Some overseas forex brokers employ a zero-cut system, meaning that margin calls will not occur
This service is unique to overseas forex brokers and cannot be offered by domestic forex brokers
By utilizing the zero-cut system, you can trade with reduced risk .
Therefore, when using overseas forex brokers, it is necessary to be aware of the characteristics of this system
This article a detailed explanation of the advantages, disadvantages, and points to note regarding the zero-cut system used in overseas forex trading .
For popular brokers that employ a zero-cut system, please check our ranking of highly-rated and recommended overseas forex brokers
, we recommend you read this complete guide for overseas forex trading beginners
Contents
- 1 What is a zero-cut system for overseas forex trading that eliminates margin calls?
- 2 Why are there no margin calls with overseas forex brokers? Differences from domestic forex brokers
- 3 The advantages of the zero-cut system with no margin calls in overseas forex trading
- 4 Disadvantages of the zero-cut system with no margin calls in overseas forex trading
- 5 Is the zero-cut system a trap? Precautions for overseas forex trading with no margin calls
- 6 Key points to consider when choosing an overseas forex broker that employs a zero-cut system
- 7 Recommended overseas forex brokers that employ a zero-cut system with no margin calls
- 8 Frequently Asked Questions about Zero-Cut Systems (No Margin Calls) in Overseas Forex Trading
- 9 summary
What is a zero-cut system for overseas forex trading that eliminates margin calls?
By utilizing an overseas forex zero-cut system, you can trade with reduced risk because you won't incur margin calls .
This section provides a detailed explanation of the zero-cut system
The following will be explained:
- What is a margin call in FX trading?
- How the zero-cut system for overseas forex trading works (no margin calls)
- The difference between zero cut and stop cut
- The process of executing a zero-cut system with no margin calls in overseas forex trading
What is a margin call in FX trading?
A margin call is an abbreviation for additional margin , an additional deposit required when the margin falls below a certain maintenance ratio .
In FX trading, losses can occur, causing the margin to fall below the initial deposit, resulting in a negative balance
If your margin balance goes into the negative, you will need to make an additional deposit to replenish it
This situation is called a "margin call."
How the zero-cut system for overseas forex trading works (no margin calls)
A zero-cut system is a system that prevents traders from incurring debt if their trading losses fall below their margin deposit .
To prevent you from incurring debt, a forced settlement will occur as soon as your margin reaches zero
Therefore, your margin will never go into the negative.
Without a zero-cut system, if you incur a large loss in trading that falls below your margin, your margin will go negative and you will be required to make additional payments
With the zero-cut system, your margin will never go into the negative, so no additional margin calls will occur
The difference between zero cut and stop cut
The zero-cut system is a type of stop-loss system
A stop-loss order is a system that automatically closes a position when the margin maintenance ratio falls below a certain level
Zero-cut is a system where positions are automatically closed when the margin maintenance ratio falls to 0% .
A stop-loss order is a system designed to prevent your account balance from going into the negative
However, if exchange rates experience rapid price fluctuations due to economic indicators or other factors, there may be times when stop-loss orders cannot be executed in time
In such a case, the zero-cut system will offset any losses even if your account balance goes negative, bringing your account balance back to zero
Please check this article for information on how to calculate and avoid stop-loss orders ↓
The process of executing a zero-cut system with no margin calls in overseas forex trading
The process for executing the zero-cut system in overseas forex trading is as follows:
The process leading up to the implementation of the zero-cut system
1. A sudden price fluctuation occurs in the foreign exchange market, and it moves differently than predicted. 2. A stop-loss order is executed. 3. The stop-loss order is not executed in time due to the sudden price movement, and the loss exceeds the account balance. 4. A zero-cut order is executed. 5. The margin is reset to zero
With the zero-cut system, the trader's losses are limited to the amount deposited in their trading account
Why are there no margin calls with overseas forex brokers? Differences from domestic forex brokers
Many overseas forex brokers have implemented a zero-cut system, meaning there are no margin calls
On the other hand, it is not possible to implement a zero-cut system that eliminates margin calls in Japan
Here, we will explain the following topics in detail
- Reasons why overseas forex brokers have introduced a zero-cut system that eliminates margin calls
- Reasons why domestic FX brokers cannot implement a zero-cut system that eliminates margin calls
Reasons why overseas forex brokers have introduced a zero-cut system that eliminates margin calls
The reason why overseas forex brokers have introduced a zero-cut system that eliminates margin calls to increase the trading volume of traders .
