GLOSSARY
Stop-out level
The point where the broker stops warning you and starts closing positions.
By FirstPip editorial team · Updated 2026-09-05 · Educational content · No broker owns this site
Quick answer. The stop-out level is the margin level at which a broker automatically closes your open positions to stop the account falling further. Under EU and UK rules that close-out must happen when equity reaches 50% of the initial margin the positions required.
A margin call asks you to act. A stop-out does not ask. When margin level reaches the stop-out figure, the platform closes one or more positions itself — normally the largest loser first, until the level is back above the threshold.
Where is the stop-out level set?
Inside the EU and the UK it is set by rule, not by the broker. ESMA's 2018 product intervention measures standardised the close-out at 50% of the total initial margin protection for a retail account, and FCA PS19/18 made the same requirement permanent for UK retail clients from 1 August 2019. A provider may apply it per position instead of per account, but not at a lower percentage.
Elsewhere the number is the broker's own — some publish 20%, some lower. ESMA explained why it standardised: before the rules, some providers let client funds erode to between 0% and 30% of the initial margin, which left investors exposed to losing more than they had deposited during a gapping market.
What does that look like on a real account?
Same account as the rest of this cluster: $2,000, one position of 0.30 lots of EUR/USD, $1,100 of initial margin, $3.00 a pip.
- Stop-out trigger: 50% of $1,100 = $550 of equity
- Loss required to get there: $2,000 − $550 = $1,450
- Distance in pips: $1,450 ÷ $3.00 = 483 pips
Now open 1.00 lot instead — if the leverage cap allowed it. Margin becomes $3,666.67, the pip is worth $10, and the stop-out sits at $1,833. The account is 17 pips from being closed before the trade even settles. Position size, not the stop-out setting, is what decides whether the threshold is ever reached.
What do beginners get wrong about the stop-out?
Two things. First, treating it as a stop loss. A stop loss is a level you choose because the trade idea is wrong there; a stop-out is an accounting event triggered by the state of the whole account, usually at the worst possible moment.
Second, assuming it caps the damage. The close-out reduces the chance of a deficit but does not remove it — in a gapping market the fill can be far below the trigger price. That is precisely why negative balance protection was introduced alongside it in the EU and UK, limiting a retail client's liability to the funds in the trading account.
Related terms
- Leverage · Margin · Equity
- Free margin · Margin level
- Margin call · Stop-out level
- Lot · Pip — the two numbers that decide how fast the margin picture moves
Frequently asked questions
Is the stop-out level the same at every broker?
No. In the EU and UK it must be 50% of the initial margin required. Outside those jurisdictions each broker publishes its own figure in the account terms, and it can be considerably lower.
Which position gets closed first in a stop-out?
Most platforms close the largest losing position first, then re-check the margin level, repeating until the account is back above the threshold. Your broker's terms state the exact order.
Can I turn the stop-out off?
No. It is a condition of the account, and in regulated jurisdictions a legal requirement on the provider. The way to stay away from it is to keep position size small enough that ordinary market movement never brings equity near the trigger.
Keep going
Sources
- ESMA — Additional information on the agreed product intervention measures (27 March 2018)
- FCA PS19/18 — Restricting contract for difference products sold to retail clients (2019)
- FirstPip knowledge base — concepts/leverage-and-margin (sources S007, S010, S011, S013)