The Stop Out Level is the last line of defense in forex trading—when your Margin Level drops too low, your broker will forcefully close your trades to prevent further losses.
This means that if your Margin Level falls to a specific percentage (e.g., 20%), your broker will automatically liquidate one or more of your positions.
1. Understanding the Stop Out Level
✔ The Stop Out Level is a threshold, set by your broker, that triggers automatic liquidation of your open trades.
✔ If your Margin Level falls to this threshold, the broker closes losing positions to free up margin.
✔ This is a protective mechanism to prevent your account balance from going negative.
📌 Formula to Check Stop Out Level: 📢 Margin Level = (Equity / Used Margin) × 100%
If Margin Level ≤ Stop Out Level, your broker automatically starts closing your losing trades!
2. What Happens When a Stop Out is Triggered?
🔥 You lose control of your trades—the broker closes positions automatically.
🔥 Forced liquidation starts with the largest losing position.
🔥 Your Margin Level must rise back above the Stop Out Level for liquidation to stop.
🔥 Your account balance could be drastically reduced, or even wiped out.
📌 Stop Out Level ≠ Margin Call
A Margin Call is just a warning, but a Stop Out is an immediate forced closure of trades.
3. Example: Stop Out Level at 20%
Let’s say your broker has a Stop Out Level of 20%, and your account has the following details:
📌 Account Balance: $1,000
📌 Open Position: EUR/USD (1 mini lot = 10,000 units)
📌 Margin Requirement: 2%
📌 Required Margin: $200
📌 Used Margin: $200
📌 Floating Loss: -$960
Step 1: Equity Calculation
📢 Equity = Balance + Floating P/L = $1,000 – $960 = $40
Step 2: Margin Level Calculation
📢 Margin Level = ($40 / $200) × 100% = 20%
🔥 Your account has now hit the Stop Out Level (20%)!
🔥 Your broker immediately starts closing trades to free up margin!
4. What If You Have Multiple Open Positions?
If you have multiple trades, your broker will liquidate the largest losing position first.
📌 Liquidation process:
✔ The worst-performing trade is closed first.
✔ If Margin Level is still below the Stop Out Level, the next biggest losing trade is closed.
✔ This continues until Margin Level recovers above Stop Out Level.
💥 If losses are too large, all trades could be closed, leaving you with very little or no capital left.
5. How to Avoid a Stop Out?
✔ Use a Stop-Loss to prevent excessive losses.
✔ Manage your leverage—don’t risk too much on a single trade.
✔ Keep an eye on your Free Margin—ensure you have a safety buffer.
✔ Monitor your Margin Level frequently—don’t wait for a Margin Call.
✔ Deposit more funds if your Margin Level gets dangerously low.
🚀 Risk management is key to avoiding forced liquidation!
6. Summary:
✅ Stop Out Level = A critical threshold where the broker automatically closes losing trades.
✅ Forced liquidation starts with the biggest losing trade first.
✅ Multiple positions can be closed if necessary to restore Margin Level.
✅ Always monitor your Free Margin to avoid reaching the Stop Out Level.
🚨 Don’t wait for a Stop Out—manage your risk before it’s too late! 💹
