Fool-proofing the trading process to protect investors’ funds

Author: Ivan Egorov

The importance of the trading process is paramount to brokerages. It has to be fast, reliable, and profitable. Room for error is almost non-existent, so brokers must constantly watch out for potential risks that can affect traders’ funds and brokers’ reputations.

In today’s article, we will share a list of things brokers can do to foolproof the trading process and ensure that traders’ funds are not exposed to any unnecessary risk.

1. Watch out for traders’ equity

Sometimes traders continue trading despite having insufficient equity. This becomes a serious problem with large volume orders where the potential loss is much greater. Manually monitoring everyone’s accounts is virtually impossible. Instead, brokers can use the StopOut plugin to specify the critical level as a percentage of the maximum equity of the day. Upon reaching that level, the plugin will close all orders on the account and switch it to “read-only” status.

2. Protection in times of high volatility

High volatility is an exciting time in the trading world because that’s when many traders are hopeful about making lots of money in a short amount of time. However, in reality, the majority of traders are more likely to lose money if they’re not careful. The Negative Balance Protection plugin will return the balance to zero if it turns negative and withdraw all credit facilities from the account to prevent further losses. That way, traders’ funds are safe, and the broker stays compliant.

3. Dealing with no Stop Loss level orders

Sometimes traders can open orders without a Stop Loss level specified, creating a considerable risk for their funds. Depending on the broker’s jurisdiction, having trader orders with no Stop Loss might be against local regulations. The Limited Risk Account plugin by TFB will restrict opening orders without a Stop Loss. It can also calculate it and assign it to the order automatically.

Final thoughts

Trading is risky by nature, but there are measures that brokers can take to reduce excessive risks and help their traders make the most of every opportunity. Tools for Brokers specialises in solutions that protect both traders and brokers, so if you’d like to learn more about what we can do for your brokerage, please email us at

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