What is GEMFOREX’s Zero Cut System? With explanations that even beginners can understand

Hello, this is Mai (@gemfx_life).

Among foreign FX, 「GEMFOREX」 is characterized by its leverage that can be up to 1,000 times.

Therefore, people who have traded domestic forex before or people who want to make large trades using as little money as possible may be interested in trading.

However, leverage has both advantages and disadvantages.

The system that allows trading with reduced risk is the “zero-cut system.

and some of you may not be familiar with the zero-cut system.

In this article, we will introduce GEMFOREX, including its zero-cut system, in detail.

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What is GEMFOREX?

There are many international FX firms, but GEMFOREX is one of the top 10 in the world, boasting a lot of trading volume.

In December 2021, they welcomed David Beckham as their brand ambassador, so even if you are not a soccer fan, you may be interested in this overseas FX firm.

The company was originally created in Japan and also obtained a Mauritius financial license in August 2021. (It was previously a New Zealand financial institution.) It seems that they acquired the Mauritius financial license for the purpose of further expanding their global market and services.

The security aspect will be more robust, so we can expect to see more attractive services in GEMFOREX.

Many people have said that GEMFOREX was originally one of the most reliable FX firms, with no withdrawal refusals, and that they can trade with peace of mind.

What is the Zero Cut System?

In foreign FX, there is something called a zero-cut system.

This is a system in which the forex firm will compensate for losses when the exchange rate fluctuates sharply and the loss cut cannot be made in time to limit losses.

Trading in foreign forex involves the possibility of large profits through leverage, but also the possibility of large losses or profits.

If there were no zero-cut system, you would have to make up all losses yourself.

Depending on the amount of your losses, you may end up with a debt that you cannot pay off. No one wants to take on too much risk when they start trading Forex.

Traders have different ideas about zero-cut systems.

For example, with leverage as high as 1,000 times, you can trade an incredible amount of money with a small amount of margin.

Some people have experienced that when trading forex, if the amount is too small, it is almost impossible to understand the price movements, and it is hard to enjoy the experience.

A certain amount of money is more enjoyable because it is easier to understand profits and losses due to price fluctuations.

Although there is an aspect of gambling, you may get rich with a small amount of money! It is one of the advantages of foreign FX.

Of course, some traders consider it as a kind of trump card that can be used in case of emergency.

There seems to be a difference in the way traders think about and perceive the zero-cut system.

I think that one of the advantages of the zero-cut system is that it broadens the range of trading.

Be aware that the zero-cut is only something that is done by foreign FX firms.

What if there is no zero cut?

To begin with, foreign FX has a zero-cut system, while Japanese FX does not.

Instead, there is an additional margin, which serves to protect the FX firm from losses.

The additional margin is not decided by the Japanese FX firms, but is a law set by the “Financial Services Agency”.

Therefore, Japanese FX firms always introduce additional margin.

Because of the additional margin, you will not have to bear the entire burden of negative losses when they occur.

Inability to respond to abnormal price movements

When the unrealized loss increases after the arrival and trading in FX, a loss cut will be made when the margin maintenance ratio (*) is reached.

This mechanism is designed to prevent significant gains or losses.

However, in the event of “abnormal price movements” such as the Lehman Shock, the loss-cut cannot be made in time and additional margin will be charged.

In the Japanese FX market, priority is not given to the trader but to the FX firm, so it is important to understand what additional margin is.

(*) Margin maintenance ratio is a number that indicates how much balance is left in the account for the positions currently held and how much margin is available. Many people want to trade with as little margin as possible. For keeping a certain margin maintenance ratio, it also helps to reduce the risk of loss-cut or zero-cut. The formula for calculating margin is as follows

Margin maintenance ratio is calculated by dividing “effective margin” by “margin requirement” x 100.

The effective margin is what is actually available for trading.

The margin requirement indicates how much margin is required per currency for trading.

What happens if I can’t pay the additional fees?

When additional payment is required, the FX firm will contact you and ask you to make a deposit.

If you have other 「unrealized loss」positions when the additional payment becomes necessary, you can make up the negative amount.

