eToro issued Important Update regarding Maximum Stop Loss feature
eToro informing that in light of the rising tension regarding the Eurozone situation, as of Today June 30, will be temporarily implementing the Maximum Stop Loss feature to ALL instruments on its platform. This feature was introduced when the company launched real time stocks.
This feature, also known as “maintenance margin” in financial lingo, is aimed at protecting traders’ positions from losing more money than they allocated to them.
eToro undertook this temporary measure because during times of market volatility, prices can swing up and down by large increments. Therefore, the company informs that:
When you set your SL amount to 100% there is a high risk of the rate skipping your set SL rate, causing you to lose more than you invested. For the time being, when setting a Stop Loss amount upon opening a position, you will no longer be able to set the SL at a 100% of your invested amount. Rather you will be limited to a maximum Stop Loss rate of 50% for all instruments on our system.
The company also explaining regarding if traders want to extend their SL, that they can change the Stop Loss AFTER opening the trade using “edit Stop Loss”. Bear in mind that extending the Stop Loss means that additional funds will be allocated to the trade.
Example:
You open a trade with $100 with the Stop Loss set to the maximum allowable loss – for example 50% (meaning that the trade will close when the position reaches a loss of $50). If you then wish to extend the Stop Loss and set it to $100 for example, an additional $50 will be allocated from your balance to the position (bringing the invested amount up to $150, and the Stop Loss to $100).
Further, is answering on What will happen to existing positions?
As long as you do not try to edit the Stop Loss, your positions will remain with their current Stop Loss. However, when you try to edit the Stop Loss on an existing trade, the necessary funds will be allocated to the trade.
For example: You have a $100 position with a 95% SL (or $95). You decide to edit the SL to $75. Given that the new maximum Stop Loss is 50%, the system will allocate an additional $25 to the position. Just as if you had opened this position as a new one, set the SL to $50 and then extended it to $75, allocating an additional $25 to the position.
Source: eToro – Important Update: Changes to Maximum Stop Loss
