Why margin call and stop out levels differ between brokers.

Two traders open the same position with the same balance. One is closed out after the price moves 90 pips against them, the other after 178 pips. The only difference is the broker's settings.

Every broker chooses its own margin call and stop out levels, within whatever rules apply where the account is licensed. Many brokers also set different levels for each account type.

What do margin call and stop out levels measure?

Both levels are read off your margin level: your equity divided by your used margin, times 100. Equity is your balance plus or minus the profit or loss on open trades.

The margin call level is a warning line. When your margin level falls to it, the platform alerts you. Nothing is closed yet, though some brokers also stop you opening new trades at this point.

The stop out level is the line where the broker starts closing your positions for you. It sits at or below the margin call level. The lessons on the margin call and the stop out cover each one in detail.

Take a $1,000 balance and a buy of 0.50 lot of EUR/USD at 1.10000 with 1:100 leverage. All prices and broker settings in this lesson are illustrative.

The position's face value is 50,000 euros × 1.10000 = $55,000. At 1:100 the used margin is $55,000 ÷ 100 = $550, so the margin level is $1,000 ÷ $550 × 100 = 181.8%.

Why do brokers set different levels?

A stop out closes a losing account before its equity runs out. Where the broker draws that line depends on how much risk it is willing to carry and which rules it works under.

Several things push the numbers apart:

• Regulation. Some regulators set a level at which retail positions must be closed, so a broker licensed there cannot go lower for those clients. These rules differ by country and can change.
• Negative balance risk. If prices jump past your stop out, equity can fall below zero. A broker that offers negative balance protection absorbs that loss, which gives it a reason to close accounts earlier.
• Account type. One broker may set a higher stop out on one account and a lower one on another, each aimed at a different kind of trader.
• Client category. Accounts classed as professional are often handled under different rules from retail accounts, which can change the levels on offer.
• Platform setup. MetaTrader lets a broker set these levels as a percentage or as an amount of money, so read which one your terms use.

The margin requirement itself can also change. Some brokers raise the margin needed before weekends or major news. That raises your used margin and lowers your margin level without any price move, so you reach the same lines sooner.

What does the difference mean for one trade?

Keep the trade above and change only the broker. The three sets of levels below are made up for this example and do not describe any real firm.

On 0.50 lot of EUR/USD, a pip is worth 50,000 × 0.0001 = $5. Here is the working for Broker B, with a stop out of 50%:

1. Equity at stop out = 50% × $550 = $275.
2. Loss allowed = $1,000 minus $275 = $725.
3. Distance = $725 ÷ $5 = 145 pips.
4. Stop out price = 1.10000 minus 0.01450 = 1.08550.

The same four steps give the other two columns:

The warnings arrive at different times too. Brokers A and B send the margin call at 1.09100. Broker C waits until equity is 80% of $550, which is $440, a loss of $560 or 112 pips, at 1.08880.

Used margin is held at $550 here to keep the sums clean. On many platforms it moves slightly with the EUR/USD price, which shifts these points by less than a pip.

Is a lower stop out level better?

A lower stop out gives a losing trade more room. It also lets you lose more of your deposit before anything is closed: at Broker C, the account keeps only $110 of its $1,000.

The stop out level is a trigger. The closing price is whatever the market offers when it fires, and after a gap that can be well past the line.

Say you hold the Broker B trade over a weekend. EUR/USD closes Friday at 1.08700, a loss of 130 pips × $5 = $650. Equity is $350, and the margin level is $350 ÷ $550 × 100 = 63.6%, still above 50%.

On Monday the market opens at 1.08300. The loss is now 170 pips × $5 = $850, equity is $150 and the margin level is $150 ÷ $550 × 100 = 27.3%.

The broker closes at about that price. The loss is $850, which is $125 more than the $725 the 50% line implied.

A large enough gap can push equity below zero. Whether you would owe that amount depends on your broker's negative balance policy, which is worth reading before you hold trades through weekends or news.

With several positions open, a stop out often closes them one at a time, commonly starting with the biggest loss, until the margin level is back above the line. Your broker's terms say which order it uses.

Treat the stop out as a last resort. A stop loss you set yourself fixes your exit in advance, and a margin buffer keeps the stop out far away.

How do you find your broker's levels?

Start with the broker's account types page, which usually lists margin call and stop out for each account. The client agreement or terms of business is the binding source if the two disagree.

If you cannot find them, ask support in writing, name your exact account type and keep the reply.

Check again whenever something changes, such as a new account type, a different leverage setting or an account opened under another company in the same broker group. A group can hold several licences, and the levels can differ between them.

Your platform shows your live margin level, in MetaTrader on the Trade tab of the bottom panel. Compare it with your broker's two numbers while trades are open.

Before a trade, you can work out your own stop out price as in the table above. The margin calculator gives the used margin for any pair and size. Leverage changes that used margin, and the leverage lesson covers how.