Margin call and loss cut

Margin call and loss cut to prepare for sudden market fluctuations

Margin call and loss cut to prepare for sudden market fluctuations
The biggest appeal of FX trading is that you can operate hundreds of times as much funds as you can by using “leverage” on cash on hand (margin). Therefore, if the market moves in an unintended direction, a large loss will occur.
In FX – MATE, in order to prevent the principal from expanding loss, when the margin balance outvaluation loss expands and the margin maintenance rate falls below a certain percentage, we will notify you to notify margin reduction . This is called “margin call”.
Also, when the loss amount further increases beyond a certain percentage, the target position (position) is automatically reverse traded (settlement). This is called “Loss cut”.

Margin call · Loss cut occurrence margin maintenance rate(*)

The margin call · loss cut is caused by the maintenance rate of the customer’s margin. In FX – MATE, the margin call of the standard / pro account occurs when the margin maintenance rate is 120% or less, and the activation of the loss cut becomes 100% or less of the margin maintenance rate.

“Margin maintenance ratio” indicates the ratio of net assets to the margin requirement margin.
“Margin maintenance rate (%)” = “effective margin” ÷ “required margin” × 100

Ross cut rule

When the margin maintenance rate becomes 100% or less, the loss cut (forced settlement) is executed in order from the position with the big evaluation loss among the open positions held by the customer.

Open position Trade date Valuation loss Order in which Rosscat is executed
Position A November 1 xx hours xx minutes -10,000 2
Position B November 2 x x hours x x minutes -50,000 1
Position C November 3 x x hours x x minutes -2,000 3
Depending on the market conditions, the order of settlement contracts may change.

On the order of loss cut due to decrease in liquidity

Since we enforce all transactions through “Liquidity Providers” (a network of financial institutions such as international investment banks and securities companies, which are commonly known as interbanks and are recognized worldwide) If liquidity declines markedly due to factors such as national holidays, economic trends, trading time zones, etc., Rosscat may not be carried out in order.