When starting overseas forex trading, it's crucial to understand "stop-loss." Especially for beginners, not knowing how stop-loss works can lead to significant losses. Therefore, this article provides a thorough explanation of stop-loss in overseas forex, including its mechanism, meaning, calculation methods, terminology such as stop-loss levels, and important precautions. Those starting overseas forex trading should refer to this article. For overseas forex beginners, we recommend reading this complete guide for overseas forex beginners. Contents 1. What is the mechanism and meaning of stop-loss in overseas forex? Detailed explanation of terminology and calculation methods 1.1 What is stop-loss? A mechanism that automatically closes positions 1.2 What is the stop-loss level? 1.3 When is stop-loss executed? 1.4 The benefit of stop-loss is preventing further losses 1.5 To avoid stop-loss, "add margin" 2. What are the stop-loss levels of different overseas forex brokers? Comparison of stop-loss levels between overseas and domestic forex brokers 2.1 What are the differences in stop-loss levels between overseas and domestic forex? 2.2 Comparison of Stop-Loss Levels of Overseas FX Brokers 2.3 Comparison of Stop-Loss Levels of Domestic FX Brokers 3 Three Ways to Avoid Forced Stop-Loss in Overseas FX Trading 3.1 ① Don't use excessive leverage 3.2 ② Engage in scalping trading 3.3 ③ Create your own stop-loss rules as your own judgment criteria 4 Q&A about Stop-Loss in Overseas FX 4.1 Q. What is a zero-cut system? 4.2 Q. What is the difference between having a margin call and not having one? 4.3 Q. Is it possible to incur debt with overseas FX? 4.4 Q. What are the patterns where forced stop-loss doesn't occur in time? 5 Summary What is the mechanism and meaning of stop-loss in overseas FX? Detailed explanation of terminology and calculation methods Let's get started and explain the mechanism and meaning of stop-loss in overseas FX in a way that even beginners can understand. Stop-loss is a mechanism that automatically closes positions Stop-loss is a mechanism in FX trading where, if losses exceed a certain level, the FX company forcibly closes positions to prevent losses from exceeding the funds (margin) deposited by the investor. Some people may worry, "Wouldn't I suffer a huge loss if my position was suddenly and forcibly closed?" However, FX companies will issue a margin call before a stop-loss. About margin calls before stop-loss A margin call is a warning that will alert you to a drop in your margin maintenance ratio before a stop-loss is triggered. Some FX companies call it an "alarm" or "alert," and it is a warning that will inform you of a stop-loss in advance. While a stop-loss forcibly closes all positions, a margin call refers to advance notification. It varies depending on the FX company, but many companies seem to issue a margin call when the margin maintenance ratio falls to 50-70%. Imagine a margin call as a yellow card in soccer, and a stop-loss as a red card. What is a stop-loss level? A stop-loss level is the standard at which a stop-loss is executed in FX trading. A stop-loss is a forced closure when the margin maintenance ratio falls below a certain level. This margin maintenance ratio is the stop-loss level. The stop-loss level varies depending on the FX broker, so be sure to check it in advance. When is a stop-loss executed? The timing of a stop-loss execution depends on the stop-loss level set by the FX company. A stop-loss is executed when the margin decreases and the funds remaining in the account fall to the predetermined margin maintenance ratio. Beginners in FX should deposit a sufficient amount of money in advance to avoid being stopped out. It is also recommended to trade with a low leverage setting. Those who trade with high leverage should also check out recommended methods and tips for high-leverage trading. How to calculate the margin maintenance ratio The margin maintenance ratio is the ratio of net assets to the margin required to hold a position in FX trading. The margin maintenance ratio is calculated using the formula "Net Assets ÷ Required Margin × 100". An example calculation is as follows. Calculation until stop-loss execution... Continue reading [Overseas FX] What is a stop-loss? Explanation of meaning, calculation method, levels, etc. for beginners