There are several inconvenient and touchy terms in the realm of Forex trading. We all know them but we try not to think of them or use them. “Margin call” and “stop out” are among those terms – once we encounter them, we are in trouble. Unless, of course, a Forex broker does something that pushes away the perspective of a trader hitting that stop-out level or getting that margin call.
Well, ForexTime Ltd (FXTM), the retail FX brokerage with registrations in Cyprus and the UK, is about to introduce changes in the trading conditions for ECN accounts that will render the chances of reaching a stop-out level smaller.
The broker has announced that from May 18, 2015, the stop-out levels on ECN accounts will be reduced from current levels of 60% to a new level of 50%.
This means that once your Account Equity = required margin * 50%, the broker will start closing automatically all of your open positions. Previously, the multiplier was 60%, so the amount of equity one had to have to maintain trading was larger. Due to the reduction of the stop-out level, traders will have a bigger room to trade and a bigger amount of equity to risk.
As the broker puts it, traders will have:
- The ability to sustain a higher drawdown while not being stopped-out;
- The opportunity to maintain open orders with greater volume;
- Increased chances to recover from an unfavorable position.
To view the official announcement on the trading conditions changes, click here.