AvaTrade’s new AvaProtect tool is proving to be a beneficial innovation. Technological advances are always welcome, but in what is turning out to be a tumultuous year one that is focussed on risk management will be particularly useful.
The AvaProtect project was rolled out at the end of January 2020, just as the COVID storm clouds gathered. It will be interesting to see the firm’s data on client take-up during Q1.
How does AvaProtect work?
This unique risk management feature allows you to protect a specific trade against losses of up to $1m. You have to choose over which time frame, and there is a fee to pay, explained by AvaTrade as “a modest hedging cost paid at the time of purchase.”
The new product is designed to support mobile trading and the desktop trading application, AvaTrade WebTrader. The App is free to download in Android or iOS format and setting it up takes only moments to do.
If you make a wrong decision and your trade goes against you, then as long as it’s within the set timeframe, your funds are returned directly into your account.
If your call is a good one you just have to close it out as normal and funds will be credited to your account in the usual way.
Dáire Ferguson, CEO of AvaTrade, has explained the intention of the new service to include enhancing the whole trading experience:
“Our core value is to empower people to be able to invest and trade with confidence in a safe and reliable environment, and we believe that AvaProtect really delivers on that commitment.”
The warm reception for the AvaProtect product could be down to the extreme market events of 2020. It also catches something of the zeitgeist.
The trading community is picking up on the need to ‘stay in the game’.
The irony of trading is that losses have to be accepted as part and parcel of successful long-term trading. However, AvaTrade is not alone in spotting the need to help clients minimise, analyse and mitigate downside risk.
Like all well-regulated brokers, AvaTrade has a disclosure statement which reveals the percentage of retail investors who lose money. Their figures in this ranking put them in a good position in relation to others in their peer group.
“CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.”
One of the inside-secrets of investing is that it’s the management of your losing trades rather than the winning ones that will ultimately determine your P&L. It’s reassuring to see a broker working on that area of the trading role, as much as the more eye-catching revenue-generating topics.
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