Warning: Different Forex Brokers Have Different Margin Call and Stop Out Levels

When trading forex, not all brokers operate the same way when it comes to Margin Call and Stop Out Levels. You must know your broker’s rules! 📜

Many traders ignore these critical levels, only to find out later that their positions have been liquidated without warning! 😱

How Brokers Handle Margin Calls & Stop Outs

Forex brokers typically fall into two categories when handling a Margin Call:

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1️⃣ Brokers that Treat a Margin Call & Stop Out as the Same Thing

👉 Margin Call Level = Stop Out Level

• No warning.
• If your Margin Level drops below 100%, the broker automatically starts liquidating your trades immediately to restore margin.
• You receive a notification AFTER the liquidation has already started.

📌 Example:

• Margin Call Level: 100%
• Stop Out Level: 100% (same as Margin Call Level)
• If your Margin Level drops below 100%, the broker immediately closes positions, starting from the most unprofitable one.

💥 NO TIME to save your trades!
Once your Margin Level hits 100%, it’s game over for your losing trades.

2️⃣ Brokers that Give a Margin Call Warning Before Stop Out

👉 Margin Call Level is different from the Stop Out Level.

• If your Margin Level drops to the Margin Call Level (e.g., 100%), you get a warning.
• If your Margin Level keeps dropping and reaches the Stop Out Level (e.g., 20%), the broker starts closing positions to restore margin.

📌 Example:

• Margin Call Level: 100% (Warning only)
• Stop Out Level: 20% (Forced liquidation)
• If your Margin Level hits 100%, you get a WARNING to add funds or close trades.
• If your Margin Level keeps falling and reaches 20%, the broker liquidates trades until your margin is restored above 20%.

✅ This approach gives traders more time to manage positions before forced liquidation occurs.

📌 Example of a Broker’s Margin Policy:

What Happens When You Get a Margin Call? 🤔

Scenario 1: Margin Call & Stop Out are the Same (No Warning)

• You DO NOT receive a warning before liquidation starts.
• Your broker immediately starts closing losing positions.
• Your trade is closed at market price—which may not be in your favor!

🛑 Result: If the market is volatile, you can lose much more than expected because orders are executed at the next available price (slippage). 🚨

Scenario 2: Margin Call is Separate from Stop Out (Warning Given)

• You receive a warning at the Margin Call Level.
• You have a chance to close positions or add more funds.
• If your Margin Level drops further to the Stop Out Level, the broker closes positions automatically.

🟢 Result: You get time to manage your trades before liquidation.

Margin Call Flowchart (What Happens to Your Trades?) 📊

💡 If your broker has a separate Margin Call & Stop Out Level:

1️⃣ Margin Call Level Hit (e.g., 100%)
🔹 You receive a warning from your broker.
🔹 You CAN’T open new trades.
🔹 You must close losing trades or add funds to continue trading.

2️⃣ Stop Out Level Hit (e.g., 20%)
🔹 Your broker closes your worst trade first.
🔹 If the Margin Level is still below 20%, the broker closes more trades.
🔹 Liquidation continues until your Margin Level is above the Stop Out Level.

Key Takeaways: How to Avoid Margin Call & Stop Out

✅ Check your broker’s policy!

• Always know the Margin Call and Stop Out Levels before opening an account.
• Ask your broker if they send a warning or immediately liquidate trades.

✅ Use proper risk management!

• Don’t overleverage. 📏
• Keep position sizes small relative to your capital.
• Always use a stop-loss to avoid getting liquidated.

✅ Monitor your Margin Level!

• If your Margin Level is below 150%, it’s a red flag! ⚠️
• If it drops below 100%, you may receive a Margin Call.
• If it drops below the Stop Out Level, your broker will close your trades.

✅ Have backup funds ready! 💰

• If you get a Margin Call, quickly deposit more funds to prevent Stop Out.
• Keep an extra buffer in your account to handle market fluctuations.

Final Thoughts

Margin trading amplifies both profits & risks.

❌ If you don’t understand how Margin Calls & Stop Outs work, you can lose everything quickly.
✅ If you use proper risk management, you can avoid getting liquidated and stay in the game.

📌 Before trading, check your broker’s margin policies. Some brokers immediately close trades when the Margin Level hits 100%, while others give you time to fix your margin.

🚨 Know the rules, trade smart, and stay in control! 🚨