[FXGT] Advantages and disadvantages of zero cut

FXGT

Crypto GT uses a zero cut system. This system has great advantages for traders. Therefore, Crypto GT can be said to be a virtual currency exchange that can be operated from a trader’s perspective. Summary of zero cut.

What is zero cut?

A zero cut means a large unrealized loss due to sudden market fluctuations, and in some cases, the account balance may become negative. In this case, if the zero cut system is adopted, the negative amount will be compensated by the FX company or the virtual currency exchange and will be 0. In other words, traders will no longer have the risk of going negative and incurring debt. In other words, it can be said that it is a very useful system for traders.

FXGT adopt zero cut

Since FXGT uses a zero cut system, there is no risk of becoming a debt even if a sudden change in the market price occurs as described above and it becomes negative, so you can rest assured.

Cases in which a negative balance occurs

So the question is, how does a negative balance occur in the first place? It doesn’t happen that often, so I think a lot of people are concerned about it. Below is an example of this.

sudden market fluctuations

In recent years, there has been considerable anxiety around the world, and the risk of war has increased, and the situation is dangerous. For example, when there is a political change or a shocking interest rate policy announcement, the market changes suddenly at a frightening pace. When such cases occur, there are many cases where forced loss cuts are delayed. If the chart fluctuates greatly in an instant during the few seconds until the loss cut is processed, the loss cut will not be in time and the account balance will be negative.

too many lots

If you put in too many lots even though your funds are very small, the forced loss cut will be triggered at the timing when the chart fluctuates greatly in an instant, but it will fluctuate in a few seconds as shown above. If the loss cut is not made in time, the account balance will be negative.

Will negative balances occur?

Negative balances do happen. According to a tally by the Japan Financial Futures Trading Association, there have been thousands of such incidents in Japan alone. In this way, no matter how much automation has progressed in society, it will not be able to keep up with rapid changes.

Year
発生年
Minos balance
マイナス残高件数
Apple Shock20196,389
China Shock20154,820
Swiss franc shock20151,137

Source : 金融先物取引業協会

Is Zero Cut Advantageous for Brokers?

Looking at the zero cut system, it looks like an advantage for the trader.

sense of security

The fact that the zero cut system is adopted means that there is no debt. As a result, brokers can attract more traders. And it will also result in a dramatic increase in the number of users who actively trade, which will be profitable.

litigation risk

If the zero cut system is not adopted, if there are many users who have a negative balance and cannot make money, they will have to file lawsuits one by one. By adopting the zero cut system, there is an advantage that such wasteful work can be cut.

Conditions for triggering zero cut

The last thing you should know is that the zero cut is triggered only when the account balance becomes negative and the bonus is gone. Since there is a cushion function, the zero cut will not be activated unless you lose all the bonuses. The bonus can only be used for trading and cannot be withdrawn, but it is also a great service that allows you to increase your trading funds.

margin call

First, a margin call will be activated before the zero cut. Margin call is an alert function that notifies traders that unrealized losses on their positions are increasing. Margin call will be activated at 70% margin maintenance rate for ECN,Crypto Max,PRO accounts and 50% margin maintenance rate for other accounts. You must either write down your current position or make an additional deposit.

Margin Call
Standard50%
Mini50%
Crypto Max70%
ECN70%
PRO70%

loss cut

When a stop-loss cut is activated, positions with unrealized losses will be liquidated, and the loss will be fixed. For ECN,Crypto Max,PRO accounts, the margin maintenance rate is 40%, and for other accounts, the margin maintenance rate is 20%, which is the loss cut. If you do not take some action at the time of a margin call, a stop-loss cut will be triggered.

Loss Cut
Standard20%
Mini20%
Crypto Max40%
ECN40%
PRO40%

zero cut

The last thing to be activated is the zero cut. If the margin maintenance rate falls below 0%, the zero cut system will be activated. When the zero cut system is activated, FXGT will bear the loss of the account balance that becomes negative, so traders will not have to chase debts. FXGT is a broker where you can safely trade with high leverage.

Precautions for zero cut

Zero cuts have only advantages for traders, but there are also caveats, so please be careful of the following points.

Transactions that exploit zero cuts

If you make a transaction that exploits the zero cut, you may be subject to a penalty. In that case, please be aware that you may run the risk of having your account frozen.

Bonus disappears

When a zero cut is adopted, the bonus disappears. FXGT has a cushion function, but when a zero cut is adopted, it means that all the principal and bonus disappear. If you would like to keep your bonus, please add margin when a margin call occurs to avoid a loss cut or zero cut.

Loss cut in descending order of loss amount

In FXGT, losses are cut in descending order of loss amount. Therefore, the deeper the damage is in a position, the sooner it is better to cut the loss manually.

If you touch the prohibited items, you will not receive a zero cut.

As explained in the article above, please be careful as if you violate any prohibited items, you may not be eligible for a zero cut. If a prohibited item is discovered, not only will you not get a zero cut, but you may not be able to trade again.

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