Margin Call vs Stop Out: The Levels That Close Your Trades

Two numbers decide when an account stops being yours to manage. One produces a warning, the other closes your positions for you, and most explanations of them repeat the same pair of percentages without saying where those percentages come from. Where a symbol allows opposing positions, how opposing positions are margined is a broker setting rather than a platform behaviour, and it changes the used-margin figure in this calculation.

They do not come from the same place. For a retail client of a firm regulated in the European Union or the United Kingdom, one of these levels is set by a regulator and the broker cannot go below it. Elsewhere it is entirely the broker’s choice.

What follows separates the two events, gives the rule that binds where one exists, and is explicit about the point where the mechanism stops protecting you.

What the Margin Level Percentage Actually Measures

Margin level is a ratio, not an amount. It is your equity divided by the margin currently used by open positions, expressed as a percentage.

Equity is the part people misread. It is the account balance adjusted by the unrealised profit or loss on everything currently open, and by accrued costs such as swap and commission.

That is why the figure falls while nothing has left the account. A position moving against you reduces equity immediately, and the ratio drops even though the balance is untouched and no loss has been realised.

The denominator matters just as much. Used margin is set when a position opens and does not shrink as the trade goes wrong, so a falling numerator is divided by a fixed number. The arithmetic behind that requirement is worked through on our margin calculator, which this page assumes rather than repeats.

One consequence follows directly: adding a position raises used margin and lowers margin level, even when the new position is immediately profitable.

A Margin Call and a Stop Out Are Two Different Events

A margin call is a notification. It tells you that the funds supporting your open positions have reached a level the broker has set, and it usually comes with a restriction on opening anything new.

Nothing is closed at that point. You can deposit, you can close positions in an order you choose, or you can do nothing and accept what follows.

A stop out is the second level and it is not a message. Once margin level reaches it, positions close automatically and the account holder plays no part.

Alpari states on its own help pages that the level is a fixed percentage determined by the broker and visible in the account specifications of the trading account. That describes where the number lives, and it applies well beyond that one firm.

The distance between the two levels is the only window you get. In a slow market it can last hours; in a fast one a single move can carry an account through both, which is why treating the margin call as a scheduled prompt to act is a mistake. When a stop out closes a position, the quote side that triggers a stop is what the closing price is measured against.

The 50 Per Cent Floor Regulators Set, Not Your Broker

Explanations of this subject almost always present the close-out level as a broker preference. For a large group of traders that is wrong.

The floor below comes from the regulator, and no firm it covers may set a lower one.

ESMA’s product intervention measures for contracts for difference include a margin close-out rule on a per-account basis, standardising the percentage of margin at 50 per cent of minimum required margin at which providers must close out a retail client’s open positions.

The same package sets negative balance protection on a per-account basis, and caps leverage at 30:1 for major currency pairs, 20:1 for non-major pairs, gold and major indices, 10:1 for other commodities and non-major equity indices, 5:1 for individual equities and 2:1 for cryptocurrencies. Both that guarantee and the caps are retail-only entitlements, so what a trader forfeits by moving across is worth reading alongside professional client categorisation.

The Financial Conduct Authority made the equivalent requirement permanent for the United Kingdom in PS19/18, requiring firms to close out a customer’s position when their funds fall to 50 per cent of the margin needed to maintain their open positions, alongside a guarantee that a client cannot lose more than the total funds in the trading account.

The measurement basis is where this differs from the number on your screen, and no explanation surveyed for this page draws the distinction.

Two accounts showing the same percentage in the terminal can therefore sit at different distances from a mandatory close-out, because the rule is anchored to initial margin rather than to the margin in use at that moment.

The scope limit matters just as much. An account held outside those jurisdictions, or one where the client has been categorised as professional, is not covered by the floor and depends entirely on the broker’s terms.

How Positions Are Picked for Liquidation

Here the common explanations contradict each other, and the most confident version is the least reliable.

