What is a Stop Out Level?
Stop Out
Forex Trading Glossary
Quick Answer: A stop out is the broker’s forced liquidation when margin level falls below its threshold, closing positions to keep the account from going negative.
What is a Stop Out Level?
A stop out occurs when your broker automatically closes positions because your margin level drops below a predefined threshold. It is the final backstop that prevents the account from going negative.
How Stop Outs Are Triggered
- Margin level formula: Margin level = (equity / used margin) × 100. Hit the broker’s stop out percentage and forced liquidation begins.
- Priority order: Brokers typically close the largest losing positions first to free margin quickly.
- Volatility risk: Fast markets can widen spreads, accelerating the move toward a stop out.
Know Your Threshold
Check the platform settings for exact stop out levels. Combine that information with your leverage to understand how much room you truly have.
Preventing Forced Liquidation
- Keep free margin above 100% by controlling position size and margin level.
- Use hard stop losses so trades exit on your terms, not the broker’s.
- Reduce exposure before high-impact news when spreads and swaps can spike.
- Monitor correlated trades; multiple losing positions in the same theme can cascade into a stop out.
Related Terms
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