FXON Trading Rules What is the difference between a stop out and a negative balance protection?

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Published in 2024.06.26

Updated in 2024.10.17

Stop-out and Negative balance protection are both measures to reduce traders' loss risk, but they differ in their roles, triggering criteria, and timing.

Stop-out

A stop-out is a system that forcibly liquidates open positions when the margin maintenance rate falls below a certain level to prevent further losses. It ensures that the trader's losses do not exceed a certain level. At FXON, the stop-out is triggered when the margin maintenance rate drops below 20%.

Negative balance protection

A negative balance protection is a system that resets the account balance to zero without requiring additional deposits from the customer, even if the account balance becomes negative due to rapid market movements that prevent timely stop-out execution. This system ensures that traders do not incur losses exceeding their deposited funds, allowing them to trade with confidence.

knowledge
Tip

At FXON, a margin call is triggered when margin maintenance falls below 50% before a stop-out is triggered.

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