Today we take a closer look at an often overlooked, yet useful feature called ‘Position Top-up‘. Put shortly, it will let you use your balance to keep your positions open even when they go below the −95% payout. How to use this feature in trading effectively and what are the risks associated with it? Read the full article to learn more!
Why use it?
Keeping the loss making position does not sound like a particularly sound decision, or does it? Imagine opening a position that instead of generating you the desired payout starts eating out your funds. When the position top-up is not active (as by default) the trade will automatically close when your loss is equal to 95% of the invested amount.
However, if you consider using this feature, there is not one but two ways to address the issue: close the position and lose the money guaranteed OR invest additional funds and wait for a trend reversal, getting a chance to manage your losses.
The thing is, financial markets are both volatile and unpredictable. You never know for sure when an opportunity will present itself. It is, therefore, possible that a desired trend reversal is just around the corner. As a result, it is possible that by losing just a little bit more you will eventually close a deal in the black. However, it is also possible that by using this feature you will lose even more as the price continues moving in the opposite direction. Therefore, caution is always advised when working with position top-up.
How to apply?
Timing and intuition are crucial when using the feature. In order to use position top-up, a trader has to be sure that the trend reversal is just around the corner. Otherwise he will lose even more. Choosing the right moment to activate the feature is important.
The feature can be found in the ‘Auto Close‘ menu in the right-hand side of the trade room. In order to activate the position top-up feature the trader only has to check the corresponding box.
Note that once you activate the feature, all subsequent deals will automatically open with position top-up already enabled. In order to turn it off, simply uncheck the same box in the ‘Auto Close’ menu.
How to use it?
In order to activate the feature, when your deal starts to get closer to the “−95%” threshold, click on the ‘Auto Close’ menu, check the “Use balance to keep position open” box and specify the new amount of loss you are ready to incur. Note that without the ‘position top-up’ feature this value cannot exceed −95%. When the feature is active, however, you can enter virtually any amount. The percent is based on the invested amount, not the entire balance.
Watch out, as if you leave the ‘When loss is…’ field empty, your entire account might be at risk!
Note that additional funds will be deducted from your account in 20% increments (calculated as a percentage of your investment amount, not your entire balance). Should losses exceed the -95% threshold, 20% of your initial deposit will be reserved on your account for this particular deal. If there is no reversal and the trader keeps losing money, additional funds will be deducted from the account in 20% increments until the stop-loss limit is met.
Remember that risk management is of utmost importance to any trader. Do not forget about basic risk management rules and strategies when using this feature (e. g. do not allocate your entire trading capital to a single deal).
