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MyMoney.my.id > Blog > Business > Stop Using Full Margin when Trading! Know the Dangers!
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Stop Using Full Margin when Trading! Know the Dangers!

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Last updated: 2022/12/16 at 6:56 AM
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Full margin in forex trading is using the lot size until the free margin runs out when making transactions. Simply put, full margin is an “all in” way of trading, aka risking everything on one occasion. This method is indeed more suitable as a method of gambling rather than being used as a method of doing business.

Full margin is absolutely not recommended when trading. Because the risk is clearly big and violates the rules of capital and risk management. While trading itself is a business and normally a business is run carefully so as not to go bankrupt and survive as long as possible.

Why Do Traders Use “Full Margin” when Trading?

Even though it has a big risk, full margin is an instant way to generate large amounts of profit. And unfortunately the majority of traders like that way. They like to earn big profits without much effort. Therefore, many traders do “full margin”. Even if they know that the risk that must be borne is to lose all trading capital.

On the other hand, psychological pressure can also trigger traders to do full margin. For example, when traders lose consecutively even after careful analysis, there must be great stress on the trader’s mentality. Especially if the trader is a beginner, who is just getting into the forex trading business. This situation can make traders desperate, frustrated or something else and finally choose to do full margin.

Full Margin Danger

The most visible danger from full margin action is the loss of capital, aka margin calls. Because using full margin makes capital resistance very low, so it’s very easy to experience a margin call.

However, apart from that there are other, bigger dangers, namely making full margin a habit when trading. This can happen when traders repeatedly do full margin. And when traders do it the umpteenth time, full margin is ingrained in the subconscious and turns into a habit.

As we know, habits are difficult to change. So, you can imagine if traders have a habit of doing full margin every time they trade. If you are lucky, the profits will be very large. But what if the trader is unlucky? Wouldn’t the trader lose more money, even than he previously earned?

Can Full Margin Trading Be Successful?

Why do you think the majority of forex traders fail? Because they do full margin. And only a few are lucky and manage to get big profits.

The problem is, are you lucky enough to be one of those people who succeed with full margin? or you even enter the line of people who fail, whose number is even greater.

Full margin sure is a bad habit. And it is highly not recommended to do it while trading. Not even a single professional trader advocates full margin. Except for people who have certain interests, for example the person works with a broker and gets a commission for making traders lose, influencing traders to do full margin so traders have the opportunity to call margins and so on.

Can a trader continue to be successful with a full margin or full lot trading style?

One of the attractions offered in online forex and stock trading activities is the existence of a margin facility that allows traders to carry out trading activities, both buying and selling activities, exceeding the limits on the capital or funds available and owned by traders.

This margin trading facility is a facility provided by a securities company or broker intended for its clients (traders) for the purpose of boosting performance, and multiplying the value or volume of trades so that the chances and opportunities for profit / profit will also increase the probability. However, behind the positive appeal offered through the provision of margin facilities, the risk of a trader experiencing loss and MC is also very large.

Regarding the question of whether you can be successful with a full margin trading style in forex trading activities, the most common answer based on my trading experience so far is no or if there are very few hits it has the potential to plunge a trader into the risk of failure, loss and loss of capital quickly and repeatedly whose impact can be psychologically disturbing is not having the confidence to be successful in making consistent profits in the world of forex trading.

The following are the reasons why it is difficult for a trader to be successful with a full margin trading style, including:

* Trends and trends in currency prices in the forex market always move dynamically with fast fluctuations and are difficult to predict even if you use a technical and fundamental analysis approach.
* Trading using full lots or full margin increases the risk of experiencing loss and MC is very fast.
* In trading with full margin, the probability of making a profit is less than the probability of being exposed to the risk of loss and loss of capital.
* The approach to trading with full margin is more towards aspects of speculation and contains elements of gambling and greed.
* Trading with the full margin method does not meet the requirements and criteria for good money management.
* Trading with full margin has an effect on our unstable psychology.
* The use of unmeasured lots will make margin trading less robust.

Conclusion

Let’s trade using good capital and risk management so that we can last a long time in this forex trading business. Although maybe the profit we get is not as big as people who do full margin. But if we can be consistent and disciplined for a long time we can also make profits like these people and even bigger.

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