Without a zero-cut system, you inevitably have to trade while facing the risk of margin calls
With a zero-cut system, traders can trade with peace of mind knowing that they will not be required to make additional margin calls
Overseas forex brokers can increase their revenue through spreads and transaction fees as traders' trading volume increases
However, some overseas forex brokers do not employ a zero-cut system, so be sure to check this when choosing a broker
Reasons why domestic FX brokers cannot implement a zero-cut system that eliminates margin calls
Domestic FX brokers cannot implement a zero-cut system that eliminates margin calls
This is because, under Japan's Financial Instruments and Exchange Act, "compensation for losses" is prohibited .
Therefore, in domestic FX trading, a margin call occurs when the margin balance goes into the negative
Because overseas forex trading is not subject to the restrictions imposed by Japan's Financial Instruments and Exchange Act, it becomes possible to implement a zero-cut system
If you want to take advantage of the zero-cut system, you should use an overseas forex broker
For information on the advantages and disadvantages of overseas and domestic forex trading, please see this article below ↓
The advantages of the zero-cut system with no margin calls in overseas forex trading
This section provides a detailed explanation of the advantages of the zero-cut system, which eliminates margin calls in overseas forex trading
No risk of debt
By utilizing the zero-cut system, you will not incur margin calls
Therefore, there is no risk of debt
This is arguably the biggest advantage of the zero-cut system
Because there is no risk of debt, using an overseas forex broker allows even beginners to trade with peace of mind
Let's also look at cases where FX trading can lead to debt and how to prevent it
Transactions can be conducted with peace of mind
By utilizing the zero-cut system, traders can trade with peace of mind .
For traders starting with limited capital, this allows them to focus on their own trading without experiencing significant stress from rapid price fluctuations
Traders grow and improve through actual trading experience
Therefore, a zero-cut system that allows for safe FX trading is a recommended system for traders' growth
It is well-suited for high-leverage trading
of the zero-cut system it is well-suited for high-leverage trading .
High-leverage trading involves trading with high leverage, such as 1000x or 2000x
High-leverage trading is characterized by the possibility of making large profits from small amounts of capital, but it also carries the risk of leading to significant losses
If you incur significant losses due to sudden fluctuations in exchange rates, a zero-cut system will prevent you from incurring debt
The zero-cut system helps to mitigate the risks associated with high-leverage trading, making it a good match
If you want to make big profits starting with a small amount of capital, be sure to check out our recommended methods and tips for high-leverage trading
This article introduces overseas forex brokers that offer high leverage and a zero-cut system, which is advantageous for high-leverage trading
Disadvantages of the zero-cut system with no margin calls in overseas forex trading
This section provides a detailed explanation of the disadvantages of the zero-cut system, which eliminates margin calls in overseas forex trading
Neglecting risk management
A disadvantage is that relying too heavily on the zero-cut system can lead to neglecting risk management
Because it doesn't involve incurring debt, it's possible to repeatedly try until the margin is depleted, which can lead to gambling-like trading.
If you've experienced multiple zero-cuts, you should review your trading strategy
Risk management is an important skill in FX trading
By properly managing risks and creating a trading plan, you can more easily generate consistent profits
Some overseas forex brokers have wide spreads
Some overseas forex brokers that employ a zero-cut system have wider spreads
A wide spread increases transaction costs, creating an unfavorable trading environment for traders
When choosing an overseas forex broker, be sure to carefully check the spread settings
For recommended brokers with low spreads, please check out spread comparison ranking of recommended overseas forex brokers
Is the zero-cut system a trap? Precautions for overseas forex trading with no margin calls
The zero-cut system provides traders with a very good trading environment
However, there are also points to be aware of regarding zero-cut systems
This section provides a detailed explanation of the precautions to take when trading overseas forex without margin calls
- It is necessary to verify the safety of overseas forex brokers
- Depending on how it is used, you may be required to pay additional margin
- The timing and conditions for executing the zero-cut system vary depending on the overseas forex broker
It is necessary to verify the safety of overseas forex brokers
When utilizing a zero-cut system, it is necessary to verify the security of the overseas forex broker you are using.
