Stop Out

Stop out is the automatic closure of your open positions by the broker when your margin level drops below a specified percentage, commonly between 20 and 50 percent depending on the broker and jurisdiction. It is a protective mechanism that prevents your account from going negative during volatile periods. Stop outs are triggered by floating losses, not by closed losses, because the broker is protecting itself from counterparty risk on unprofitable open trades.

The sequence typically starts with a margin call at 100 percent margin level, warning you that the account is at risk. If losses continue and margin level falls further, the stop out process begins. Brokers usually close the largest losing position first and work down the list, or close all positions simultaneously if the equity drop is rapid. The exact rules vary by broker, but the end result is the same: open positions are liquidated automatically to prevent deeper losses.

For example, if you have a $10,000 account with large positions requiring $3,000 of used margin, your initial margin level is 333 percent. If floating losses grow to $7,000, your equity drops to $3,000 and margin level falls to 100 percent, triggering a margin call. If losses reach $8,500, equity is $1,500, margin level is 50 percent, and the broker executes stop out. Remaining positions close automatically, locking in the $8,500 loss as realized. That is 85 percent of the account gone in a single drawdown.

In copy trading, stop out risk is minimized through systematic position sizing. SteadyFlowFX's 9 algorithms size positions to stay well above any stop out threshold, and the verified Myfxbook 34.2 percent max drawdown has never threatened stop out levels on properly configured accounts. Subscribers should confirm their broker's margin call and stop out levels and maintain conservative leverage so the strategy's drawdown cycles cannot accidentally trigger forced liquidation.