Two widely read guides state as general fact that the broker closes the most unprofitable position first. A third says closure runs by largest loss or by largest margin consumed, and that it varies by firm. Only the third is right about the status of the claim.

The sequence is a broker parameter. The ESMA measure requires closing out on terms most favourable to the client and does not prescribe an order, so nothing at the regulatory level makes worst-loser-first universal.

This matters more than it sounds. If you hold several positions and assume the largest loser goes first, you are predicting which exposure survives, and that prediction rests on a setting you have not checked.

It also affects offsetting positions. Closure runs leg by leg, so a pair held to cancel each other can be broken by a partial liquidation, leaving the remaining leg fully exposed. Where a broker closes one position at a time until margin level recovers, the account ends up part-liquidated in a shape nobody chose.

Why a Stop Out Is Not a Limit on Your Losses

The mechanism has an obvious reading that is wrong: that reaching the stop-out level means losing a fixed and known proportion of the account.

A stop-out level is a trigger, not a fill. When it is reached, the broker sends closing orders and those orders execute at the best price available at that instant.

If price is moving through a thin book, or if the market reopens after a weekend or a scheduled announcement at a distance from the last traded price, there is no obligation for a fill to appear near the level. The positions close, but lower. Our page on gapping and slippage covers why that happens.

The protection that actually caps the outcome is a separate thing. Negative balance protection limits the loss to the funds in the trading account, and under both the ESMA measures and PS19/18 it is guaranteed on a per-account basis for retail clients of firms in those jurisdictions. A crypto derivatives venue resolves the same shortfall differently, passing it to profitable traders rather than leaving it with the firm, which is covered in how a crypto derivatives venue handles the same shortfall.

Read that scope carefully: it is the difference between a legal entitlement and a marketing line. Where it does not apply, whether the account can go negative is a question about the broker’s contract, not about the stop-out level.

Where to Find the Levels on Your Own Account

This page deliberately publishes no broker-specific percentages. Every figure here should trace to an official source, and the broker pages stating these levels could not be reached at the time of writing. Note also that a different level with a similar name exists – a minimum distance in points between an order and the current price – which is set per symbol rather than per account.

That omission is worth naming, because the articles competing for this subject all print such numbers without saying where they came from. A stop-out percentage attributed to a named broker is worth nothing unless it is the broker saying it.

Three places hold the real answer:

• The account or contract specifications your broker publishes for the exact account type you hold. Alpari directs clients here, and it is the standard location across the industry.
• The client agreement, which is where the liquidation sequence and any right to close positions partially are usually described.
• A written question to support: the margin call level, the stop-out level, whether either varies by instrument, and the order positions are closed in.

Ask about account type explicitly, because levels commonly differ between account types at the same firm. Our overview of tiered leverage shows how one account can carry different requirements across exposure bands.

What Actually Reduces the Chance of a Stop Out

Almost nothing on the broker’s side is adjustable, which points the answer back at the two inputs to the ratio.

Used margin is the input you control before the trade, being a function of position size and the applicable requirement. The decision that sets your distance from a stop out is therefore the size decision, taken before entry. Our guides to lot sizes and position sizing deal with that choice directly.

Reducing size lifts margin level from both directions at once: it releases used margin and shrinks the floating loss the same market move produces.

The leverage row misleads most often. Raising leverage improves the ratio because a given position requires less margin, and it leaves the money lost per point of adverse movement exactly where it was.

A stop-loss order sits outside this arithmetic. It works on price rather than margin level, and caps the loss on one position rather than protecting the account. Our page on order types covers the distinction.

Who This Page Is Not For

This is a description of a mechanism, not a technique. Nothing here makes a stop out less likely on its own, because the only inputs a trader controls are size and exposure, and those belong to a risk process rather than to this page.

It is also not a broker comparison. No stop-out percentage is quoted for any named firm, deliberately.

Traders whose accounts sit outside the European Union and the United Kingdom should read the regulatory section as context rather than as protection they hold. That floor attaches to the regulator, not to the product.

Frequently Asked Questions