If the overseas forex broker is unreliable and lacks security, you may experience the cancellation of profits or even losses
To prevent this from happening, in addition to ensuring that a zero-cut system is in place, you should also check for other safety features
This article explains in detail how to choose a highly reliable contractor and the key points to consider ↓
Depending on how it is used, you may be required to pay additional margin
The zero-cut system is not always enforced
In the past, there have been cases where the zero-cut system was not executed, and margin calls were issued
Furthermore, if a trade violates the terms and conditions of the overseas forex broker, the zero-cut system may not be executed.
Examples of violations of the terms and conditions are as follows:
Examples of violations of the terms and conditions
- Fraudulent receipt of points - Hedging transactions using zero-cut feature - Fraudulent receipt of bonus credits
Hedging involves simultaneously holding both a buy position and a sell position in the same currency pair .
Using zero-cut in hedging transactions allows you to profit from one side while zero-cut is applied to the other, enabling you to aim for large profits with minimal losses
Be aware that such transactions are considered an abuse of the zero-cut feature
Let's also look at trading can lead to debt and how to deal with it
The timing and conditions for executing the zero-cut system vary depending on the overseas forex broker
The timing and conditions for executing the zero-cut system vary depending on the overseas forex broker
Some brokers execute trades automatically, but others require an application, so be sure to check beforehand when using overseas forex services
The execution timing and conditions for major overseas forex brokers are as follows:
| Overseas Forex Brokers | Zero-cut execution timing and conditions |
|---|---|
 Exdefine | When the account balance becomes negative and there are no open positions remaining, the position is automatically executed |
 FXGT | Automatic execution when the account balance becomes negative |
 BigBoss | Automatic execution when the account balance becomes negative |
 VPhotoage | The order will be automatically executed when the account balance becomes negative and all positions are closed |
 HFM | Automatic execution when account balance goes into negative territory |
 AXIORY | Automatic execution when account balance goes into negative territory |
 IS6FX | If you make an additional deposit or transfer funds from another account to an account with a negative balance, the transaction will be automatically executed |
 XMTrading | If you make an additional deposit to an account with a negative balance, exchange XM points for cash, or transfer funds from another account, the transaction will be executed immediately |
 TitanFX | Automatic execution when account balance goes into negative territory |
 ThreeTrader | Automatic execution when account balance goes into negative territory |
Key points to consider when choosing an overseas forex broker that employs a zero-cut system
This article provides a detailed explanation of the key points to consider when choosing an overseas forex broker that employs a zero-cut system
Please use this as a reference when choosing a highly secure overseas forex broker
Narrow spread
When opening an account, choose an overseas forex broker with narrow spreads
Some overseas forex brokers that employ a zero-cut system may have wide spreads
Pay attention to the spread width in order to keep transaction costs down
For recommended brokers with low spreads that employ a zero-cut system, please check our spread comparison ranking of recommended overseas forex brokers
They hold a financial license
When choosing a highly secure overseas forex broker, whether or not they hold a financial license is an important factor
Holding a financial license suggests that a company is likely to provide a secure trading environment
To open an account with a safe overseas forex broker, be sure to check whether they have obtained a financial license
Excellent customer support
Some overseas forex brokers offer Japanese language support and 24-hour customer service
If any problems arise, having a company that offers Japanese language support or 24-hour support will allow for smoother communication
Before opening an account, be sure to check the level of customer support provided
Recommended overseas forex brokers that employ a zero-cut system with no margin calls
We compared overseas forex brokers that employ a zero-cut system based on the following criteria
Overseas FX broker comparison conditions
