Margin Trading

Leverage, a fundamental concept in trading and investment, has the potential to significantly amplify returns but also comes with inherent risks. This financial tool involves the strategic use of borrowed capital to enhance trading capacity, with the expectation of increased earnings during favorable market conditions. Brokers and exchanges commonly facilitate leverage, while traders may supplement it with funds from alternative sources. Distinguishing leverage from the margin is essential, as they are interconnected yet distinct concepts.

In a nutshell, a Stop Out is actually a trader's bankruptcy. It occurs when there is not enough capital in the account to maintain open trades, and the broker closes them forcibly. This unfortunate situation is caused not only by losing positions but primarily by inappropriate money management. Today we will analyze why and under what conditions Stop Out occurs, and most importantly, how to avoid this situation.

Competent control of risks and adherence to risk management in trading is the key to success for any trader. But, unfortunately, traders spend very little time on this issue, focusing on finding various profitable strategies and indicators.

Lack of equity is a common problem among investors trading in the financial market. This situation contributes to the difficulty of conducting operations with securities and other assets. The reason for this situation is most often quite modest income received from investments. That is why investors look for different variants, the most actual among which is a margin provided by brokerage companies as a guarantee when taking a credit. It has its own characteristics and a number of disadvantages, with which a trader should be acquainted before making up his mind.