# Margin calls and avoiding them



## bogan00 (15 May 2018)

Hope everyone is having a great night,.
I am starting to learn about forex but i know the difficulties with margin calls

With margin calls: say if i deposit $1000 and leverage 1:100
(i know it is a stupid thing to do)
So if i go ahead and buy 1 unit ($100,000). 
Thus my margin used would be 100,000/100=1000
so already in margin call i assume.

However if i add 4,000 of my own money prior to buying 1 unit- then my total equity would be 1000+4000=5000  thus avoiding a margin call whilst still being able to buy 100,000

is this allowed/this how it works?

(hypotethical question- of course im not going to go ahead do this ...maybe ha)


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## tech/a (16 May 2018)

Yes
Margin is there to protect the broker from your potential losses

Leveraged products leverage your risk
Make sure you understand it


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## trading@riat (24 July 2018)

tech/a said:


> Yes
> Margin is there to protect the broker from your potential losses
> 
> Leveraged products leverage your risk
> Make sure you understand it




Well said, margin calls are also made by broker to protect him from your potential losses.


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