• Maximum leverage • Zero-cut execution timing and conditions • Financial license • Customer support
Although not covered here, bonus campaigns are also a major comparison factor, so be sure to check out the latest bonus campaign rankings of overseas forex brokers
| Overseas Forex Brokers | Maximum leverage | Zero-cut execution timing and conditions | Financial License | Customer Support |
|---|---|---|---|---|
Exdefine | Unlimited | When the account balance becomes negative and there are no open positions remaining, the position is automatically executed | The Seychelles Financial Services Authority (FSA), the UK Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC), the British Virgin Islands Financial Services Commission (BVI FSC), the Central Bank of Curaçao and Sint Maarten (CBCS), the Mauritius Financial Services Commission (FSC), the South African Financial Industry Conduct Authority (FSCA), and the Kenya Capital Markets Authority (CMA) | Japanese language support available: Email, chat, and phone consultations. |
FXGT | 5000 times | Automatic execution when the account balance becomes negative | The Financial Services Authority of the Seychelles (FSA), the Financial Industry Conduct Authority of South Africa (FSCA), and the Vanuatu Financial Services Commission (VFSC) | Japanese language support available: Live chat, inquiry form, tickets. |
BigBoss | 2222 times | Automatic execution when the account balance becomes negative | Financial Services Authority of Saint Vincent and the Grenadines (SVGIBC) | Japanese language support available via live chat, contact form, and email. |
VPhotoage | 2000 times | The order will be automatically executed when the account balance becomes negative and all positions are closed | Australian Securities and Investments Commission (ASIC), Vanuatu Financial Services Commission (VFSC), South African Financial Industry Conduct Authority (FSCA) | Japanese language support available via live chat and email. |
HFM | 2000 times | Automatic execution when account balance goes into negative territory | Financial Services Authority of Saint Vincent and the Grenadines (SVGIBC), Cyprus Securities and Exchange Commission (CySEC), Financial Services Authority of the Seychelles (FSA), Dubai Financial Services Authority (DFSA), South Africa Financial Industry Conduct Authority (FSCA) | Japanese language support available: Live chat, phone support, and email. |
AXIORY | 2000 times | Automatic execution when account balance goes into negative territory | Belize International Financial Services Commission (IFSC), Mauritius Financial Services Commission (FSC) | Japanese language support available: Chat, email, and support desk. |
IS6FX | 2000 times | If you make an additional deposit or transfer funds from another account to an account with a negative balance, the transaction will be automatically executed | Financial Services Authority of Saint Vincent and the Grenadines (SVGIBC) | Japanese language support available: Email, Chat, LINE |
XMTrading | 1000 times | If you make an additional deposit to an account with a negative balance, exchange XM points for cash, or transfer funds from another account, the transaction will be executed immediately | Financial Services Authority of the Seychelles (FSA) and Financial Services Commission of Mauritius (FSC) | Japanese language support available via live chat and email. |
TitanFX | 1000 times | Automatic execution when account balance goes into negative territory | Vanuatu Financial Services Commission (VFSC), Seychelles Financial Services Authority (FSA), Mauritius Financial Services Commission (FSC), British Virgin Islands Financial Services Commission (BVI FSC) | Japanese language support available via chat, email, phone, and social media. |
ThreeTrader | 1000 times | Automatic execution when account balance goes into negative territory | Vanuatu Financial Services Commission (VFSC) | Japanese language support available via email and live chat. |
Based on our comparison, we will introduce companies that employ the following zero-cut systems
Exness
Source: Exness official website
| license | FSA/FCA/CySEC/BVI FSC/CBCS/ FSC/FSCA/CMA |
|---|---|
| Maximum leverage | Unlimited |
| spread | USDJPY: 1.0pips EURUSD: 0.9pips |
| Stop-loss | 0％ |
| Zero Cut | can be |
| Trading Tools | MT4/MT5 |
| Asset Guarantee | Separate management |
offers unlimited leverage under certain conditions is characterized by its narrow spreads
Furthermore, because it employs a zero-cut system, you can take advantage of unlimited high-leverage trading while minimizing risk
With narrow spreads, this broker offers a comfortable trading environment for traders .
