Why were hedged positions closed by Stop Out?
Though for hedged positions the margin is 25%, hedged transactions can be closed by Stop Out.
In case of sharp price changes the floating result for locked positions does not change, but only if the spread is fixed.
For dynamic spreads the situation is different: if spread is extended, equity will decrease.
It happens because for "buy" transactions profit depends on the bid price, and for "sell" transactions profit depends on the ask price.
When spread extends, losses on one position rise significantly, and they are not compensated in the reverse position appropriately.
That is why total profit for locked positions decreases sharply, and it causes a sharp decrease in the account equity.
Spread extension in the news is usually short-term, and if the account holds enough equity available, it does not affect locked positions.
If the account equity is not sufficient to cover such spread rises, all open positions are automatically closed as the equity becomes negative.
For more information please contact us via our email address:
[email protected]. To get information, you must specify an account number and transaction IDs.