Losing more money than originally invested ???

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How can i lose more money than originally invested if the broker sets a certain amount of margin requirement ?

For example , if i am trading with 100 $ and the broker sets a fixed margin of 10 $ , that means that i have 90 $ of free margin to trade with and if i lost all of them , then this means i should be left with 10 $, right ? 

Which means that whenever the broker sets a certain margin , my balance can never go negative , am i correct ? 

 
fawzysalah: How can i lose more money than originally invested if the broker sets a certain amount of margin requirement ? For example , if i am trading with 100 $ and the broker sets a fixed margin of 10 $ , that means that i have 90 $ of free margin to trade with and if i lost all of them , then this means i should be left with 10 $, right ? Which means that whenever the broker sets a certain margin , my balance can never go negative , am i correct ? 

No! Your loss/risk/exposure is regarding your order volume in lots and the stop-loss size or the final exit price if slippage occurred and it closed out further away. Your loss is not based on the margin.

Leverage and margin are something else that should also be taken into consideration when calculating your volume in lots but it does not define your loss (or profit) once the trade is closed.

However, most brokers to prevent you from losing more than your balance by issuing margin calls or stop-outs.

 
Margin requirement means you must have that amount of money in your account to open a position and that is all.
 

Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin and leverage. No SL means you have infinite risk (on leveraged symbols). Never risk more than a small percentage of your trading funds, certainly less than 2% per trade, 6% total.

  1. You place the stop where it needs to be — where the reason for the trade is no longer valid. E.g. trading a support bounce, the stop goes below the support.

  2. AccountBalance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the spread, and DeltaPerLot is usually around $10/PIP but it takes account of the exchange rates of the pair vs. your account currency.)

  3. Do NOT use TickValue by itself - DeltaPerLot and verify that MODE_TICKVALUE is returning a value in your deposit currency, as promised by the documentation, or whether it is returning a value in the instrument's base currency.
              MODE_TICKVALUE is not reliable on non-fx instruments with many brokers - MQL4 programming forum (2017)
              Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum (2018)
              Lot value calculation off by a factor of 100 - MQL5 programming forum (2019)

  4. You must normalize lots properly and check against min and max.

  5. You must also check FreeMargin to avoid stop out

  6. For MT5, see 'Money Fixed Risk' - MQL5 Code Base (2017)

Most pairs are worth about $10 per PIP. A $5 risk with a (very small) 5 PIP SL is $5/$10/5 or 0.1 Lots maximum.

 
Fernando Carreiro #:

No! Your loss/risk/exposure is regarding your order volume in lots and the stop-loss size or the final exit price if slippage occurred and it closed out further away. Your loss is not based on the margin.

Leverage and margin are something else that should also be taken into consideration when calculating your volume in lots but it does not define your loss (or profit) once the trade is closed.

However, most brokers to prevent you from losing more than your balance by issuing margin calls or stop-outsThatT

The last sentence is what i meant , that the broker with margin call me out of all trades once i reach the 10 $ margin , so i would be left out with the 10$ and not a negative balance , right ? 

 
Alan Ray Northam #:
Margin requirement means you must have that amount of money in your account to open a position and that is all.
So if i kept losing from my free margin until i reached the margin requirement (in this example 10$) , i would be margin called out of all open trades and be left with only 10$ and not being able to open any other trades unless i recharge my acconut's balance  , right ? 
 
fawzysalah #: The last sentence is what i meant , that the broker with margin call me out of all trades once i reach the 10 $ margin , so i would be left out with the 10$ and not a negative balance , right ? 
fawzysalah #: So if i kept losing from my free margin until i reached the margin requirement (in this example 10$) , i would be margin called out of all open trades and be left with only 10$ and not being able to open any other trades unless i recharge my acconut's balance  , right ? 

You misunderstand! You get a call-out, or stop-out because your loss (stop-loss) eats away at your equity and consequently at your "Free Margin" until it reaches a point where your margin requirements are exceeded.

That however, happens because you did not properly calculate your stop-loss risk and are working with a volume (lots) that is WAY higher than what your exposure should have been.

When traders base the trade volume only on margin, then they are trading recklessly, not accounting for proper risk exposure.

 
fawzysalah #:
So if i kept losing from my free margin until i reached the margin requirement (in this example 10$ ) , i would be margin called out of all open trades and be left with only 10$ and not being able to open any other trades unless i recharge my acconut's balance  , right ? 

No!  When your free margin goes to zero dollars your broker may close out any or all open positions.  You should contact your broker to find out what their rules are.  With my broker when my free margin goes to zero my broker will close out my open positions if my free margin is at zero for two trading days.

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