In plain English
What Stop-out level means
A stop-out level is a built-in safety trigger. When the account’s margin level falls to or below the broker’s specified point, the platform may begin liquidating positions, often starting with the least favorable or most margin-intensive ones. The exact trigger and order of closure are broker-specific.
Why it matters
Stop-out levels define when a losing trade stops being merely open and becomes subject to forced liquidation. That makes the level critical for risk management, especially in fast markets where equity can drop quickly. Some regulators also require close-out rules for retail derivatives accounts.
Example
If a broker’s stop-out level is 50% and your equity-to-used-margin ratio falls to that point, the platform may begin closing positions automatically. For example, with $4,000 used margin, a 50% stop-out corresponds to $2,000 equity.
Quick answers
Common questions
Is the stop-out level always the same as maintenance margin?+
No. Maintenance margin is the margin needed to keep a position open; stop-out level is the account threshold that can trigger forced closure.
Can a stop-out happen before I notice a margin call?+
Yes. In fast-moving markets, prices can move through both thresholds before you react.
Sources