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Margin Call – Every Trader’s Nightmare

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Margin Call – Every Trader's Nightmare

Getting a margin call is dreaded by many futures traders. It’s like adding salt to your injury; not only you are losing money, but you must add more money to your trading account, or risk your position getting cut by your futures broker.

So what to do when you get a margin call from your broker? Here are 3 things you should do:

3 things you should do when you get that dreaded margin call

Keep your emotions in check

1. Keep your emotions in check

It can be very frustrating when you get a margin call. It can also be a bad experience especially if you are just starting to trade futures. But it does not mean you are a terrible trader and should quit trading. Take a deep breath and clear your head. It’s time to figure out the reasons that lead you to a margin call.

2. Figure out why do you get a margin call

Sit down, grab a piece of paper and jot down the things you have done that might get you a margin call. Did you hold too many positions? Did you neglect to set stop losses? Maybe you used too much leverage, or maybe the market was against you. Whatever the reasons, take them as lessons learned and resolve to avoid repeating the same blunders in the future.

Track your trading journey

3. Track your trading journey

Much like keeping track of your life journey through blogs and diaries, you should be doing so with your futures trading. It is important to have some sort of a record of what you have done during your trading so you could examine and look at each trade as an opportunity to learn and grow. You can do this with a trading journal. It can be as simple as writing down your details in a book, on a Word document, or to have more formatting in an Excel sheet. You could review your trading decisions and assess whether you are doing it right or wrong. If you find any mistakes, you can avoid them when you trade next.

Conclusion

Getting a margin call does not mean you should stop trading. You are not the first and definitely will not be the last trader to get a margin call. In fact, most futures traders have had the experience of receiving a margin call. Don’t view a margin call as a mistake. Turn your hindsight into insight, move on, adjust your course and continue in the direction of improvement.

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Wan Zuraiha Wan Zakaria is a staff writer at Oriental Pacific Futures (OPF) where she writes on investment and trading. OPF is a futures and options broker based in Kuala Lumpur, Malaysia and provides electronic trading, brokerage and clearing services to retail and institutional traders since 2007. OPF is licensed under the Securities Commissions of Malaysia and offers cash-settled derivatives instruments traded on Bursa Malaysia, as well as select major derivatives exchanges around the world.

Oriental Pacific Futures articles published on the Corporate Website (www.opf.com.my) may be reprinted, reposted or distributed free for educational purposes only on the condition that Oriental Pacific Futures and the Corporate Website link information http://www.opf.com.my are included. However, other organizations are invited to link to articles that are available in the public area of the Oriental Pacific Futures’ Learning Resources website. No additional permission is needed for such a link.

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