Margin call and stop out are the broker's mechanisms for protecting itself when an account approaches insolvency. They will protect you too — but only if you understand how they trigger.
Key terms
- Equity: balance + open P&L.
- Used margin: margin locked by open positions.
- Free margin: equity − used margin.
- Margin level (%): equity / used margin × 100.
Margin call level
The broker-defined margin level (e.g. 100%, 80%, 50%) at which you are warned. Some brokers prevent new positions at this level.
Stop out level
The lower threshold (e.g. 50%, 30%, 20%) at which the broker forcibly closes positions, starting with the most-losing one, until margin level is restored.
Worked example
Account: $1,000. Open one trade requiring $200 margin. Position floats at -$700. Equity = $300. Margin level = 300/200 × 100 = 150%. Still above 100% margin call. If position floats further to -$900, equity = $100. Margin level = 100/200 × 100 = 50%. Stop out triggered (at typical 50%); broker closes the position.
How to avoid stop-outs
- Use stop-loss orders sized so the trade can lose your planned risk before stop-out.
- Don't hold open trades through high-impact news on thin margin.
- Reduce position size if margin level approaches the call threshold.
Next steps on ShaFX
- Free trading calculators — position size, pip value, margin, risk/reward, drawdown.
- Take a quiz on this topic and see what you missed.
- Glossary — precise definitions for every term used here.
- Compare brokers using our methodology.