Stop Loss Limitations and Maintenance Margin
Stop Loss limitations vary per instrument and may be subject to change according to market conditions. The reason we set a maximum Stop Loss limitation is to mitigate the possible risk to your capital in case of sharp movements in the market.
The maximum Stop Loss is 100% for trades on all commodities and indices, and most currencies (80% for trades on USD/RUB, USD/SGD,EUR/PLN, USD/HUF, EUR/HUF, GBP/HUF, CHF/HUF and USD/PLN; 50% for trades on USD/ZAR, USD/NOK, USD/SEK, NOK/SEK, EUR/NOK, EUR/SEK, USD/TRY, USD/MXN and ZAR/JPY).
The maximum Stop Loss is 75% for trades on most stocks (50% for trades on MOMO, TTWO and SNAP) and most ETFs (50% for trades on RWR, EWY, EWW, EWT, LQD and BOND).
You will have the option to increase your Stop Loss beyond the set limits once the trade is open. Should you wish to extend your Stop Loss, funds will be added to the trade from your balance as part of our 'Maintenance Margin' feature, which acts as an additional safety net for your trade. It is important to note that if you do not have sufficient funds in your balance, you will not be able to extend your Stop Loss.
How does the Maintenance Margin work?
Let's say you invest $100 in a stock trade with the Stop Loss set to the maximum allowable loss: 75% (meaning that the trade will close once the position reaches a loss of $75). If you wish to extend the Stop Loss to 100% once the trade is open, an additional $25 will be allocated from your balance to the invested amount, bringing the total invested amount to $125, and the Stop Loss to $100. The 'extra' $25 is what we call the 'maintenance margin'.
Why do we need a maintenance margin?
During times of market volatility, prices can swing up and down by large increments. Therefore, in the event that you set your SL to 100% of the invested amount and there is a sudden market spike, you may lose more than you originally invested. The maintenance margin helps prevent this situation by using funds from your balance to buffer the trade.