If you fail to pay the FX additional payment by the due date, the FX firm will prompt you to pay the additional payment, which may result in a late payment charge.

When you fail to respond to the forex firm’s demand, you will be subject to collection and other risks.

What is GEMFOREX’s zero-cut system?

You may also be wondering when the zero-cut is triggered by GEMFOREX.

This varies from forex broker to forex broker, so the more you trade with other foreign forex brokers, the more you need to remember the criteria for GEMFOREX’s zero-cut system.

We will explain each of the triggering conditions and, conversely, when they are not triggered.

activation condition

This is the mechanism by which GEMFOREX makes a zero cut when the 「account balance becomes negative」.

The criteria are clear and very simple and easy to understand.

First, assume that you are trading and have incurred a loss that is greater than your own funds.

Then, if there is a bonus remaining, it will be made up and offset within 60 minutes.

If there is no bonus remaining, the system will also reduce the loss to zero within 60 minutes.

Since the time is clearly defined as 60 minutes, there is no need to worry that the zero-cut system will not take place and 「when will it be triggered?」 There is no need to worry.

If the zero-cut system does not become effective after 60 minutes, you may check it.

The beauty of GEMFOREX is that you can hold down your losses considering that you will not lose more than your own funds.

It may not be triggered

Some people think that foreign FX has a zero-cut system that is safe, but be sure to check for cases where it is not triggered.

As long as you trade normally, you can rest assured that the risk of not triggering the system is unthinkable.

If the zero-cut system is identified as a “malicious trade” because of the zero-cut system as a service of GEMFOREX, it will be revoked.

The official GEMFOREX website states the following

“In accordance with Article 12.13.14 of the Terms of Service, the act of depositing funds in two (or more) firms and trading both sides of the trade or trading both sides of the trade in multiple accounts of the Company is prohibited.”

This makes it clear that trading with 「both sides」 is prohibited.

Bilateral trading is a method of simultaneously holding a buy position and a sell position in the same currency pair.

This approach will show you that you can respond to the market either way it moves.

It is a method that prevents temporary losses from increasing and allows you to continue trading.

Although at first glance it seems to have more advantages, there are actually some major disadvantages.

The cost of both positions is high.

Losses can be even greater than when holding either a buy or sell position.

For example, if you hold for a long period of time, you will incur swap points.

However, buying and selling do not have the same swap points.

Therefore, the rules stipulate that you should not use both positions from the point where you can easily lose money.

In the first place, if a zero-cut system is introduced as in the case of foreign FX, it will be judged as malicious because it is a blind spot with its mechanism.

Incidentally, GEMFOREX also prohibits the use of both sides of a trade with other businesses.

You may wonder, “Wouldn’t I be exposed if I were to have both positions in other places than GEMFOREX? You may think so.

Please be aware that GEMFOREX, including other industries and other foreign FX firms, prohibit both sides of a trade.

It is also a risk of account freeze, and it is not a good thing, such as not being able to use the zero-cut system.

Scalping is also risky.

At GEMFOREX, zero-cut may not be triggered even when scalping.

Trading more than 10 lots within 5 minutes without prior notification is prohibited by GEMFOREX.

However, if you have contacted the scalper in advance, you can use it, as it is not prohibited in principle.

It is easy to forget to contact them, but considering the risk of zero-cut, it is good to do so.

GEMFOREX also has loss-cut rules.

I mentioned that GEMFOREX has a zero-cut system, but there are steps before it is actually executed.

It does not mean that the zero-cut occurs suddenly when you are trading.

The specific steps are “margin call,” “loss cut,” and “zero cut.

I will explain what the rules are for each of them.

・cutting one’s losses

A zero-cut is executed when the account balance becomes negative, but this is not a frequent occurrence.

When the margin maintenance ratio falls below 20%, there is a mandatory loss cut, which is a two-step process.

When this loss-cut cannot be executed in time, the zero-cut is executed.

The lower the loss-cut level is , the more you earn it’s easy to keep the position.Once the loss cut is reached, you cannot continue to hold your position any longer.

