Land-FX (Land Prime) tends to focus on bonuses, spreads, and leverage in accounts, but there are zero cut and loss cut rules, so we will explain margin trading. If you do not know this, there is a risk that you will be cut off without knowing it, so it is better to know this. This article summarizes what the rules actually are.
- What is loss cut? What does it mean?
- What is margin call? What does it mean?
- Benefits of 0% loss cut level
- What is zero cut?
- Zero cut activation order
What is loss cut? What does it mean?
Stopout means forced liquidation. Loss cut will force a loss cut when the specified percentage is reached. The purpose of forced loss cutting is to prevent a loss of the entire amount by incurring further losses, but in the case of Land-FX, it is activated when the loss cut reaches 0, so when the loss cut is activated, it is effectively a loss of the entire amount. means. Be careful not to put too many lots in currency. It is recommended to hold a position and trade at 1% to 2% of the operating principal.
What is margin call? What does it mean?
A margin call is an alert that is notified when the margin maintenance rate becomes low and approaches a forced stop-out. It’s just a warning; nothing will happen immediately. However, when a trader receives this warning, they must decide whether to put in additional funds or cut their losses. If left unattended, loss cut will be activated.
How to calculate margin maintenance rate
We will introduce how to calculate the margin maintenance rate, which is the standard for the stop-loss level. Margin maintenance rate = Effective margin ÷ Required margin × 100. Effective margin is calculated by account balance + profit/loss. Required margin is the amount of margin required per trade. Please note that the unit calculation will change depending on the base currency, USD or JPY.
loss cut level
The margin maintenance rate that results in a loss cut or margin call is as follows. There are differences depending on the account type. It is also mentioned on the management page. This mechanism is similar to other companies and has also been introduced by xm, gemforex, titanfx, axiory, fxgt, threetrader, exness, etc.
Margin maintenance rate is a number that shows how much margin your current position has relative to your account balance. If this ratio falls below 30%, the ECN account will be cut off. If this falls below 0%, standard accounts and swap-free accounts will also be subject to forced loss cuts.
Benefits of 0% loss cut level
In the latest Land-FX, the loss cut level is set to 0%. This can be said to be an unusual application compared to other brokers. So what are the benefits? It is very convenient for trading where you want to make as much unrealized profit as possible from pips through system trading or scalping. It can withstand large price fluctuations to some extent. It is easier to generate profits even with high leverage trades on currency pairs.
Forced stop-loss cuts can be avoided
In most FX brokers, the loss cut level is set at 50% or so, but the fact that this is set to 0% increases the possibility of avoiding forced loss cuts. On the other hand, if a stop-out is triggered, it also means that you will lose the entire amount.
Maximum capital efficiency
Zero stop-loss level means that you can use all your funds for trading, giving you more freedom. On the other hand, it means that there are no restrictions as traders can make any kind of trade depending on their decisions. Those with experience can make the most of the service and create a large amount of assets even if the investment amount is small. There are also promotions, which is advantageous.
able to withstand unrealized losses
It is easy to understand that the loss cut level is zero, and it has the advantage of being able to withstand unrealized losses to the limit even if you enter. This means that you can trade while being patient depending on the method and situation, which means that the range of detailed strategies in the market expands. A very important point is that even if you use EA, you will not be forced to settle immediately (loss cut).
What is zero cut?
Land-FX uses zero cut. Zero cut is a system where if your account balance becomes negative at some point, the broker will compensate you for the negative amount. There is no margin call, meaning there is no risk of chasing debts, so traders can rest assured that there is no risk. This means you can trade with confidence. Zero cuts are expected in the following situations:
Especially important economic indicators can cause large price movements. In such cases, there may be cases where the loss cut is not made in time, which may result in a big disadvantage. At this time, zero cut will be activated.
The trading server may be down and the stop-loss cut may not work. At this time, there is a risk that you will have a big negative impact. The strength of the server is relatively strong, but if it goes down, there’s nothing you can do about it.
Zero cut activation order
Zero cut will not be activated suddenly. There is an order. Let’s take a look at the movement of platforms MT4 and MT5. As you place more orders, events will occur in the following order. If you use leverage of 200x or 500x, the risk will increase in both cases. Adjust the lot according to your current funds and trade.
The first thing to be triggered when unrealized losses increase is a margin call. A margin call is a warning, so I have never said anything about it, but it is a time when traders are forced to decide what to do.
The next thing to be activated is a stop loss cut. There is nothing the trader can do as a stop loss will result in a forced settlement. All you can do is wait for the payment to be made.
The activation condition for zero cut is after the loss cut is activated. The mechanism is that the zero cut is activated only when the loss becomes negative after the loss cut is activated.