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As a retail forex trader,  what  are you actually trading? New forex traders might be puzzled about how it’s possible to trade currencies they don’t physically own. They’re also often confused about how it’s possible to sell something before buying it. Let’s revisit a part of the  earlier story  about Batman and Spider-Man: Oh really? Let’s make a bet then. What kind of bet? How will it work? If GBP/USD goes up, I’ll pay YOU the difference between its price right now and whatever the price is when you decide to close the bet. But if GBP/USD goes down, you’ll pay ME the difference. Payouts will be in cash. Also, you can close the bet whenever you want. What do you say? Let’s do it! I’ll take that bet. The conversation above should give you a hint. If you’re not familiar with the story above, this means you haven’t read our earlier lesson on  How Forex Brokers (Kinda) Work   starring Batman and Spider-Man. It’s highly recommended that you read this lesson first. When you “ buy EUR/USD “,

  Trading on margin   is a way for traders with limited capital to make significant profits (or losses). If you fail to understand the concept of margin or not knowing what to do when faced with a margin call from your broker, you will definitely experience the shock of your trading account blow up. Here are five ways to avoid a margin call. 1. Know WTF a margin call is. Understanding what margin call is and how it works is the first step in knowing how to avoid one. Most new traders want to focus on other details of trading such as technical indicators or chart patterns, but little thought is given to the other important elements such as  margin requirements ,  equity ,  used margin ,  free margin , and margin  levels . If you’re hit with a margin call out of the blue, this usually means you have no clue what causes a margin call and are opening trades without considering margin requirements. If this is you, you are doomed to fail as a trader. Guaranteed. A margin call occurs when you