What Does “Stop Out Level” or “Stop Out” Mean?
The Stop Out Level is similar to the Margin Call Level, but it’s far more serious.
In forex trading, the Stop Out Level is a specific Margin Level (%) at which your broker will begin automatically closing your open positions. This process—known as liquidation—occurs because your account no longer has enough margin to support your open trades.
More specifically, a Stop Out happens when your Equity falls below a certain percentage of your Used Margin. When this level is breached, your broker will start closing the most unprofitable trades first to try to restore your Margin Level above the Stop Out threshold.
Once triggered, this automated process cannot usually be reversed. It's designed to protect your account from going into a negative balance.
Example: Stop Out Level at 20%
Let’s say your broker’s Stop Out Level is 20%.
If your Margin Level drops to 20%, your position(s) will be automatically liquidated.
Recap of Key Metrics:
- Balance: $1,000
- Used Margin: $200
- Floating Loss: -$960
- Equity = $1,000 – $960 = $40
- Margin Level = ($40 / $200) × 100% = 20%
At this point, the broker will close your position to release the $200 of Used Margin, converting it into Free Margin. However, your realized loss is now $960, so your Balance, Equity, and Free Margin are all reduced to $40.
Stop Out Level vs Margin Call Level
| Event | Margin Level | Equity | Used Margin | Balance | Floating P/L |
|---|---|---|---|---|---|
| Margin Call | 100% | $200 | $200 | $1,000 | -$800 |
| Stop Out Triggered | 20% | $40 | $200 | $1,000 | -$960 |
| After Liquidation | – | $40 | $0 | $40 | $0 |
What Happens With Multiple Open Positions?
If you’re trading multiple positions, the liquidation process typically starts with the position with the largest unrealized loss. Brokers will continue closing positions one by one until your Margin Level rises above the Stop Out threshold. In extreme cases, all open positions may be closed.
For example, if the Stop Out Level is set at 100%, and your Margin Level drops below that, your broker may begin auto-liquidating your trades starting from the worst-performing one, to regain compliance with margin requirements.
Why Stop Outs Happen
The Stop Out mechanism is a safeguard that:
- Prevents your account from going negative
- Protects both the trader and the broker from excessive losses
It’s your responsibility to monitor your positions and maintain sufficient margin. If you ignore warnings and margin calls, and your trades keep going against you, a Stop Out will be enforced—automatically and without negotiation.
So, while you can complain to your broker, the system is doing exactly what it’s supposed to do.