This article explains the stop loss level, lot trading, and margin of the overseas FX broker, HFM (HotForex). HF Markets sets a certain stop loss line. Just because you have an unrealized loss, it doesn’t mean you can keep it that way forever. When it reaches a certain line, it will also trigger a forced stop loss. What is the margin maintenance rate, which is the stop loss level?
Loss cut and margin call
The stop loss and margin calls are as follows, and vary depending on the account type. Only micro accounts have different settings, and all other accounts are the same. Both percentages are low, so stop loss is not easy. In other words, high-risk trades are also possible. The spreads are narrower than others, so this is a recommended company. Details of the services and tools can be confirmed from the home page in advance. Be sure to check the maximum pips, etc. Effective support is also available, and advice can be received in a timely manner in the fluctuating market.
| Loss Cut | Margin Call | |
| Micro Account | 10% | 40% |
| Others | 20% | 50% |
Please see below for account types.
What is loss cut?
This refers to the forced settlement of held positions to prevent further losses when losses exceed a certain level in a transaction. This is regardless of the trader’s wishes, as the position is forcibly settled once a certain level is reached, and there is nothing that can be done. However, it can also be considered a safety measure, as it is better than forcing yourself to hold onto a position and going bankrupt. Settlements are made at a pre-determined level to prevent losses from expanding. This system and function is currently provided, and there are swaps for currency pairs, CFDs, and other products, so you can rest assured even if you end up in the negative.
What is margin call?
A margin call is when a loss occurs and the margin maintenance rate falls below a certain level, the Forex company requests additional margin or closes the position. Even if you ignore a margin call, you will not be penalized, but if a margin call is occurring, it means that there is a high possibility of a loss cut, so this also has the implication of warning traders. Traders are forced to either invest additional funds or cut losses.
What is zero cut?
HFM adopts a zero cut. Zero cut means that if your account balance becomes negative at some point, the FX broker will compensate you and make it zero. This system is adopted by HFM, which means that traders do not pursue debt. Even if you look at the platform screen and see that the market is negative, the broker will cover it. This is not standard if you are licensed as a domestic financial institution in Japan. This is the reason why HFM is not registered with the Japanese Financial Services Agency.
order
The margin call occurs first in the order. A margin call is a warning that a stop-out is coming. At this point, traders will not be forced to liquidate, but they will need to consider whether to take a loss cut or survive. The next thing to be activated is a stop-loss cut. A stop-out is a forced settlement, and the trade will be settled without regard to the trader’s intention. And the last thing that is adopted is zero cut. In the unlikely event that the account balance becomes negative, a zero cut will be activated.
Compare the loss cut line with other companies
You can see that the stop loss line is relatively low for HF markets. If you keep the basic risk management standards in mind, you can trade quite freely. It is convenient even if there is a sudden fluctuation in one entry. Be sure to prepare margin.
| Loss Cut (%) | |
| HF Markets | 10%〜20% |
| FBS | 20％ |
| AXIORY | 20％ |
| XM | 20% |
| Land-FX | 30％ |
| TradeView | 100% |
high risk trade
A low loss cut enables high-risk trading. However, if the loss cut is low, there are more opportunities to reverse and aim for profit, but the balance will be less when the loss is cut. The higher the loss cut level, the less chance of reversal, but the more margin left when the loss is cut. In other words, there are advantages and disadvantages by saying that there is no correct answer.
High risk trading is for advanced users
High-risk trading can result in a loss of principal if done poorly. Since the discretion goes to the trader, the degree of freedom increases, but a certain amount of experience is required for high-risk trading. High risk trading can be said to be advanced trading, so it is not very suitable for beginner traders. Because the money will run out quickly.
High loss cut
If the loss cut line is high, it will be easier for loss cuts, but on the other hand, the balance will not decrease at once. You will not have to worry about clothes damage for a long time, so you can feel safer mentally. A high loss cut comes with many restrictions, but it can be said that it is very suitable for beginner traders whose trading is not stable yet. There is an advantage that you can protect the minimum amount of funds when the loss is cut.
Countermeasures to prevent loss cuts
In the first place, it is important to sell measures in advance to prevent loss cuts. Please take the following measures.
stop loss setting
First of all, before talking about loss cuts, get into the habit of placing a stop loss every time you place an order. Of course, the take profit is the same. A stop loss can be placed at the stop price setting. When the loss becomes large, it will automatically close the position and cut the loss.
Review of the number of trading lots
You should try to reduce the risk of loss cut, so first review the number of trading lots. It is said that 1% to 2% of the total principal is appropriate for the price of one loss cut. Try adjusting the number of lots so that it can be done at that level.
low leverage
If you want to reduce the risk of loss cut, lower the leverage. The lower the leverage, the higher the margin requirements and the more difficult it is to trade large lots with a small amount of capital.
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