- Unlimited Leverage and 0% Stop Out Level
- What is Stop Out?
- Merit and Demerit of Low Stop Out Level
- Relationship of Stop Out and additional margin
- What happens if account balance becomes negative?
Unlimited Leverage and 0% Stop Out Level
Exness, an online Forex and CFD broker is growing its popularity all over the world.
There is a number of advantages to trade Forex and CFDs with Exness, and 2 of them are the:
- Unlimited Leverage
- 0% Stop Out Level
With the Unlimited Leverage, you can open positions of much greater amount than the available margin in your account.
Exness’s unlimited leverage increases the trading volume, thus helping you to not miss out any trading opportunities.
As a default setting, Exness’s trading account has the Stop Out Level at 0%.
This means that you can continue trading in your live trading account until there is zero available margin in your account.
Exness won’t liquidate your positions while your account is in the process of losing them, but will liquidate all positions when your account equity is literally zero.
Exness’s stop out level allows you to trade to the maximum limit.
What is Stop Out?
Stop Out plays an important role in Forex.
However, when the market changes suddenly, the Stop Out may not be in time, and there is a possibility that more than the margin deposit will occur.
Therefore, it is important to decide the FX company based on the Stop Out line that suits you.
For your information, you do not need to worry about losing more than the total account balance as Exness supports NBP (Negative Balance Protection).
In this article, we will explain a wide range from knowledge to know about Stop Out to comparison of FX companies.
Although it is an important system in FX, what many people do not fully understand is “Stop Out (Order Liquidation).”
Stop Out is forcing a Forex company to close a position in order to prevent more loss than the deposited margin.
Merit and Demerit of Low Stop Out Level
Stop Out standards are loose in the FX market, but what are the advantages and disadvantages of that?
Especially with Exness that the stop out level is at 0%, there are certain merits and demerits of the condition.
Let’s think with some concrete numbers.
1. The merit of low Stop Out level
What are the benefits of having a low Stop Out level?
The advantage of the 0% Stop Out standard is that Stop Out are less likely to occur even if there is a momentary fluctuation in the market price.
It is a common price movement to move in a disadvantageous direction momentarily, to draw a V-shape of market price movement and return.
At this time, if the company has a higher Stop Out level, for example, it may be triggered at the bottom of the V shape and all positions are closed forcefully.
If your account reaches Stop Out at the bottom and then come back in a V-shape right after that, you’ll be disappointed that you wouldn’t have lost unless the Stop Out level was that high.
If you are using a company with low Stop Out level, this is a loss that has not occurred.
In a nutshell, being less susceptible to sudden short-term market changes is a benefit of the low Stop Out criteria.
In case of Exness, the stop out level is 0% for all account types.
For the list and comparison of all account types of Exness, visit the page here.
2. The demerit of low Stop Out level
On the other hand, the disadvantage of the low Stop Out level is that “the amount of money left after Stop Out will be small.”
Following the previous example, although the market price was V-shaped, it may continue to drop.
At this time, if the company with 100% margin maintenance rate is Stop Out, certain account balance will remain in the account.
If the company has a margin cut rate of 0% as the Stop Out level, the amount remaining after the Stop Out is zero.
If the Stop Out standard is low, the loss amount that is fixed when the loss is cut becomes large.
With such a condition, the amount remaining is zero, so it’s more like gambling than asset management.
And again, with Exness, your maximum loss is limited to the total account balance due to their NBP system.
Relationship of Stop Out and additional margin
Forex companies have a “margin call” system before a stop out is triggered.
Margin call is basically a request saying “please add additional margin”.
When the margin maintenance rate decreases and the Stop Out level approaches, you will receive a margin call by e-mail or on the platform.
You can deposit additional margin money to avoid Stop Out, or you can close some positions to maintain higher margin level.
Such FX accounts may be forced to close positions if you do not deposit additional margin by the specified deadline.
So it is important to confirm what kind of system your FX account is using when you open an account.
In any case, the position is in danger when the margin call arrives, so it is best to rebuild your strategy without losing your eyes on reality.
If you are not certain about trading Forex in a real market, you can always open a demo account with virtual money for practice.
What happens if account balance becomes negative?
As explained at the very beginning, the purpose of Stop Out is to prevent the loss of more than the deposited margin.
However, the exchange market sometimes goes beyond imagination.
The weekend’s news may start the exchange rate on Monday morning with a large deviation from the closing price of the previous week, and the “Switzerland Shock” in 2015 made trading impossible.
If the exchange rate warps like the Swiss shock or the opening of the window at the beginning of the week, you may lose more than your margin when your account reaches a Stop Out level.
It’s not something that happens often, but it is by no means a “impossible story.”
Keep it in mind as an inevitable risk in FX.
But with Exness, you can be assured that you won’t lose more than the deposited amount, and you do not need to cover the exceeded losses by adding more margin.
For the list of all fund deposit and withdrawal methods available with Exness, visit the page here.