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Trading Conditions

The majority of your trading conditions are affected by your broker, his policies and settings, and your trading account settings. This section contains the most basic trading conditions. Contact your broker if you want to know what trading conditions apply to your account.

Commissions

Most of the brokers charge the commissions from the traders. You can be charged in USD, Lots, or Basis Points converted to your account currency. Commissions often depend on the volume traded. Brokers usually publish the commissions on their websites and you should consult those first.

After opening a position, the commissions are included in your precalculated unrealized Gross and Net Profit or Loss in the Positions tab on the TradeWatch panel. You can also see an opening commission owed and a closing commission to be charged (right click on the column titles, and check Commission and Closing Commission items respectively). Combined Unrealized Broker Commission is also available in the Position Info dialog box.

Stop Out

Stop Out is a certain margin level at which your broker will start to automatically close positions because the margin cannot support open positions any longer. Stop Out is defined as a percentage and triggers when Margin Level (also calculated in percentages) drops to or below the Stop Out level. There are two Stop Out types available in cTrader - Smart Stop Out and Fair Stop Out. Margin and Stop Out levels are available in the Balance bar at the TradeWatch panel. Click on the Balance bar to expand it.

Here you can also view the balance, equity, available and used margin, gross and net profit or loss. Hover over any field to see the detailed information on how this value is calculated.

Fair Stop Out

When the Fair Stop Out level is reached, a position that is using the highest margin is closed first. cTrader does not close the most unprofitable position to increase your chances of recovery by releasing more margin to support remaining positions.

Smart Stop Out

When the Smart Stop Out level is reached, cTrader closes only a part (what is absolutely necessary) of the position which uses the highest margin to keep the Margin Level slightly above the Stop Out level. Smart Stop Out closes small parts of the position each time the Margin Level drops below the Smart Stop Out.

Examples

Let’s say an account has the following properties:

Balance: 1000 USD Leverage: 1:500 Smart Stop Out: 50% Equity: 1000 USD

In this example we have modeled a situation that does not consider any commissions and spread, just to concentrate on the margin and Stop Out levels. We also trade a symbol with USD as a base currency to avoid the conversion to the account currency (USD).

Let’s say the account opens two positions:

  • Position #1: 400,000 BUY USDCAD – Margin Used: 800 USD;
  • Position #2: 100,000 BUY USDCAD – Margin Used: 200 USD.

Let’s consider the same entry price for both positions - 1.29608.

After opening the positions, Margin Level immediately drops to 100% – opening new positions is now impossible.

Pip value is 38.57 USD. cTrader precalculates the pip value automatically in the Create Order menu, you can see it before entering a trade.

Now the price of the symbol drops by 13 pips and Stop Out level is triggered.

Unrealized Profit/Loss = 13 pips x 38.57 USD = 501.41 USD.

Margin Level = ((Equity - Unrealized Profit/Loss) / Margin Used) x 100%; Margin Level = ((1000 - 501.41) / 1000) x 100% = 49.8%.

Margin Level (49.8%) is now smaller than Stop Out Level (50%).

Now let’s see what happens to the positions with each of the Stop Out types:

  • Case #1: Fair Stop Out,
  • Case #2: Smart Stop Out.
Case #1: Fair Stop Out

When the Fair Stop Out is used, cTrader entirely closes Position #1: 400,000 BUY USDCAD, because it uses the most margin. The price drop of 13 pips causes a realized loss of 401.57 USD.

Loss = Pip Value of Position #1 x Loss in pips;
Pip Value = (Pip Size / Price of the symbol) x Volume of the position;
Price of the symbol = Old symbol price - 13 pips = 1.29608 - 0.0013 = 1.29478;
Pip Value = (0.0001 / 1.29478) x 400,000 = 30.89 USD;
Loss = 30.89 USD x 13 pips = 401.57 USD.

Balance = 1000 USD - 401.57 USD = 598.43 USD.
Margin Used = 200 USD (Margin Used for Position #2).

Unrealized Profit/Loss = Profit/Loss of Position #2;
Unrealized Profit/Loss = Pip Value of the Position #2 x Loss in Pips;
Unrealized Profit/Loss = 7.71 USD x 13 = 100.23 USD.

Equity = Balance - Unrealized Profit/Loss; Equity = 598.43 - 100.23 = 498.20 USD.

Margin Level = (Equity / Margin Used) x 100%;
Margin Level = (498.20 / 200) x 100% = 249.1%.

Current Margin Level is 249.1%, which is well above the 50% Stop Out level.

Case #2: Smart Stop Out

When the Smart Stop Out is active, cTrader calculates how much of the Position #1 (the biggest position) needs to be closed in order to restore the Margin Level to above the Stop Out Level. The closing volume is rounded to the nearest 1,000 units of the symbol.

In our case, the price drop of 13 pips causes the closure of 3,000 USDCAD of a bigger position (Position #1) and a realized loss of 2.99 USD.

