You are a new trader starting on ICMarkets. You don’t know what Stop out ICMarkets is? You don’t know what Margin called ICMarkets is? In this article. Learn Forex Trading will help traders answer the above problems. To help people trade more easily on ICMarkets.
What is stopping ICMarkets?
Stop out is an important concept in the ICMarkets trading exchange. Regarding the protection of traders’ accounts. Helps traders avoid excessive risk. When the market moves in the opposite direction from the trader’s prediction.
This is an automatic action of ICMarkets. When the Margin level (ratio between Equity and Margin) of the trading account drops to a certain level. The exchange will close the trader’s open trading orders. Start from the order with the largest loss, to avoid the trader’s account going negative.
Instructions for calculating Stop out on ICMarkets
The way to calculate ICMarkets Stop out depends on the type of trading platform you use. According to the official website of ICMarkets, the stop-out level is 50%. Available for all account types on the MetaTrader 4, MetaTrader 5, and cTrader platforms. This means when your Margin level drops below 50%. ICMarkets will automatically close your trading orders.
Parameters in Stop out of ICMarkets
To calculate Stop out ICMarkets, ICMarkets client needs to know the following parameters:
- Balance: This is the amount of money currently in your account. Includes unrealized profits and losses.
- Leverage: Is the ratio between the actual amount you invest. Compared to the maximum amount you can trade.
- Usage: Is the amount locked to maintain your open trades? It is calculated by multiplying the trading volume by the pip value and dividing by the leverage.
- Equity: Is the actual amount of money you have in your account. After deducting unrealized losses. It is calculated by subtracting the balance for unrealized losses.
- Degree of freedom: This is the percentage between equity and utilization. It is calculated by dividing equity by utilization and multiplying by 100.
For example:
If you have an account with the following attributes:
- Balance: 500 USD
- Leverage: 1:500
- Stop out level: 50%
- Equity: 500 USD
If you open the following two trades:
- BUY – 200,000 – USD/JPY
- BUY – 50,000 – USD/JPY
Both trades have the same entry price. Your account will immediately be 100% free. Once the freedom level reaches 100%, you cannot open additional trades that require additional freedom. When the price of USD/JPY drops by 10 Pips. The free level will become 50% and the stop-out feature will be activated.
See more: ICMarkets Demo: Trade live on the test platform
How to calculate Stop out ICMarkets
- Pip value of 250,000 USD/JPY = ¥2,500 (÷101.33 = $24.67)
- 10.2 [Pips] x $24.67 [Pip Value] = $251.63
- Equity ($500 – $251.63 [Unrealized loss] = $248.37) ÷ $500 [Usage] = 0.497 (x 100 = 49.7%)
When Stop Out is activated. CTrader will need to do something to restore account freedom. Make it higher than the stop out level. CTrader will close the largest portion of the trade. To release only the necessary amount of freedom and no more. With the minor exception of rounding to the nearest 1,000 units.
In this case, the transaction of 200,000 USD/JPY will be adjusted to 198,000 USD/JPY. By selling 2,000 USD/JPY. Closing 2,000 USD/JPY with a loss of 10.2 Pips would cause a loss of $2.01. Despite the loss, it reduces the amount of freedom needed to maintain the trade to $4. Below you’ll see how this event affects the account. The same calculations are used:
- Balance = $497.99
- $0.19736 [Pip Value of 2,000 USD/JPY] x 10.2 [Loss in Pips] = $2.01
- Usage of 248,000 USD/JPY = $496
- Unrealized loss = $249.64
¥1,000 [Pip Value of 100,000 USD/JPY] x 2.48 [Volume of Open Trades] = ¥2,480 x 10.2 [Loss in Pips] = ¥25,296 (÷101.33 [USD/JPY Exchange Rate] = $249.64)
- Equity = $248.35
- $497.99 [Balance] – $249.64 [Unrealized Loss] = 248.35
- Degree of freedom = 50.07%
- 248.35 [Equity] ÷ 496 [Usage] = 0.507 x 100 = 50.07%
Now the account freedom has been increased to 50.07%. Just enough to be above the ICMarkets Stop level with minimal impact to the trading account
Consequences of Stop Out ICMarkets
This is a feature that protects your account. When your level of freedom drops below a certain threshold. When this happens, the trading platform automatically closes the most losing trades. To restore your level of freedom. The consequences of Stopping out are an important issue. Which you need to know when trading with this broker.
