What Is Zero Cut in Overseas FX? How It Works vs. Margin Calls
Wondering what zero cut in overseas FX actually is and how it works?
In short, when your account balance goes negative, the broker covers the negative amount and returns your balance to zero.
This article explains how it differs from the margin call (oikin) in Japan's domestic FX and how to check the conditions in the broker's terms.
Summary: Zero cut is the broker resetting a negative balance to zero
- The broker covers the amount by which a sudden price move pushes your balance below zero
- It is generally designed so you are not billed for losses beyond your deposit
- Whether it applies, and under what conditions, differs by the broker's terms
- How it relates to bonuses also needs to be checked in the terms
How zero cut works, with an example
A stop-out is a forced close when your margin level falls below a set level. But if prices move suddenly, the close may not be executed in time and your balance can go negative.
Zero cut is when the broker absorbs this negative amount and returns your balance to zero. You do not have to pay the negative amount yourself.
- 1
Prices move suddenly
The market moves sharply on an economic data release or a weekend gap.
- 2
The stop-out cannot keep up
The forced-close price slips, and the loss exceeds your account balance.
- 3
The balance turns negative
A loss beyond your deposit arises temporarily.
- 4
The broker resets it to zero
If zero cut applies, the negative amount is covered at the broker's expense.
How it differs from margin calls in domestic FX
In domestic FX in Japan, when your balance goes negative, you generally have to deposit the shortfall as an additional margin call (oikin).
| Item | Overseas FX zero cut | Domestic FX margin call |
|---|---|---|
| Handling of a negative balance | The broker covers it and resets to zero (conditions apply) | You may have to deposit the shortfall |
| Loss limit | Your deposit is the guideline | Losses may exceed your deposit |
| Where to check | Each broker's terms | Each broker's agreement |
Check the conditions in the broker's terms
Zero cut is not necessarily on the same terms at every broker. The scope of application, eligible accounts, and excluded cases are set in the broker's terms.
In XB's broker data as well, zero cut is shown as "Yes*" and "Check conditions." We do not state it definitively, and you should confirm it in the official terms.
- Which account types are eligible
- Whether it is excluded in cases of fraudulent trading or terms violations
- Whether any procedure is needed before it is applied
- How bonuses or credit are treated in your balance
Bonuses and zero cut: what to watch for
On an account that has received a bonus, the treatment of the bonus amount may be set in the terms. How it is handled at zero cut also needs to be checked in the terms.
See each broker's account conditions in a list, with checked dates.
See supported brokersFAQ
Q.What is zero cut in overseas FX?
When your account balance goes negative, the broker covers the negative amount and resets your balance to zero. Conditions differ by the broker's terms.
Q.Does zero cut mean no margin call will occur?
Where it applies, it is generally designed so the negative amount is not billed to you. However, you need to check the conditions in each broker's terms.
Q.What happens to zero cut if I have a bonus?
How the bonus amount is treated is set in the broker's terms. Check the official terms before opening an account.
This article is for information purposes only and is not investment advice. Conditions may change, so please check each broker's official page for the latest information. Offshore FX and CFD trading carries a risk of losses exceeding your principal.
