{"version":"1.0","provider_name":"For overseas forex cashback services, try Money Charger","provider_url":"https://money-charger.com/en/","author_name":"admin","author_url":"https://money-charger.com/en/author/admin/","title":"Is there no margin call in overseas forex trading? We explain the disadvantages and mechanisms of the zero-cut system - Money Charger (Overseas Forex Cashback Service)","type":"rich","width":600,"height":338,"html":"Are there no margin calls in overseas forex trading? An explanation of the disadvantages and mechanisms of the zero-cut system
\n","description":"Some overseas forex brokers employ a zero-cut system, meaning no margin calls are incurred. This is a service unique to overseas forex brokers, as it is not available with domestic forex brokers. Utilizing the zero-cut system allows for risk-reduced trading. Therefore, it is essential to understand the features of this system when using an overseas forex broker. This article provides a detailed explanation of the advantages, disadvantages, and points to note regarding the zero-cut system in overseas forex. For popular brokers that employ the zero-cut system, please check our ranking of recommended overseas forex brokers with good reputations. Beginners in overseas forex are advised to read this complete guide for overseas forex beginners. What is the zero-cut system in overseas forex that eliminates margin calls? Utilizing the overseas forex zero-cut system eliminates margin calls, allowing for risk-reduced trading. This section provides a detailed explanation of the zero-cut system. The topics covered are as follows: What is a margin call in forex? A margin call is an abbreviation for additional margin, which is an additional deposit required when the margin falls below a certain maintenance ratio. In forex trading, losses can occur, causing the margin to fall below the initial deposit and become negative. When the margin becomes negative, it is necessary to replenish the margin, requiring an additional deposit. This situation is called a \"margin call.\" How the Zero-Cut System for Overseas Forex Trading Works The zero-cut system is a system that prevents traders from incurring debt when their margin falls below their initial deposit due to losses in trading. Because no debt is incurred, positions are forcibly closed when the margin reaches zero. Therefore, the margin will never go negative. Without the zero-cut system, if a trader incurs a large loss that falls below their margin, the margin will go negative and a margin call will occur. With the zero-cut system, the margin will never go negative, so no margin call occurs. Difference between Zero-Cut and Stop-Loss The zero-cut system is a type of stop-loss system. Stop-loss is a system in which positions are forcibly closed when the margin maintenance ratio falls below a certain level. Zero-cut is a system in which positions are forcibly closed when the margin maintenance ratio reaches 0%. Stop-loss is a system to prevent the account balance from going negative. However, if the exchange rate fluctuates rapidly due to economic indicators, etc., the execution of stop-loss may not be possible in time. In such cases, the zero-cut system will offset the losses even if the account balance goes negative, and return the account balance to zero. Please check this article for information on how to calculate and avoid stop-loss orders ↓ Flow of execution of the zero-cut system with no margin calls in overseas FX The flow of execution of the zero-cut system in overseas FX is as follows: With the zero-cut system, the losses incurred by traders are limited to the amount deposited in their trading account. Why are there no margin calls in overseas FX? Differences from domestic FX brokers Many overseas FX brokers have introduced a zero-cut system with no margin calls. On the other hand, it is not possible to introduce a zero-cut system with no margin calls in Japan. Here, we will explain the following in detail. Reasons why overseas FX brokers introduce a zero-cut system with no margin calls The reason why overseas FX brokers introduce a zero-cut system with no margin calls is to increase the trading volume of traders. Without a zero-cut system, it is necessary to trade while inevitably facing the risk of margin calls. With a zero-cut system, traders can trade with peace of mind as no margin calls occur. When the trading volume of traders increases, overseas FX brokers can increase their profits from spreads and trading fees. However, some overseas FX brokers do not use a zero-cut system, so be sure to check when choosing a broker. Why Domestic FX Brokers Cannot Implement a Zero-Cut System (No Margin Calls) Domestic FX brokers cannot implement a zero-cut system (no margin calls). This is because the Financial Instruments and Exchange Act in Japan prohibits \"compensation for losses.\" Therefore, in domestic FX, a margin call occurs when the margin becomes negative. Overseas FX brokers are not bound by the Financial Instruments and Exchange Act in Japan, making it possible to implement a zero-cut system. If you want to utilize a zero-cut system, you should use an overseas FX broker. For the advantages and disadvantages of overseas FX and domestic FX, please check this article below ↓ Advantages of Overseas FX's Zero-Cut System (No Margin Calls) Here, we will explain in detail the advantages of overseas FX's zero-cut system (no margin calls). No Risk of Debt When using a zero-cut system, no margin calls occur. Therefore, there is no risk of debt. […]"}