The Root Causes of Frequent Margin Calls for Forex Beginners

Liquidators generally have the following common characteristics. How to overcome these problems is a question worth pondering for every Forex trader:

One of the common points: contrarian trading and heavy position trading.

Heavy position trading is the main reason for liquidation. Using a large proportion of leverage to make heavy moves has low risk resistance. Always want quick success and get rich overnight. The way to avoid it is to store small amounts in a light book and keep the water flowing smoothly. Therefore, I always advocate only placing 0.1 lots for 1, 000 US dollars, 0.2 lots for 2, 000 US dollars, and so on.

Some people may think that the position is too light and the money is made too slowly. In fact, the essence of making money in trading is to make money with compound interest, not with explosive profits. The mantra that you need to remind yourself at all times is: use small amounts in small positions and follow the trend; accumulate small amounts to make more. Because when you make money, it’s not when you have small funds. Once your funds reach more than 5, 000 US dollars, you withdraw the cost. At that time, my mentality suddenly became enlightened and I made profits very quickly.

The second thing in common is: stubborn resistance and unwillingness to admit mistakes.

Once you go in the wrong direction, you will not make a decisive decision, and a strong man will be cut off. Instead, he stared at the market with red eyes and resisted until the position was blown up and all his "life" was involved, and he had to be forced to close the position. He would not look back until he hit the south wall. Little do we know that we came to this market to make money, not to stand upright and save the beautiful.

No one can live with money. If your position is exhausted, you will have no capital to recover, so you must first learn to survive with capital preservation, and then consider how to make money. Generally, if you find that you are wrong, you will be out immediately if you lose 30 points. If you make two wrong orders that day, shut down your computer and leave! Don’t get too hung-up and think about recovering your losses.

The third common point: the hand is tied at any time, and there is no stop loss.

In addition to the word "calling orders" in everyone's communication, the most talked about is stop loss, but many people still lost their positions because they did not stop loss. Once a position is opened, without setting a stop loss and waiting cautiously, it is like tying yourself to a car that has no braking system and is about to overturn at any time, hoping that the price will move in the direction of the position you opened. However, speculation is not gambling. Luck and luck cannot always be with you. If you want to make stable profits, you still have to rely on your own true strength. The market has its own operating rules, which are not dependent on anyone's will. Therefore, the bad trading habit of fluke psychology must be eradicated early in your trading behavior, otherwise there will be endless troubles.

Some people are worried about what to do if the price goes back after hitting the stop loss? It is easy to do, just 8 words: "Never regret it, knock it down and start over." To never regret is to warn yourself that breaking the stop loss is normal and is a "cost" that must be paid in the trading process, because our speculation concept is not to pursue the winning rate one-sidedly. It is abnormal not to hit the stop loss all the time. Only a god can do it. To start over again is to tell yourself that since the stop loss has been hit, it means there is a problem with the entry point and stop loss position. You must carefully find out the crux of the problem, summarize it in time, and deal with it calmly to facilitate another fight.

The stop loss position must be combined with your own position adjustment, and at the same time, it must be combined with your own operating cycle. If you are doing a mid-line operation, the stop loss should be slightly larger, usually around 120 points. For short-term operations, the average stop loss level is about 40 points. The invested funds should be divided into 3 parts, one for opening a trial order, and two for adding funds midway.

In the specific operation process, a small amount of funds should be used, and short-term attacks should be carried out appropriately, and do not cover everything up to the end. It is necessary to combine technical stop loss and financial stop loss. The stop loss of funds generally does not exceed 5% of the total funds as the stop loss level. Once the loss exceeds the warning line of more than 5%, no matter what, you will be out immediately.