know Your Broker’s Margin Call and Stop Out Levels
Every retail forex broker or CFD provider sets its own Margin Call Level and Stop Out Level.
Understanding these levels is absolutely essential before you start trading.
Unfortunately, many traders skip this step entirely—they open an account and jump right into the markets without knowing how their broker handles margin requirements. Ignoring or overlooking these critical levels can quickly lead to serious losses.
Brokers Handle Margin Calls Differently
Some brokers do not differentiate between a Margin Call and a Stop Out. In this case, there are no warning messages—once your Margin Level falls below a set threshold (e.g., 100%), the broker will begin automatically closing your trades. You’ll receive a notification after the liquidation has begun.
📌 Example: A broker may set both the Margin Call and Stop Out Level at 100%.
If your Margin Level dips below that, your trades are instantly liquidated—no prior warning.
On the other hand, some brokers treat Margin Calls and Stop Outs separately.
📌 Example: A broker might set the Margin Call Level at 100% and the Stop Out Level at 20%.
If your Margin Level drops below 100%, you’ll receive a warning. This gives you the chance to either deposit more funds or close trades to restore your Margin Level.
If you don’t act and your Margin Level falls to 20%, your broker will then begin automatically closing positions—starting with the most unprofitable one.
What Does a Margin Call Actually Mean?
Depending on your broker’s policy, a Margin Call could mean:
- If there is a separate Stop Out Level: You receive a warning that your Equity has fallen below the required margin. It’s a signal to take action before liquidation occurs.
- If there is no separate Stop Out Level: A Margin Call results in immediate liquidation of your positions, starting with the biggest losing trades, until the required margin is restored.
Here’s how you can think about it:
- A Margin Call is like a “last warning.”
- A Stop Out is the broker’s automated action to prevent your account from going negative.
If there’s no separate warning (Margin Call), your trades are closed automatically without any heads-up—you’re simply “stopped out.”
Final Thoughts
Whether your broker gives you a heads-up or not, it’s your responsibility to monitor your margin and maintain sufficient equity to support your open positions.
The good news? With proper risk management, smart position sizing, and the use of stop-loss orders, Margin Calls and Stop Outs can be easily avoided.