Loss = Pip Value of 3,000 USDCAD x Loss in pips;
Pip Value = (Pip Size / Price of the symbol) x Volume closed;
Price of the symbol = Old price - 13 pips = 1.29608 - 0.0013 = 1.29478;
Pip Value = (0.0001 / 1.29478) x 3,000 = 0.23 USD;
Loss = 0.23 USD x 13 pips = 2.99 USD.

Balance = 1000 USD - 2.99 USD = 997.01 USD.

Margin Used = Margin of Position #1 (397,000 USDCAD) + Margin Position #2 (100,000 USDCAD) = Exposure / Leverage = 497,000 / 500 = 994 USD.

Unrealized Profit/Loss = (Pip Value of Position #1 + Pip Value of Position #2) x Loss in Pips = Pip Value of 497,000 USDCAD according to the entry price = 38.34 USD;
Unrealized Profit/Loss = 38.34 USD x 13 = 498.42 USD.

Note that our calculations of the pip value are much easier because we consider the same entry price for both positions.

Equity = Balance - Unrealized Profit/Loss;
Equity = 997.01 - 498.42 = 498.59 USD.

Margin Level = (Equity / Margin Used) x 100%;
Margin Level = (498.59 / 994) x 100% = 50.15%.

The current Margin Level is 50.15%, which is slightly above the 50% Stop Out level. If the symbol price continues to fall, cTrader will continue to close only small fractions necessary to keep the Margin Level above the Stop Out.

Spread

Spread is the difference between the Ask and the Bid prices. Market price is really hard to predict because of a huge number of variables contributing to the price and spread – liquidity providers, your broker’s settings, trading session, market sentiment, news, and much more. In true market conditions, the spread can become very wide or even negative (Bid price higher than Ask price).

Note that with cTrader there is no chance for your broker to manipulate pricing, charts, and history.

Price Slippage

Slippage is the small difference between the price you wanted your order to be filled at and the actual price your order was executed at. Filling an order with a price other than expected is a common practice in case of market execution order and straight-through-processing environment (STP) on a volatile market and is not something your broker can control.

Orders larger than the current volume available on the market may be either rejected or partially filled using several deals with VWAP (Volume Weighted Average Price), which is less favorable than the top of book price you see in the chart.

cTrader guarantees your order to be filled with the best price currently available, but there is no way to guarantee the exact price when using Market Orders, although, you can set the price range to fill the order only within that limit. Use the Limit Orders to guarantee the price.

Symbols

cTrader Web is a multi-asset-class CFD trading app that supports a huge variety of markets: stocks, indices, commodities, Forex, ETF, and cryptocurrencies. But the availability of one or another asset depends on your broker, and he decides what symbols they offer for trading. If you want to trade the symbols that your broker doesn’t offer, you should contact him directly. Adding new symbols is a decision which is made by your broker.

Swap Fee (Rollover)

Swap fee is the type of fee that is charged when you hold an open position overnight. It is actually the interest rate differential between the two currencies of the pair you are trading. This fee is charged by the liquidity provider and is not necessarily a fee, as the difference in interest rates can be in your favor and hugely contribute to your profit.

Liquidity

Liquidity is a degree of how fast an asset can be bought or sold. Liquidity is one of the most important characteristics of the market. With the cTrader platform, brokers usually have several liquidity providers connected to ensure high market liquidity. Your broker will have more information about this on their website.

Latency

Latency is the time period between the moment a signal is sent from the point A and its reception at the point B. Latency can affect the speed of execution of your orders. The lower the latency, the better. Your broker, the liquidity provider, the speed of proxy servers, your ISP, and a simple fact that counterparties of the deal can be very far apart are factors that can affect latency. cTrader carefully controls latency and will warn you if it rises outside the safe limits.

Different brokers also have different configurations of proxies from the Spotware global proxy cloud. Your broker can add as many as they wish from a selection of dozens of key locations throughout the world.

While the proxies provided by your broker help to improve latency and connection, the key factors affecting latency are your location and your internet speed.

Leverage

Leverage is the investment strategy of using the money borrowed from your broker to increase the potential profit while your own money act as a collateral. Leverage is a ratio of the deposited to borrowed funds. There is no standard leverage in investing, it can be up to 1:1000 and depends on the market situation, your broker’s settings, and the symbol you want to trade. Please check the Symbol Info dialog box before entering a trade to find out an actual leverage. Account leverage is just an upper limit allowed for your trading account.

cTrader supports leverage of up to 1:1000 for all symbols and accounts. The amount of maximum leverage which your broker provides you is decided by them. It is likely that your broker will give you a variety of options, allowing you to use a lower rate of leverage if you want. Different markets are typically offered with the different rates of maximum leverage. We recommend checking each market info to know exactly the maximum amount of leverage offered with that market. Do not just assume every market is offered at the same rate as your account.

Trading Session

A trading session is a time period representing one day of business in a financial market. Trading sessions vary between different brokers and between different symbols, while Forex is traded 24 hours a day and five days a week, other symbols can have different trading hours (see the Symbol Info for market hours). Understanding the time frame of the trading session is very important, please contact your broker to find out about his schedule and swap fee charge time. You can see your current time and change your timezone on the Status bar in the bottom-right of the screen.