Protecting trader’s equity: How Exness reduces stop outs
By Paul Reid
01 August 2023
Market volatility that follows major fundamental reports and unexpected news can create brief but massive spikes or crashes. With a well-funded trading account, you might be able to weather those storms, even with a certain amount of fear. But if you keep your trading equity tight, it’s possible those extreme price actions could zero out your account in a matter of minutes.
This sad occurrence is called a stop out. It happens because brokers don’t want traders to fall into debt, so when a client’s losses exceed the available account funds, trading activities grind to a halt. Returning to their trading platform, only to find a zero balance, is a painful experience for traders.
Even worse, imagine buying gold at $1950 (USD) in the morning, then returning to your trading platform in the evening to celebrate the news that gold crossed the $2000 mark. Except that your order was closed and your account balance dropped to zero - all because of a brief crash to $1930 in the afternoon that triggered a stop out.
Every long-standing trader has at least one horror story like that. But Exness decided some time ago to protect clients from such negative market moves, by devising a mechanism that would give them immunity from those spikes and crashes without affecting profitability. What it came up with was the Exness Stop Out Protection feature.
Let’s explore how Stop Out Protection works and how you can delay - and sometimes completely avoid - stop outs with Exness.
A virtual buffer for traders
To give traders a chance of weathering stormy price action and survive long enough to see a reversal, Exness created a virtual buffer that activates whenever a price rapidly moves in the wrong direction and threatens a stop out.
The virtual buffer is a nominated amount of virtual funds, temporarily added to the trader’s available margin. That amount is dynamic and depends on the spread and number of lots traded. Here’s how it’s calculated.
How Stop Out Protection is calculated
The virtual funds are always equal to half the spread, multiplied by the volume in lots. The virtual funds act as a buffer keeping the order alive for longer, giving time for a possible price reversal to occur.
Let’s say you buy 10 lots of XAUUSD and the market falls dramatically, shortly after. The spread for 10 lots of XAUUSD is $200, so as your trading account hits zero, your account is boosted with 50% of the spread, which is $100 in virtual funds. Because of this virtual buffer, your account won’t stop out at zero, remaining active instead.
If XAUUSD rebounds, your account no longer needs the virtual funds and it’s business as usual - as if nothing happened. If XAUUSD doesn’t recover, stop out will be triggered when your equity falls to minus $100: but that $100 loss is absorbed by Exness.
Even if the spread widens, common during volatility, an Exness trader won't immediately stop out because the wider the spread, the more virtual funds they’re given to maintain that safety net.
The bottom line
You might be thinking, what’s the catch? Well, there isn’t one. The Exness Stop Out Protection feature is not a premium offering that requires special account conditions. It is available to every Exness client, no matter their trading budget. Stop Out Protection is always active, like a silent guard, protecting Exness traders from extreme volatility. So much so, that most of the time traders won’t even realize they’ve actually avoided a stop out.
The feature has saved countless clients from a very bad trading day, and that’s just one of many ways in which Exness puts its customers first. This unique benefit is embedded in Exness’ founding principles. From its beginnings 15 years ago, Exness wanted to give traders a secure and balanced way to access markets, while eliminating friction and common pain points that have existed in the industry for decades. These principles are stronger than ever, setting new benchmarks for the trading industry.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.
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