Margin Call and Stop Out

As losing trades eat into your account equity, the ratio between your equity and your used margin — called the margin level — keeps falling. When that margin level drops to a threshold your broker defines, typically somewhere between 100% and 150%, the platform triggers a margin call. This is simply a notification, often a popup or account status change, telling you that your account no longer has enough free margin to safely support your current positions and that you should either deposit more funds or close some trades yourself.

If nothing is done and the market keeps moving against you, the margin level keeps falling. Once it drops to a second, lower threshold — commonly around 50%, though this varies by broker and instrument — the platform executes what is called a stop out. This is an automatic, forced closure of one or more open positions, starting usually with the most unprofitable one, done without asking for your confirmation. The goal is to stop your account balance from going negative, protecting both you and the broker.

It helps to think of these as two separate lines drawn on a map of your account's health: the margin call line is a yellow warning sign, and the stop out line is a wall you are not allowed to pass. Trading through a margin call by adding more risk, rather than reducing it, is one of the fastest ways to reach a stop out.

Different brokers and account types set these percentages differently, so it is worth checking your specific broker's margin call and stop out levels rather than assuming a industry standard number. Keeping position sizes modest relative to account balance is the most reliable way to never see either of these in practice.