Stop Out

What a stop out is

Positions on margin need a cushion. Margin level compares the equity in your account with the margin your open positions are holding:

When equity falls, the level falls. Brokers set two lines. The upper one, the margin call level, is a warning or a restriction on opening new positions. The lower one, the stop out level, is where the broker acts. At the stop out level the platform starts closing positions without asking, to free margin and protect itself and you from a larger loss. The levels differ between brokers and account types, so any number on this page is an example only.

Margin call and stop out are different

• Margin call: a warning or a restriction. Some brokers send a message, some block new orders, and some do nothing visible. Your positions are still open and your decisions are still yours.
• Stop out: an action. The broker closes positions. Your plan, your take profit, and a bot's recovery logic are all overridden.

Some brokers have only one level. Some skip the warning entirely.

How the closing happens

The details vary by broker, so check yours. In general terms, the platform picks a position, closes it at the market price available, recalculates the margin level, and repeats until the level is back above the stop out level. A common rule is to start with the position with the largest floating loss, but some use the most recent, the largest, or another order. Closing happens at market, so it is exposed to slippage. A partial stop out closes some positions and leaves others open.

A worked example: a grid reaches the stop out

Take a made-up $1,000 account at 100:1 leverage. A grid bot buys 0.1 lot (10,000 units, about $1 per pip, $100 of margin) at the start and again every 20 pips lower. Take the margin call level as 100 percent and the stop out level as 50 percent. These are examples. All figures are calculated by us on 27 Oct 2026, exact for these inputs.

Equity falls slowly at first, because only a few positions are losing. Then each added position makes every further pip cost more, and the loss grows faster than the pip count. Margin used also rises in steps. The margin level crosses 100 percent at 117 pips and 50 percent at 145 pips. The account has not lost everything. At the stop out it has $400 of equity left, about 40 percent of the start, and the grid that was designed to wait for a bounce is cut off.

Partial stop outs

If the broker closes one position at a time, here is what happens next. At 145 pips the position with the largest loss is the first one, losing $145 (145 pips at $1 per pip). Closing it removes $100 of margin but does not change equity, because the loss was already counted. Used margin falls to $700 and the margin level becomes 400 / 700 = 57.1 percent, which is above 50 percent, so the stop out stops. The grid now holds 7 positions and has locked in a $145 loss. If price keeps falling, the level will fall again and the process repeats. A partial stop out is not a rescue, it is the first slice.

Weekend gaps and fast markets

The stop out level is a trigger, not a price. If the market jumps, the broker closes at the first prices available, which can be far beyond the level. Suppose the grid above has 7 positions open with price 120 pips down, and the market reopens after a weekend 200 pips down, with no new grid levels filled. Equity was $580. The 7 positions lose another 7 x 80 = $560, which leaves $20. The account is closed out at almost nothing. Past a gap of about 83 pips from 120 the equity goes below zero, which is the subject of negative balance.

What a stop out does to a bot

• Grid bots: the whole basket is cut, often close to the low, so the bounce they were waiting for comes after they are closed.
• Martingale bots: the most recent steps are the largest, and a bot built to double again is stopped out at exactly the point it would have doubled. See martingale.
• DCA bots on leverage reach it more slowly, but the same arithmetic applies to margin.
• Any bot may reopen right after, using what is left, which starts the same ladder on a smaller account.

How to check before you run a bot

• Find the stop out level in your account terms, and whether it is a percentage or a currency amount. Check for a margin call level too.
• Find out how your broker chooses which position to close, and whether it closes one or all.
• Work out the largest stack the bot can build, the margin it needs, and the price move at which the margin level reaches the stop out. The margin calculator does the first part.
• Add weekends, news and holidays. Check how your broker treats positions held over a gap.
• Run the bot on a demo account through a fast move before real money, and check whether the demo uses the same stop out level as the live account.

What it does not tell you

The stop out level says when the broker acts, not whether the strategy was sound. A margin level above the stop out does not mean the account is safe, because a gap can skip the level. The example here is an invented account with a plain grid. Real instruments have different contract sizes, and margin can change with leverage rules, so compute with your own terms.