Stop out
A stop out is when a broker force-closes your positions because your margin level has fallen to a set threshold, such as 50%. It stops losses from exceeding the money in your account.
How it works
When open trades lose money, equity falls and margin level (equity / margin × 100%) drops. When it reaches the stop-out level, the system closes positions at market price, usually starting with the biggest loser, until the margin level is back above the threshold.
The broker sets the threshold in the account terms: often 50%, sometimes 20–30%. In the EU, since 2018 retail accounts must be closed out no later than 50%. On crypto exchanges a similar mechanism is called liquidation.
A stop out does not protect your trade; it protects the broker and acts as a last fuse for the account. It hits at the worst moment, and in a sharp gap the closing price can be worse than the threshold.
Balance $500, a position with $400 of margin, stop-out level 50%. The stop out happens when equity falls to $200 (50% of $400), after a $300 loss, which is 60% of the account. A stop-loss set at 1% of the account would have closed the trade much earlier.
The main mistake is trading without a stop-loss and treating the stop out as your stop. Then every bad trade costs most of the deposit. Put your stop where the idea fails and size the position so the stop-out level is far beyond it and never triggers on any reasonable move.
Questions and answers
What is a stop out in simple terms?
It is when your broker closes your losing trades on its own because there is almost no money left in the account to support them.
What is the difference between a margin call and a stop out?
A margin call is a warning and a block on new trades. A stop out is the actual forced closing of positions.
Can my balance go negative after a stop out?
In a sharp gap the closing price can be worse and leave a negative balance. Negative balance protection resets it to zero if your broker offers it.
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Updated: 2026-10-19