Exness - a new paradise for grids and martingale
The other day, Exness has published news about a change in trading conditions for Cent, Mini and Classic accounts. The news is about a change in the Stop Out level, which is now equated to 0%. The Stop Out level, as you know, works as a protective stop loss and is calculated based on the size of the used margin. That is, at a Stop Out level of 20%, all positions will be closed when the funds in the account drop below 20% of the pledge amount (the loss will exceed the balance sheet minus 20% of the pledge).
What does this mean for trading risky advisors trading on the principle of martingale and a grid of orders? More likely to survive a drawdown / lingering trend.
But isn’t a zero stop-out an ordinary advertising temptation with a bunch of conditions in small print? We studied the issue, tested everything in practice and issued a verdict.
How Stop Out Works
For example, with a balance of $ 5,000, of which $ 500 is used as collateral, all positions will be closed upon reaching a loss of $ 4,900, despite the fact that funds in the amount of $ 100 remained on the account. This limitation is especially noticeable with a large load of the deposit and the use of Forex strategies that generate large drawdowns. In addition, some brokers can set the Stop Out at 50% and 100%, which dramatically affects the entire trading process.
First of all, Stop Out is an insurance for a broker, some protective buffer, which in case of which will prevent you from losing more funds than you have in your account. Zero Stop Out means that the trader can spend absolutely all the funds that he has deposited into the account, without fear of early closure of positions. That is, the loss will increase to the last cent on the account, after which the positions will still be closed by Stop Out.
Who needs it
On the one hand, Stop Out can work as a protective measure, preventing the trader from completely losing the entire deposit to the last penny. In some cases, this may be justified, but at the same time, this is another limiting measure in risk management, because you constantly need to worry about the level not falling below the permissible level.
The highest relevance to the zero level is given by strategies that generate large drawdowns. An account with a zero level of Stop Out is ideal for net players and strategies using the Martingale method, allowing them to use all the deposit options. For risky strategies, every extra cent can be decisive, and additional measures like Stop Outs only interfere here.
It can also be convenient for hedging and arbitrage strategies, since, again, you get more flexibility in risk management. You decide when to close positions, and when to use the full deposit. In any case, it is in the broker's interests to have a non-zero Stop Out, because, otherwise, he will lose funds in case of untimely closing of positions. Therefore, first of all, we will check how this function works in practice.
Testing in practice
So, for verification, open a cent account with a deposit of 300 cents. The task is to merge the score to zero and thereby verify the veracity of the information from the press release.
To do this, open a position in 3 lots with three orders, taking into account a leverage of 1: 1000 and a maximum lot per trade equal to 1. The margin in this case is more than half the deposit, and given the large leverage, the price will not go through and 10 points before the opportunity deposit will be exhausted. The video below shows how the level goes into the red zone and with the next sharp movement, all positions are closed.
The account initially had 307.84 cents. After closing all positions, the total loss amounted to 312.7 cents. That is, we were at 5 cents in the red.
The important point is that no matter how fast the system of automatic closing of positions works, at a low stop-out level there is always the possibility of closing positions at a loss. This happens with a rapid flow of quotes, when the position does not have time to close at the right price and slippage occurs, that is, falling onto the price gap. In this case, after the closing of all transactions, the broker may demand compensation from you.
So what does Exness tell us about this? In a press release, the company claims that it is not worth worrying about a negative balance, as in any case the amount will be compensated, and the balance value will be reduced to zero.
Actually, this is how it happens. Somewhere five minutes after the closing of all positions, the balance was reset, and a corresponding message appeared in the journal and history about the arrival of 5.16 cents of compensation.
The same thing in the history of the account, we see the arrival of 5 missing cents.
In fact, Exness is now one of the best solutions for high-risk strategies. A large leverage and a zero level of Stop Out allow extremely flexible risk settings and give freedom of decision when to close positions and when to play “to the full”. An important point is that the broker guarantees the restoration of the balance to zero in case of loss of the amount exceeding the initial deposit. That is, no matter how bad the market conditions are, you can always count on exactly the amount that you credited to the account.