Stop out
Also known as: stop-out level, margin close-out, forced liquidation
Stop out: A stop out is when the broker automatically closes your positions because your account no longer has enough equity to support them. It happens when the margin level reaches or falls below the broker’s stop-out level.
How a stop out works
Brokers monitor the margin level (equity ÷ used margin × 100%). A margin call level usually comes first as a warning; if the margin level keeps falling to the stop-out level, the broker begins forced liquidation — closing positions in the order set by its liquidation policy until the margin level recovers or no positions remain. In fast markets, positions may be closed at worse prices than expected.
Rules for retail clients
For retail CFD and forex clients in the EU and UK, brokers must close out one or more positions when account equity falls to 50% of the total required margin. Elsewhere, stop-out levels are set by the broker.
Example
With a 50% stop-out level, positions start being closed when equity falls to half of the used margin — for example when equity drops to $917 on $1,833 of used margin.
Learn more
- What Is a Margin Call in Forex? Margin Call vs Stop Out
A margin call warns that your forex account is short of margin; a stop out closes positions. Learn how they work, the 50% rule and how to avoid them.
- What Is Margin in Forex? Used, Free Margin and Margin Level
Margin is the deposit needed to open a leveraged forex trade. Learn required margin, used margin, free margin, equity and margin level with examples.
Related terms
- Margin call
A margin call is a warning that your account is running low on equity to support your open positions. Technically, it is reached when the margin level falls to a threshold set by the broker, and it can come as a notification or only as a warning in the platform.
- Margin level
Margin level shows how much equity you have compared with the margin your open positions use. It is equity ÷ used margin × 100%, and brokers typically use it to decide when to issue a margin call and when to close positions.
- Free margin
Free margin is the money in your account that is not being used to support open positions. It equals equity minus used margin.