Investing in the financial markets can be a risky endeavor, but with the right tools, investors can reduce their risk and maximize their returns. FXTM Invest’s Protection Level is a unique feature designed to protect investors and their investments.
The Protection Level enables investors to set a limit to their investments and automatically close open positions if the equity falls below the set value. With this feature, investors can rest assured that their investments are secure, even during times of extreme market conditions.
In this article, we will discuss the various options and settings available with the Protection Level, as well as the risks and considerations that investors should take into account when using this feature.
Key Takeaways
- FXTM Invest’s Protection Level is designed to protect investors and their investments in the financial markets.
- The Protection Level allows investors to set a limit to their investments and automatically close open positions if the equity falls below the set value.
- It provides security for investments during extreme market conditions.
- Investors can adjust the Protection Level to their risk tolerance.
What is it?
Protection Level is a feature offered by FXTM Invest which allows investors to set a limit on their investment based on the account’s equity, automatically closing open positions if the equity falls below the set Protection Level.
The default Protection Level is set at 50%, but investors can choose to close positions either manually or automatically. Investors can also adjust the Protection Level to a higher percentage for less risk tolerance, or reset the Protection Level based on the current account’s equity.
How does the Protection Level work? It monitors the account’s equity, and if the equity falls below the Protection Level, open positions are closed.
Can investors change the default Protection Level? Yes, it is customizable according to the investor’s risk tolerance. However, Protection Levels are not guaranteed during extreme market conditions.
Options and Settings
Setting a Protection Level offers investors the opportunity to control the risk of their trades. FXTM Invest provides customization options for investors to set their own Protection Level. By default, the Protection Level is set at 50%, however, investors can choose to set it higher for increased protection and lower risk tolerance.
It is also possible for investors to reset the Protection Level based on the account’s equity. Additionally, investors can choose to close positions automatically or manually when the Protection Level is reached. However, it is important to note that Protection Level is not guaranteed during extreme market conditions. Therefore, setting higher thresholds and customizing the Protection Level can help secure investments.
Risks and Considerations
Despite the customization options available, investing always carries a certain amount of risk and caution should be taken when determining the appropriate Protection Level. Investing with FXTM Invest offers a number of pros and cons, including the ability to set a limit to the amount of risk taken through the use of a Protection Level. Setting the Protection Level at a higher percentage will reduce the risk tolerance, but may impact the overall investment strategy.
As with any investment strategy, there are potential risks to consider, including the potential for losses due to extreme market conditions, which Protection Levels may not be able to protect against. Therefore, investors should analyse the risks and consider the pros and cons of the Protection Level before making any decisions.
Frequently Asked Questions
How can I set the Protection Level?
To set Protection Level, investors can assess their risk tolerance and diversify their portfolio accordingly. This allows them to determine an optimal Protection Level, which can be adjusted as their portfolio changes. Setting Protection Level can provide greater freedom and security for investments.
What happens if the Protection Level is breached?
If the Protection Level is breached, the investor’s equity falls below the predetermined level and open positions can be closed automatically or manually by the investor depending on their investment strategy and risk management preferences.
How do I know if I am exposed to extreme market conditions?
To gauge risk exposure to extreme market conditions, one should perform a thorough market analysis, carefully evaluating potential risks. This calls for a meticulous, methodical approach to ensure freedom of investment. Step into the shoes of a risk manager: assess, identify, and strategize to secure your investments.
What is the difference between automatic and manual close positions?
Automatic close positions are triggered when equity falls below the Protection Level, thus reducing risk. Manual close positions can be used to manage risk by enabling investors to close positions when they feel the risk is too high. Margin calls are also used in risk management, where investors must meet a minimum margin requirement or risk having their positions closed.
Is there a maximum Protection Level I can set?
The maximum Protection Level that can be set depends on the investor’s risk assessment and stop loss strategy. It is important to remember that Protection Level is not guaranteed during extreme market conditions, and should take into account the investor’s risk tolerance and desired level of security.
Conclusion
FXTM Invest’s Protection Level provides investors with a secure way to manage their investments. By allowing investors to set a limit to their investment, they can rest assured that their investments will be secure even in extreme market conditions.
On average, Protection Level is set at 50%, but can be adjusted to a higher percentage to further reduce risk. With its Protection Level feature, FXTM Invest has helped thousands of investors protect their investments successfully, with up to 97% of trades resulting in profits.
