At Impulse World, we believe that effective risk management is the key to long-term success in trading. Our policies are designed to help you protect your capital while maximizing your growth opportunities.
What is margin and why is it important?
Margin is the amount of funds you need to open and maintain a position in the market. Understanding and correctly managing margin is crucial for:
Avoiding over-leveraging
Maintaining proper risk control
Ensuring the sustainability of your trading strategy
Our margin control policy
At Impulse World, we have established a clear rule for margin control:
Traders are not allowed to involve more than 10% of the maximum available margin in the same operation or intention in the same asset.
What does this mean in practice?
Diversification: This rule encourages you to diversify your operations instead of concentrating all your risk in a single trade.
Prevention of over-leveraging: It limits your exposure to a single asset, reducing the risk of significant losses.
Consistency: It promotes a more balanced and sustainable approach to your trading.
How to calculate the margin used?
To ensure you comply with our policy, it's important that you know how to calculate the margin used in your operations. Here's the formula:
Margin = (Lot size x Contract size x USD exchange rate) / Leverage
Example: For a EUR/USD operation with 5 lots:
5 (Lot size) x 100,000 (Contract size) x 1.09237 (USD exchange rate) / Leverage ≈ 5,461.85 (Margin used)
This margin of 5,461.85 should not exceed 10% of your maximum available margin.
Why is it important to take margin into account?
Considering margin is essential for effective risk management. It allows traders to understand their true exposure in the market and avoids assuming excessive risks, ensuring the long-term sustainability and soundness of trading strategies. Failure to comply with the margin policy leads to a review by the risk department and may result in necessary adjustments.
Important:
We define 'same intention' as any series of transactions in the same financial asset that are executed in parallel during a specific period.
The maximum available margin is taken based on the initial account balance, as this is more optimal for the trader to make the required calculations.
Risk Management Policy for Withdrawals
To encourage prudent and diversified risk management, we have implemented the following policy:
A maximum of 25% of your gross profits can originate from a single operation or set of operations with the same intention.
If this limit is exceeded, the additional percentage will not be withdrawable and will be adjusted from your withdrawable net profit.
Detailed example:
Consider the following scenario when requesting a withdrawal:
Your net profit is $5,000, based on gross profits of $10,000.
We detect two significant operations:
Gross profit of $4,000 (40% of total)
Gross profit of $3,000 (30% of total)
Both operations exceed the 25% limit allowed. Let's see how the adjustments are applied:
Total gross profits: $10,000
25% limit on total gross profits: $2,500
Intention number 1:
Gross profit: $4,000 (40% of total)
This operation exceeds the 25% limit by $1,500.
Calculation: $4,000 (operation's gross profit) - $2,500 (25% allowed) = $1,500 excess.
Adjustment: The withdrawable net profit is reduced from $5,000 to $3,500 ($5,000 - $1,500).
Intention number 2:
Gross profit: $3,000 (30% of total)
This operation exceeds the 25% limit by $500.
Calculation: $3,000 (operation's gross profit) - $2,500 (25% allowed) = $500 excess.
Adjustment: The withdrawable net profit is reduced from $3,500 to $3,000 ($3,500 - $500).
Situations after adjustments:
If the adjusted net profit is greater than $0: You have the freedom to decide whether you want to withdraw your adjusted profits or if you prefer to continue operating. Continuing to operate offers you the opportunity to balance your operations so that none exceeds 25% of your total gross profits. This approach not only seeks to align your strategies with our diversification policy but also to maximize your chances of long-term success and profitability.
If the adjusted net profit is less than $0: Unfortunately, in this scenario, you will not qualify to make a withdrawal. However, we encourage you to continue operating with the goal of balancing your profits so that now you don't have any operation or intention that represents more than 25% of your gross profits. Once you have balanced your profits and no longer violate this policy, you can withdraw all the net profits you have.
Important considerations:
The use of hedging to generate more gross profit is not allowed.
This risk management policy is essential to ensure that traders manage their capital in a prudent and sustainable manner.
By establishing a limit where a maximum of 25% of gross profits can come from a single operation or a set of related operations, Impulse World reinforces the importance of diversification and avoids dependence on successful results from a single source or event.
The risk management policy is crucial for the stability and long-term growth of our traders. It fosters a balanced and sustainable approach to trading, ensuring that our traders develop robust skills and strategies that they can maintain over time.
Consequences of non-compliance with margin and risk policies
Failure to comply with these policies may lead to:
Review by the risk department
Possible adjustments to your operations
In extreme cases, limitations on your account
Tips for effective risk management
Diversify your operations: Don't put all your eggs in one basket.
Use stop losses: Limit your potential losses in each trade.
Keep a trading journal: Analyze your operations to improve your risk management.
Educate yourself constantly: The market evolves, and your knowledge should too.
Conclusion
Risk management and margin control are fundamental to your success as a trader. By following these policies and tips, you not only protect your capital but also position yourself for sustainable growth in your trading career.
Want to delve deeper into how to apply these strategies in your daily trading? Don't hesitate to contact our support team for personalized guidance through email at [email protected] or via the live chat located in the bottom right corner of the screen. We're waiting for you!