GLOSSARY
Stop-out level
The point where the broker stops warning you and starts closing positions.
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.
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)