Once the loss cut is reached, you cannot continue to hold a position any longer.

There are two ways to prevent losses as much as possible

・to Reduce the number of positions
・to Ensure that the margin maintenance ratio is maintained at a constant level.

Also, do not miss margin calls.

What are the advantages of GEMFOREX’s zero-cut system?

There are two good points.

・No risk of additional fees.
・Easy to start trading with high leverage

Here are the details of these benefits.

Once you know the benefits, you can’t choose other than GEMFOREX.

・no risk additional payment

Even if you have got lost due to sudden market movements, you do not have to pay for additional margin.

Although the margin you have deposited for trading in advance will be lost, you do not have to pay any additional money even if it comes to negative $5000 or $10000.

Even if you are worried about the loss that you cannot pay yourself in starting FX trading, GEMFOREX has no additional margin, so you can avoid the risk of debt.

Easy to start trading with high leverage

You can start trading with as little margin as possible by applying high leverage.

The feature of high leverage is that large transactions can be made even with a little money, So you will feel cozy to start trading.

For example, even if you only have $1000 in your account, you’ll only lose the $1000.

If you are afraid to try high leverage, GEMFOREX’s zero-cut system will fit you!

Any disadvantages to GEMFOREX’s zero-cut system?

FX has a zero-cut system with high leverage, so there are no such major disadvantages.

However, you should choose the FXfirm carefully.

If the loss is too big, it may not cover the loss.

for example, at a time when the world situation moves drastically, the problem of “not being able to cover the loss” may arise.

Although this is not true for all some FX firms, there have been cases charged additional compensation because the loss cannot be guaranteed.

You may have heard of some foreign FX firms.

In 2015, during the Swiss Shock, FXDD filed a claim for additional compensation.

Although the firm had adopted a zero-cut policy, it did not execute the zero-cut because the losses exceeded the expected amount.

The company’s credibility was quickly collapsed by the additional loss request.

It subsequently resulted in the and then, their financial license was forfeited.

Some vendors could break their original promises, so we should carefully consider whether we can trust them or not.

If the FX doesn’t have enough funds, it may lose money and be broke.

As you are trading with your precious money, you need to choose a forex firm you won’t regret.

Take your time to decide if it’s safe or not.

The reason why GEMFOREX introduces zero-cut

I dare say high leverage is not a risk.

GEMFOREX is a system where the more profit you make, the more profit you can get.

Therefore, they want to increase the number of new accounts and the number of transactions as much as possible.

However, there are many people who hesitate to trade with high leverage because it seems to be a risk.

so gemforex introduced the zero cut system to encourage people to start trading by reducing the fear.

When you consider that the purpose of the system is to prevent people from being reluctant to trade, you can see how beneficial it is.

Do other FX firms have zero-cut systems?

Actually,they do.

The reasons for this…

・Uses the NDD method of trading
・Leads to the opening of new accounts by new clients
・Increases trading frequency and stabilizes commission profits

However, please keep in mind that the conditions and execution time of the zero-cut system are different in each company.

GEMFOREX offers an automatic zero-cut system, but it may not be executed unless you apply for it.

「TaitanFX」and 「Land-Fx」won’t use the zero-cut system itself if you do not apply for it, and you will be left with a loss.

「XM」 and others have different conditions, such as the fact that the zero-cut system cannot be used without making a deposit.

On the other hand GEMFOREX has adopted a method that is safe for traders, as there are no trading conditions and the execution time is as quick as within 60 minutes.

As for the execution of the zero-cut system, it is truly the top-class response.

I would like to explain each of them in detail.

What is the NDD method?

This is the “execution method”used by FX firms. It is the most common and fair method of execution.

NDD stands for non-dealing desk, and is a method in which traders buy directly from the interbank.

The interbank is where all FX orders come together, and a registered dealer acts as an intermediary among the orders.

There is no dealer in the middle, which means that this is the fairest way to trade.

・Execution at a rate that is also favorable to the trader
・All orders are covered, so dealer discretion is not a factor.

