What are “Stop Out” và “Loss Cutting”?
What is Stop Out?
Stop Out, is a mechanism that closes your open position automatically when your deposit falls below certain level.
Is a mechanism to prevent the increase of client’s loss, this mechanism is used by all Forex trading companies.
Stop Out rate of FOREX trading companies.
At “XM”, the favorite broker , the open position will be automatically closed when the equity is below 20%.
What is Loss Cutting?
Is to close a position (an instrument being traded) that is causing a loss and is forced to close itself.
The position is closed to prevent increased damage by self realizing the loss, such as “if loss is falling to negative ◯◯ $ then Loss Cutting is executed.”
In general investment not only in FOREX, where everything is going against the expectations, it is important to have Loss Cutting. If you keep the damage, just let it rise, only in a minute the money you have deposited into the account will return to 0.
In addition, you can place in advance “Loss Cutting at which level” from the trading tool.
In contrast to “Stop Out”, which is the automatic mechanism FOREX trading company forces to close, “Loss Cutting” is what you set yourself to prevent increasing loss.