Stop out in forex: what it means and how it works

Stop out meaning in plain words

A stop out happens when the broker's system closes your open trades automatically because your account no longer has enough money to support them. You do not press anything. The platform closes positions at the market price until the account is back above the required level.

It exists to stop your losses from growing past the money in your account. It does not protect your profit, and it does not choose a good moment to exit. It simply cuts positions when a limit is reached.

Leveraged forex and CFD trading can lose money fast. A stop out often means a large part of the deposit is already gone.

The terms behind it

You need these terms to understand a stop out:

• Balance: the money in the account from closed trades, deposits and withdrawals.
• Equity: balance plus or minus the profit or loss of open trades. See equity vs balance.
• Used margin: the money set aside to keep open positions running. See what is margin.
• Free margin: equity minus used margin. See free margin.
• Margin level: equity divided by used margin, shown as a percentage. See margin level.

The stop out level is a margin level value set by the broker. When your margin level falls to it, forced closing starts. The exact level depends on the broker and the account type. If you use Exness, check the current stop out level for your account in the personal area or on the official site.

Margin call vs stop out

Both are tied to margin level, but they do different things.

The margin call level sits above the stop out level, so the warning comes before the forced closing. In a fast market the gap between the two can close very quickly. More detail is on the margin call page.

The order of forced closure

On most platforms the stop out works step by step:

1. Margin level reaches the stop out level.
2. The system closes the open position with the largest loss first.
3. Used margin falls and margin level is recalculated.
4. If margin level is still at or below the stop out level, the next losing position is closed.
5. This repeats until margin level is back above the stop out level or no positions remain.

Closing the largest loss first frees the most margin compared with the loss it locks in. As a result, smaller losing trades and profitable trades may stay open. Some brokers use different rules, so read the account conditions.

Pending orders do not use margin until they are filled. Depending on the platform, they may stay in place after a stop out.

Why stop out prices can be worse than expected

The calculator shows the price where your margin level reaches the stop out level. The actual closing price can be worse than that. Common reasons:

• Gaps. When the market reopens after a weekend or a holiday, or jumps after news, price can move straight past your stop out price. The trade closes at the first available price, not at the level you calculated. See price gaps.
• Slippage. In fast markets the fill price differs from the last quote. See slippage.
• Wider spreads. Around news, at session changes and in thin markets, spreads widen. A wider spread lowers equity on open trades and can trigger a stop out even if the chart price barely moved. See what is spread.
• Sequential closing. Each position closes at the price available at that moment. In a falling market, later closures can be worse than earlier ones.

After a large gap, equity can drop below zero. Whether a negative balance is reset depends on the broker's policy, so check the current conditions before you trade.

Stop out simulator

Enter your balance, open positions, leverage and the stop out level of your account. The tool shows your margin level and the prices where a margin call and a stop out would happen.

Try changing one input at a time. You will see how a smaller position, lower leverage or a larger balance moves the stop out price further from the current price. All figures depend on what you enter, so use your own account data. More tools are on the calculators page.

How traders reduce the risk of a stop out

• Use a stop loss so a trade closes at a level you chose, well before the account nears stop out. A stop loss can also slip in a gap.
• Keep position size small compared with equity. See risk management.
• Understand how leverage increases both margin use and the speed of losses.
• Watch margin level, not only balance, while trades are open.
• Be careful holding positions over weekends and major news.
• Practise on a demo account to see how margin level changes before risking real money.

Frequently asked questions

What is the stop out level?

It is the margin level at which the broker starts closing your positions automatically. Each broker sets it for each account type.

Is a stop out the same as a margin call?

No. A margin call is a warning at a higher margin level. A stop out is the forced closing of trades at a lower level.

Which trade is closed first in a stop out?

Usually the position with the largest loss. Closing continues until margin level is back above the stop out level.

Can I lose more than the stop out price suggests?

Yes. Gaps, slippage and wider spreads can fill the closure at a worse price than the one you calculated.

Does a stop loss prevent a stop out?

It can, if it closes the trade before margin level falls to the stop out level. It is not guaranteed in gaps.

Where do I find my account's stop out level?

In your broker's account conditions. For Exness, check the personal area or the official site for current values.