What is the difference between a Stop Out and a Zero Cut (Negative Balance Protection)?

Trading Condition

What is the difference between a Stop Out and a Zero Cut (Negative Balance Protection)?

Negative Balance Protection

This article was :

Published in 2024.06.26

Updated in 2025.05.07

Stop Out and Zero Cut (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%.

Zero Cut (Negative Balance Protection)

Zero Cut (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.

Additionally, an explanation regarding losses is provided in the FAQ below, so please refer to it as well.

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Knowledge

At FXON, a margin call is triggered when margin maintenance falls below 50% before a Stop Out is triggered.

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