FX Risk Management
FxPro Vault is one of the tools we provide our traders with in order to help them manage their risk. FxPro Vault is a secure account which enables you to transfer funds to and from your live trading accounts as you see fit. This allows you to choose how much to risk on any one of your trading accounts while protecting the rest of your funds from any open positions you may have.
While leverage can certainly multiply the gains from a winning position, it can also multiply the losses you incur if a trade doesn't go your way. This is particularly problematic when trading a small account as a losing trade can quickly wipe you out.
For instance: You have a trading account with $500 and 1:500 leverage. You open a position for 1 lot (100,000) on EUR/USD when the price is 1.14010. Your required margin for this position is $228.04, which is almost half of your account. Every pip movement is worth $10 to you. This means that the price only needs to go down to $1.13740 for you to lose almost all the money in your account. This gives you no room to allow for a losing trade and is far too risky.
It is very important that you consider your account size, your leverage and the size of the positions you trade. This gives you some room to allow for a losing trade to go your way. Additionally you should be able to open more than one position without having the majority of your account balance secured as margin.
Negative Balance Protection
As an added level of safety, we offer negative balance protection to all of our traders. This means that even if a position should go in the opposite direction it will never cause you to lose more than the funds in your trading account. This is a service we offer at our own cost and is not currently a regulatory requirement.