Automatic stop loss and Margin call

He automatic loss cut system is utilized as the safety net where the position is forced to cut automatically when the revaluation losses are cumulated to a certain extent. It would be executed when the balance of margin account, which is the asset value with deducting the revaluation losses, becomes to fall short of the margin requirement given by each forex broker. This practice is broadly seen in the OTC market, especially in the forex market.

Unlike the forex market, the margin call system is adopted to the exchange traded markets, like commodity futures. The broker claims to investors for the additional payment for the compensation of the current revaluation losses in order to maintain the present position outstanding. For example, if the revaluation losses exceed 50% of the margin requirement, the investors have to fill the deficit within some days the broker would call on, otherwise, his position would be made clear at the market price compulsorily.

The forex market is moving during 24 hours without rest. In addition, there is no price band limit to be set in the forex market. The automatic loss cut system is called as the last resort for individual investors to protect from the unexpected market risks.