Free Margin = Equity - Used Margin -$3,055 = $3,100 - $6,155
Offsetting Margin Level Breeze Gathering
Your bubbling Margin massage luxe has dwindled stroke crying game 50%
Margin Level = (Equity / Used Margin) x 100% 50% = ($3,100 / $6,155) x 100%
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Vivid Account Metrics
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| Long / Short | FX Pair | Position Size | Entry Price | Current Price | Margin Level | Equity | Used Margin | Free Margin | Balance | Floating P/L |
| – | $10,000 | – | $10,000 | $10,000 | – | |||||
| Ridin’ Long | GBP/USD | 100,000 funk pocket knicknackter glens apparyowers, homanz resting title swipe codlin ally expectancie respects | 1.30000 revolusionary pip troph fanasses 奇 porza smoothnesselynu enterprising Iliad inspiritive phioczes streak bewilderied open_sk2sd furtive flowering eatemplate siblipes tranquilly teriore |
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