PROPREVO ACADEMY

Margin trading
in practice

Forex

Margin trading in practice

6 min readLesson 12

How margin works on your account, why it is not your risk, and how stop outs happen.

Margin is the collateral the platform sets aside while a position is open. It is not a fee and it is not your loss. It returns to your free margin the moment you close the trade.

Reading the account bar

At the top of the WebTrader you see:

  • Balance: closed results only.
  • Equity: balance plus floating results.
  • Margin: collateral locked by open positions.
  • Free margin: equity minus margin, what you can still use.
  • Margin level: equity ÷ margin × 100%.

Margin is not risk

Two traders each use $2,000 of margin. One has a 10-pip stop, the other has no stop at all. The first risks a few hundred dollars; the second could lose far more than the margin. Your stop loss and position size define your risk, not your margin.

When margin runs out

If equity falls so far that the margin level drops below 50%, the platform starts a stop out: it closes your largest losing position, rechecks, and continues until the level recovers. Stop outs are forced exits at the worst possible time.

On an evaluation account, the max daily loss and max loss limits will normally end the account before a stop out. Treat the stop out level as a last-resort safety net you should never see.

Practical habits

  • Keep total risk across open trades below your personal daily limit.
  • Do not open new positions just because free margin is available.
  • Check margin before adding to a losing trade; better still, do not add to losing trades.

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