How does the safety buffer work?
What is the safety buffer?
The buffer shows how well capitalized your portfolio is and compares your used funds in open trades versus your total account balance.
On UpTick all trades are amplified by a multiplier which allows you to multiply your potential returns but also losses. For more info, see this article here. This may result in a loss that exceeds your invested capital if the market moves sharply. To minimise the risk of accounts going into negative equity we have to ensure your account has an adequate capital buffer in place.
What does the safety buffer percentage mean?
For example a buffer > 200% means that you have more than double the amount of funds needed to keep your positions open. If the buffer drops below 50%, we might have to close some or all of your positions in order to keep your account adequately capitalized.
What is a margin closeout?
A margin closeout can happen if your buffer drops below 50%. Then we reserve the right to close one or all of your positions to keep your account capitalized. Since sharp price moves can lead to losses that exceed your trade size, we need to ensure you have enough buffer as a reserve to avoid your account going into negative equity.