These trading methods also help the forex firm to maintain a mutually beneficial relationship with the trader.

Have you ever wondered if the execution is being intentionally manipulated when you are trading Forex?

In this respect, the NDD method allows you to trade without distrust.

active transactions

How to make customers trade is the way an FX firm earns.

If users realise that there are no fees to cover the negative loss, they may be more willing to trade more.

The more often they trade, the more commissions on marginal gains and the more profit they will make.

List of FX firms that offer zero-cuts

・XM
・GEMFOREX
・FBS
・LAND-FX
・IFOREX
・Hotforex
・Tradeview

Many well-known FX firms use a zero-cut system.

However, there are some vendors that are not listed on their websites, and their terms of use differs.

If you are going to trade with another FX firm, you’d better check whether there are any additional charges for sudden changes in advance.

You may actually be charged later if it doesn’t imply additional charge.

It would be written down on a website but  would not be found easily.

The conditions for zero-cut differ from every FX firm, so you should know the standard.

Is GEMFOREX’s zero-cut system applicable to other accounts?

Some people would use several bank accounts to trade.

They would be worried the margin will be taken from other bank accounts you registered at gemforex to cover the loss when the zero cut system is activated

If that happens, it would be a disadvantage.

GEMFOREX allows you to own multiple accounts, and only one of the accounts will be activated zero cut.

It is not compensated withanother account,the margin balance is just reset.

Therefore, it does not matter if you have multiple accounts.

However, if you are trading maliciously, the account may be frozen and other accounts may become inoperable.

so you can use the zero-cut system with confidence.

What happens if I deposit before GEMFOREX zero cut?

Some people may have experienced problems with automatic offsetting when depositing before the zero-cut is made in other markets other than GEMFOREX.

They would rush to deposit and regret.

In the case of GEMFOREX, there is no worry about offsetting even if the deposit is made before the zero-cut is executed.

This is a great rule for beginners.

The deposit is treated as a separate item and will not be offset.

Key points to consider when choosing an FX broker?

Now that we have introduced the zero-cut system in detail, you may be interested in trying gemforex.

However, there are many FX firms, so you may be confused as to which one to choose.

You should confirm “mandatory trust protection” as well.

A simple explanation of mandatory trust protection is that margins, profits and losses,customers are kept and deposited in a trust bank separately from the company’s assets.

If the FX firm goes bankrupt, the deposited assets will be converted.

It is important to note that some overseas FX firms have this trust protection, while others do not.

you must note that some FX firms have this trust protection, while others do not.

Therefore, when you choose an FX firm, you should decide whether it has a “financial license” or not.

It shows that the investor’s assets are guaranteed by a government agency.

You could see these points if the company.

・has a Zero-cut system is in place.
・Has a track record of reliable trading and as a firm.
・Has its own asset compensation system.
・are TransparentTransparent and reliable trading

Then you judge them and decide the best way for you.

The most important thing is whether the firm is reliable or not.

GEMFOREX also recommends a virtual server for emergencies

GEMFOREX is one of the FX firms that comes with a free virtual server called “VPS”

It must be surprising.

Although it is only available to users who meet the requirements, it is usually necessary to run the computer constantly when using EAs or other software.

It drains the battery a lot, and some people use it for work these days.

With a virtual server, the computer does not need to be running, So you can save electric bill

Also, if there is some contingency, you don’t have to worry that you will not be able to trade if there is a problem like the wiring.

The virtual server is safe during blackout.

We recommend that you also consider the GEMFOREX virtual server so that you don’t have to worry about being unable to trade and having a zero cut when you open the screen….

After all, it is FREE, so it is the best way to avoid risk.

To summarize

I have explained GEMFOREX’s zero-cut system so far.

When you actually try it, you will find that you can trade from a small amount and there are many convenient services such as the zero-cut system, which does not charge you more money than your margin.

GEMFOREX’s leverage of up to 1,000 times is a great advantage,and with the zero-cut system, you can avoid the risk of incurring debt.

The zero-cut system of GEMFOREX makes it easy for even beginners to trade , so open an account and give it a try!

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