XMTrading
Source: XM Trading official website
| license | FSA/FCA |
|---|---|
| Maximum leverage | 1,000 times |
| spread | USDJPY: 1.6pips EURUSD: 1.7pips |
| Stop-loss | 20％ |
| Zero Cut | can be |
| Trading Tools | MT4/MT5 |
| Asset Guarantee | Separate management |
XMTrading enjoys high reliability and popularity among Japanese traders
We have been operating for over 10 years and have a proven track record of implementing our zero-cut system even during market crashes caused by events such as the Swiss franc shock and the COVID-19 pandemic
Furthermore, high-leverage trading is possible with leverage up to 1000 times
a highly reliable overseas forex broker that offers high-leverage trading and is very secure .
FXGT
Source: FXGT official website
| license | FSA |
|---|---|
| Maximum leverage | 1,000 times |
| spread | USDJPY: 1.9~2.1pips EURUSD: 1.9~2.2pips |
| Stop-loss | 20～40% |
| Zero Cut | can be |
| Trading Tools | MT5 |
| Asset Guarantee | Segregated Management Liability Insurance |
FXGT is a broker that provides 24/7 Japanese language support
With excellent customer support, you can trade with peace of mind
Furthermore, high-leverage trading is possible with leverage up to 1000 times
a reliable overseas forex broker with excellent customer support and the ability to engage in high-leverage trading .
If you want to know more about FXGT's reputation and customer reviews, please check out this article below ↓
Frequently Asked Questions about Zero-Cut Systems (No Margin Calls) in Overseas Forex Trading
This section provides a detailed explanation of frequently asked questions regarding the zero-cut system (no margin calls) in overseas forex trading
- Will my profits from overseas forex trading be discovered?
- What happens if I don't pay the margin call in FX trading?
- If I pay taxes on my overseas forex trading, will my company find out?
- If the zero-cut system is applied, will it still be subject to taxation?
Will my profits from overseas forex trading be discovered?
Profits from overseas forex trading must be declared on your tax return .
Failing to file a tax return constitutes tax evasion, so be sure to do so
Even with overseas accounts, the tax authorities can track your financial records and find out
please refer to this complete guide to overseas forex taxes
What happens if I don't pay the margin call in FX trading?
In FX trading, if you don't pay the margin call, your open positions will be forcibly closed
This is a measure to cover traders' losses
When a trade is forcibly closed, it may result in the closing of a position different from the one intended, potentially leading to unexpected losses
Furthermore, if you fail to pay the margin call, it may escalate to legal action
In that case, the court will send you a demand letter for a lump-sum payment
If you ignore the demand notices and fail to pay, your assets, such as your salary and bank accounts, may be seized
Make sure to pay any additional charges before your assets are seized
If I pay taxes on my overseas forex trading, will my company find out?
When filing your tax return for profits earned from FX trading, if you have selected " special collection " as the method for collecting resident tax, there is a possibility that your tactics will be discovered.
This is because, by using special collection, the increase in the amount of resident tax will become apparent through the resident tax assessment notice sent to the company
The solution is to change the method of collecting resident tax to self-payment (ordinary collection)
If you choose the ordinary collection method, the resident tax assessment notice will be sent to your home instead of your company when you file your tax return, thus preventing your company from being notified
This reduces the risk of your company finding out
If margin is replenished through the zero-cut system, will it be subject to taxation?
If your margin is covered by the zero-cut system until it goes from negative to zero, it will not be subject to taxation.
The broker will compensate for the trader's losses
Since the amount invested will not increase, it will not be considered a profit
Therefore, you do not need to declare it as income
summary
This article provides a detailed explanation of the advantages, disadvantages, and points to note regarding the zero-cut system (no margin calls) in overseas forex brokers, as well as recommendations for overseas forex brokers
Here's a summary of this article:
- The advantage of the zero-cut system is that there is no risk of debt
- The disadvantage of the zero-cut system is that it can lead to a disregard for risk management
- One thing to be aware of with the zero-cut system is that, depending on how it's used, it can result in margin calls
- Key points to consider when choosing an overseas forex broker are "narrow spreads" and "high security."
- Recommended overseas forex brokers are "Exness", "XMTrading", and "FXGT"
The zero-cut system allows for risk-reduced trading and is well-suited for high-leverage trading
However, the absence of debt risk may lead to a neglect of risk management
Let's implement proper risk management and create a trading plan before trading
