What is Trading Power and Why Do I Get Stopped Out?

What is Trading Power and Why Do I Get Stopped Out?

‘Your Trading Power has fallen below 33%, your positions will be closed out if your Trading Power reaches 0%. Deposit funds to bring your trading power above the requirement’ – you might have received this notification from Harborx app. But what is ‘Trading Power’?

When it comes to currency trading, the process is not hard to understand. What usually makes it more confusing, is the abundance of ‘professional’ terms. How can a normal user understand jargon like ‘margin call’, ‘leverage’ and so on? Forex trading is more about terminology than complexity, but with Harborx, we wanted to avoid both – terminology and complexity. This is why we introduced the term ‘Trading Power’. Pretty self-explanatory, right?

In professional trading, we use the term ‘equity’. When you open the dashboard of your Harborx app, you will see the formula of your equity: your account balance + your open positions (P&L, which stands for Profit & Loss).

For example, this trader isn’t having a stellar day, with the current Profit and Loss being -17.58. This is why the equity is 150.68. If the trades go another way and this trader has a positive P&L on the currently opened trades, the equity will be higher than the account balance. In turn, Trading Power is simply the percentage of your equity.

If your trading Power gets too low, it means you’re running out of trading funds, therefore, we notify you once your Trading Power falls down to 33%. When your Trading Power is falling, you have less and less equity to trade, and your positions will be closed once the Trading Power reaches zero.

Trading Power is the term unique to Harborx app as we wanted to make it as simple as possible for beginners to understand their trading situation. ‘Professional’ trading platforms rely on more complicated terms of leverage, margin, invested capital and so on. Look them up if you’re curious, but the beauty of Harborx is that you don’t have to be fluent in all that professional forex jargon.

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Harborx Limited is regulated by Cyprus Securities and Exchange Commission under license number 230/14 in accordance with the Markets in Financial Instruments Directive of the European Union, and the Investment Services and Activities and Regulated Markets Law of Cyprus (Law 144 (1) / 2007). Harborx.com is owned and operated by Harborx Limited.
Risk warning: there is a high level of risk involved with trading forex, commodities, indices and other contract-for-differences. Past performance is not a reliable indicator of future results. You must be aware of the risks associated with trading directly or indirectly on margin. Please ensure that you fully understand the risks involved and do not invest with money you cannot afford to lose. Please seek independent advice if the risks involved seem unclear to you and refer to our full risk disclaimer.

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This blogpost is brought to you by Harborx.com. Check out our website to see how your trading experience can be simplified.

Comments

  1. Thanks for this! Very useful 🙂

  2. Great 😀

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