Every experienced trader must be able to control the ratio of projected profitability to possible risks, among which the main one is a potential loss. This practice implies risk management.
Trading offers multiple methods of manual control and risk management. In addition, UTEX Margin has a built-in risk management system that allows users to reduce their possible risks.
Automatic risk management
If during the day the total loss exceeds the loss limit, positions are automatically closed at the market price and trading is blocked until the next day. This way the service does not allow you to lose all the money in your account or even go into the red. The current loss limit is always displayed on the trading screen. By default, the limit on the stock market is 80% of the balance and on the cryptocurrency market – 70%, but you can set a specific amount in USDT and change it as often as you like.
If the limit is exceeded, there is an immediate liquidation: the ability to send new orders is blocked, all active orders are canceled and positions are closed at the market price.
To unblock the ability to trade, you can choose one of the following ways:
If the limit is not the maximum, increase it.
Deposit to your account.
Wait for the next trading day. The loss and the limit will be recalculated and you will be able to trade again.
Positions aren’t closed automatically during the first 3 minutes after the stock market opens to avoid getting a bad price due to a wide spread.
Manual risk management
A few basic tips to help reduce risk when trading:
Limit the share of the account that can be engaged in a single position. This value should not exceed 30-50% of the deposit.
Don't use all the available amount with leverage. The higher the leverage used, the higher the potential loss due to price changes. We recommend reducing the volume of open positions if your loss is approaching the liquidation threshold.
When trading stocks, do not exceed the overnight threshold, which is the sum of your balance and net realized profit multiplied by 4. If your used buying power exceeds the overnight threshold at market close, the risk manager can reduce positions at the market price. There is no such restriction for cryptocurrency trading.
Use stop orders to help to automate your trading process, fix profits and manage risks. Especially useful in high volatility.
Keep an eye on your losses so that you do not approach the loss limit. If you exceed it, you will lose the ability to trade until the next day. If you want to regain the ability to trade until the end of the day, deposit to the account. Otherwise, there is a probability of rapid liquidation after reopening positions.
Expand the list of assets you are trading in. Diversification (within reasonable limits) allows you to reduce your dependence on a certain asset.