How to not get Margin Called

Apr 18, 2023

Staying safe trading sensible sizes allows Traders to stay afloat and maintain consistency.

Using Broker accounts and funds as a means of entertainment isn't always a good idea because losing money really isn't fun, atleast for most people. But why do people lose all their money so frequently? What is it about their Trading style that leads this to happen so often? The answer is actually rather simple and straightforward. They don't look to the future for controlling their equity in what they can afford, rather instead looking for emotional and fun decisions with no logic.

Logical Trading allows you to maintain sensible sizes within your portfolio whilst maintaining sustainable risk. The second you add too much inside DCA or raise your trading size up you change the run of profitability and the distribution of profitable trades vs losers that you experience as you take more entries and exits. Disproportionate Risk within positions against the market risk at the time and your total exposure will only lead to losses.

So controlling your position size at any time and making it specific to any market situation, risk, exposure, or total drawdown gives you control over adding to your risk and stimulating emotions. Making this a set amount stops you from taking a leap that leads to a fall. Setting a certain size you will obey and not break as a rule will inherently stop you oversizing and trading too large at any time. Within GoldStreak Academy, we have set rules for every amount of equity at any time.

Similarly, adjusting your risk size based on drawdown or how risky markets are helps a lot. Risk naturally brings reward and that is what gets people going. The idea of a 10X return makes people so excited and with good reason. But, the risk is also likely to be considerably higher and that stops it being a long term process, which trading should be. The only way to make it a long term process is simply to have set rules that fit a long term process. Large risks and enormous returns do not fit this structure because of the swings in results in the data of your profit and loss.

So make a set size for any market situation or capital size. If any of it changes, change your maximum size or drawdown accordingly. Having no plan at all and guessing will only lead to a margin call as there is no logic or plan behind it. This can easily be done by taking your full equity and splitting it up per asset and in accordance with the drawdown running on other assets. Vary your risk as markets change and your exposure does to and you shouldn't have a problem.

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Will S