Hello,
I am new to Forex and only started working my way through babypips but I've a question which I can't seem to get an answer to.
According to ibfx (not sure if url link is permissible here), margin level is defined as:
margin level = current equity in the account current quantity of margin in use
I've heard that brokers will make margin calls if margin levels are at 50 percent, sometimes 80%. I do not understand why this is the case.
I would think that so long as the equity in the account is equal to or greater than the sum necessary to start the place which the trade could be sustained.
I can observe a margin call if a fluctuation of a single pip would bring the equity under this amount but I don't see how a 50% margin affects this.
If someone could provide some case numbers maybe it might help clear this one up for me.
Thanks,
Fortexwindo