XM’s Zero Cut System

XM’s ‘Zero Cut System’ ensures that if a loss cut (forced settlement) cannot be executed in time due to sudden market fluctuations, and the loss exceeds the available margin in the account, XM will cover the loss and reset the negative balance to zero.

XM’s Zero Cut System is subject to certain rules. Please review these rules before trading to ensure you understand how the system works.

The Zero Cut System does not apply if your available margin is positive.

XMTrading’s Zero Cut System, which resets a negative balance to zero, does not apply if your account balance is negative but your available margin remains positive. Available margin includes your account balance, any bonuses (credits), and unrealized gains or losses on open positions. If your available margin is positive, you can continue trading, so the conditions for Zero Cut execution are not met.

When equity is positive due to bonuses (credits)

XM’s Zero Cut System is triggered only when equity is negative. Therefore, if your equity is positive due to a bonus (credit), the Zero Cut will not be applied.

For example, if your account balance is -50,000 yen but you have a bonus (credit) balance of 100,000 yen, your available margin would be 50,000 yen. Since your available margin is zero or positive and you can continue trading, the Zero Cut System would not be applied.

If you hold a position with unrealized gains

Even if your account balance is negative, if you have unrealized profits from other open positions in the same account and your available margin is positive, those profits would be sufficient to cover the negative balance if you were to close your positions immediately. In this case, the Zero Cut System would not be applied.

For example, if your account balance is -50,000 yen, but the total value of your open positions A and B is 100,000 yen (A: 120,000 yen, B: -20,000 yen), your available margin would be 50,000 yen. Since your available margin is zero or positive, allowing you to continue trading, the Zero Cut System would not be applied.

No upper limit on the Zero Cut amount

XM’s Zero Cut System does not impose any limits on the amount covered. If the conditions for Zero Cut execution are met, XM will cover the entire negative balance, regardless of the loss amount. This allows you to trade with confidence, even when using high leverage of up to 1,000x.

No limit on the number of Zero Cut executions

XMTrading does not limit the number of times the Zero Cut System can be applied. Even if multiple loss cuts occur, as long as your available margin is negative and the conditions for Zero Cut execution are met, the system will be applied. You can trade with confidence knowing this protection is always in place.

Zero Cut is applied on a per-account basis.

XM’s Zero Cut System is triggered when an account’s balance becomes negative and is executed on accounts with negative equity. Even if you have multiple accounts with positive equity under the same name, XM will not transfer funds between accounts to cover losses. Zero Cut protection is applied on an individual account basis, not across multiple accounts.

If the account is involved in any prohibited activities, the Zero Cut System will not apply.

XMTrading’s Zero Cut System is designed to provide a safe trading environment for customers. However, if it is determined that you are abusing the system—such as by engaging in cross-account hedging or hedging between XM and another broker—the Zero Cut will not apply, even if losses exceed your deposited funds. Additionally, the Zero Cut will not be applied in cases of prohibited activities or violations of the Terms of Service, including arbitrage trading or fraudulent acquisition of XMP or bonuses.

XMTrading’s Zero Cut System can immediately reset your account’s negative equity when an additional deposit above the minimum deposit amount is made, XMP (XM Points) are exchanged for cash (USD), or funds are transferred between accounts. Please note that XMP bonus exchanges to Zero Cut–eligible accounts do not count as additional deposits. If you exchange XMP for a bonus into a Zero Cut–eligible account with no open positions, the bonus will first offset the negative balance. Any remaining negative balance not covered by the bonus can then be addressed with an additional deposit using one of the methods above, at which point the Zero Cut will be applied immediately.

Zero cut execution conditions and execution timing

When you make an additional deposit into an account eligible for the Zero Cut System, the deposit will not be used to cover existing losses. Once the deposit is made, XM will verify that the account qualifies for Zero Cut and execute the reset. After your negative balance is reset to zero, the additional deposit will be processed, and the full amount will be reflected in your account balance.

XMTrading’s Zero Cut System prioritizes covering losses using any available bonus balance in an account eligible for Zero Cut.

If your bonus balance is exhausted and your losses are still not fully covered, the Zero Cut will be executed. However, if your account balance reaches zero due to the bonus covering the loss, the Zero Cut will not be applied. If no bonus balance is available at the time of Zero Cut execution, XM will cover the entire negative equity amount.

Example of Zero Cut Execution with a Bonus (Credit) Balance

If a loss of -100,000 yen occurs due to a loss cut and you have a bonus (credit) balance of 50,000 yen, your effective margin will be -50,000 yen. When the Zero Cut is executed, the bonus will first be applied to cover part of the loss, and the remaining -50,000 yen will be reset to zero.

• Negative balance occurs

  ---

  1. Account balance:
     -100,000 yen
  2. Bonus (credit):
     50,000 yen
  3. Effective margin:
     -50,000 yen

• Negative balance will be deducted from your bonus (credit)

  Bonus offset

  ---

  1. Account balance:
     -50,000 yen
  2. Bonus (credit):
     0 yen
  3. Effective margin:
     -50,000 yen

• If a negative balance remains after the bonus is offset, “zero cut” will be applied.

  Applying zero cutoff

  ---

  1. Account balance:
     0 yen
  2. Bonus (credit):
     0 yen
  3. Eligible margin:
     0 yen

Example of Zero Cut Execution Without a Bonus (Credit) Balance

If a loss of -100,000 yen occurs due to a loss cut and there is no bonus (credit) balance in the account, the effective margin will be -100,000 yen. When the Zero Cut is executed, the entire negative balance of -100,000 yen will be reset to zero.