Getting your positions closed is often associated with a strong negative feeling of disappointment. When it happens to traders, they are likely to withdraw their funds and stop trading.
As a rule, discouraged and disappointed traders with low self-esteem usually withdraw money feeling inadequate, and are very likely to stop trading (at least in the near future). In comparison, angry and disappointed traders with high self-esteem usually withdraw their money putting all the blame on the application or platform (someone or something closed my positions just when everything was about to go my way).
Driven by strong negative emotions, traders in both scenarios fail to find out what they are really capable of. Using this experience to your advantage is the best option.
How? Any failure is a valuable lesson. Getting margin closeout only indicates that you’ve paid insufficient attention to risk management.
Here are some recommendations:
Give yourself time to calm down and don’t rush into emotional decisions
Realise and accept that trading is always associated with risks. Use stop orders to limit your losses
Focus on risk management, not only on earning profits
Figure out what triggers a margin call and a margin closeout
Find out the margin requirements of your broker
- Familiarise yourself with the concepts of hedging and diversification
Margin closeout may be triggered due to a very sharp decline of the market, sector or economy as a whole. During a crisis, margin closeout is a safety measure to protect from an uncontrolled loss of capital.