What is ICMarkets margin call?
Margin call ICMarkets is a warning that the ICMarkets trading platform sends to you. When your account is reduced to a certain level. Because the market moves in the opposite direction to your prediction. When you receive a Margin call, you need to do one of two things:
- ICMarkets login: Add money to your account to maintain open trading orders.
- Close part or all of open trading orders to minimize risks.
If you don’t do either of the above. The exchange will automatically close your trading orders. When your account drops to the Stop out level. Stop out level is the lowest Equity level compared to the Margin that the exchange allows. According to the official website of ICMarkets. ICMarkets out level is 50% for all account types.
When does Margin call ICMarkets appear?
Margin call ICMarkets appears when you open a new trading order. At that time, you need to have a certain amount of money in your account. To ensure that you can withstand market fluctuations. This amount is called Required Margin or Used Margin.
Each exchange has different Margin call and Stop levels. But usually it’s 100% and 50%. For ICMarkets, there are many cases where Margin call ICMarkets and Stop out ICMarkets take place at the same time. When the level drops below 100% of the minimum level to trade. The position closed without any warning information.
See more: ICMarkets register on your phone is the fastest
How to limit risks from ICMarkets Stop out
To limit risks from ICMarkets Stop out. You should apply effective risk management strategies, as follows:
Use leverage appropriately
Leverage is an effective trading tool. Helps you trade with larger amounts of money. Compared to the actual amount of money you have in your account. However, leverage also increases risk when the market fluctuates.
Place Stop loss and Take profit orders
A Stop-loss order is an order that helps you exit a trading order. When the market goes against your predictions. To minimize losses. Take profit order is an order that helps you gain profit. When the market moves in your favor, to preserve profits
Manage position size
Position size is the amount of money you use to open a trade. You should determine the position size to match the capital and leverage. Or your acceptable risk level. A general rule is not to use more than 2% of your capital on a single trade.
Portfolio allocation
Is dividing your capital into different asset types. For example stocks, currencies, commodities, precious metals, indices… By the way. You can minimize the risk from the volatility of a particular asset class. Thereby taking advantage of opportunities from other asset types
Conclude
Through the article above. Learn Forex Trading has provided useful information about ICMarkets. Like what is Stop Out ICMarkets? How to calculate? And things to limit to avoid risks on ICMarkets. Hopefully, you have enough information to grasp the market. Wishing you success in trading on ICMarkets!
3 FAQs:
Stop out ICMarkets is a situation where the trading platform automatically closes your trading orders. When your Margin level drops below a certain level. To avoid your account going negative. This is a protection measure for investors. When the market fluctuates strongly and can cause large losses.
Here are three frequently asked questions:
What is the stop-out price of ICMarkets?
ICMarkets Stop out on MetaTrader 4 /MetaTrader 5 and cTrader platforms is 50%. This means if your Margin level drops to or below 50%. Then your orders will be automatically closed
Is ICMarkets Stop out level different from other exchanges?
Each exchange has different Stop-out levels. Depending on their policies and trading conditions. Of course, ICMarkets stop-out level will also have certain differences. You should carefully check information about ICMarkets Stop out level before choosing an exchange to trade
How to Avoid Stopping ICMarkets?
You should apply effective risk management strategies. Like using leverage appropriately, and placing Stop loss, and Take profit orders. Or manage position size and portfolio allocation. You should also regularly monitor market fluctuations. Always adjust your orders in a favorable direction.
