Margin call and stop out
A stop out is the platform closing your trades for you. It is not a punishment — it exists so your account cannot go negative — but it always fires at the worst possible moment, because that moment is what triggers it.
The number that matters
Margin level is your equity divided by the margin in use, shown as a percentage. With $1,000 equity and $200 of margin used, it is 500%.
Equity moves with your open profit and loss; used margin does not. So as a position goes against you, equity falls, used margin stays put, and the percentage drops.
A margin call is the warning as that percentage approaches the limit. A stop out is the platform acting on it — closing positions automatically, largest loser first, until the level recovers.
How close a position actually puts you
Take $1,000 with one standard lot of EURUSD at 1:500. Margin used is about $200, leaving $800 free.
Each pip on that lot is roughly $10. So 80 pips against you consumes the entire free margin and puts the account into stop-out territory. Eighty pips on EURUSD is an ordinary day, not an unusual event.
With 0.1 lots instead, each pip is $1 and the same 80-pip move costs $80 rather than $800. The strategy is unchanged; only survival differs. That comparison is the whole lesson.
Why it fires at the worst moment
A stop out triggers when price has moved furthest against you, which is often exactly where it is about to turn. The mechanism closes at the extreme by construction.
That is why reaching stop out is worse than taking a planned loss at a sensible level. You lose more, and you lose it at the least favourable price available.
The defence is not a wider margin buffer. It is a smaller position, so that a normal adverse move never brings the level near the threshold.
Can the account go negative
The stop-out mechanism is designed to prevent it by closing before equity is exhausted. In ordinary conditions it does.
In an extreme gap — a weekend event, an unexpected central bank action — price can jump past the level with no tradeable price in between, and the close happens beyond where the mechanism intended.
That risk is another argument for position size rather than for leverage limits. The available leverage did not create the exposure; the lot size did.
Common questions
What is margin level?
Equity divided by used margin, as a percentage. It falls as an open position loses, because equity drops while used margin stays fixed.
When does a stop out happen?
When margin level reaches the published threshold. The platform then closes positions automatically, starting with the largest loser.
Which position gets closed first?
The one losing the most, because closing it releases the most margin fastest.
How do I avoid a margin call?
Trade a smaller position. A normal adverse move should never bring your margin level near the threshold — if it can, the position is too large.
Can my balance go below zero?
The stop out is designed to prevent it and normally does. In an extreme price gap it remains possible, which is a further reason to control position size.
Does lower leverage protect me?
Indirectly. It restricts how large a position you can open, but the same protection comes from choosing a smaller size at any leverage.