Also known as: Liquidation, Margin Closeout, Forced Liquidation, Auto Close-Out
A stop out is the broker automatically closing a trader's open positions once the account's margin level drops to a critical threshold — commonly 50%, 20%, or 0%. It is the broker's last-resort defense against a client running into negative equity.
Margin level is the engine behind it: Margin Level = (Equity ÷ Used Margin) × 100. As losing trades erode equity, this percentage falls. When it touches the stop-out level, the platform starts liquidating positions — usually the biggest loser first — until the margin level recovers above the threshold or every position is gone.
A worked example: a trader deposits $1,000 and uses $500 of margin to hold positions. Their margin level starts at 200%. As trades move against them and equity falls to $250 while used margin stays $500, the level hits 50%. If the broker's stop-out is 50%, the system begins closing trades right there. Under ESMA and FCA rules, retail CFD accounts also carry a 50% margin close-out rule and negative balance protection, so a retail client cannot normally lose more than they deposited.
Stop-out levels vary widely by broker and account type. A 0% stop-out lets a trader ride positions until essentially every cent of margin is consumed, which appeals to high-leverage gamblers, while a 50% level closes trades earlier to protect both trader and broker.
The broker's server recalculates each account's margin level tick by tick from live prices. When the level falls to the stop-out threshold, an automated liquidation routine fires. It closes positions — typically the largest unrealized loser first — freeing up used margin. After each close it rechecks the margin level; if it is back above the threshold, liquidation stops, otherwise it continues to the next position.
Most brokers issue a margin call warning first — a notification (email, push, or on-platform) when the level nears the danger zone, for example at 100%. The margin call is only a warning; the stop out is the actual forced action. Under EU/UK retail rules the close-out is standardized at 50% of required margin per account, paired with negative balance protection so retail clients are shielded from owing more than their balance.
Unrealized losses reduce account equity while used margin stays fixed.
Equity ÷ used margin shrinks as a percentage toward the danger zone.
The broker alerts the trader (e.g. at 100%) to add funds or cut exposure.
At the critical level (e.g. 50%), automated liquidation begins.
The system closes the largest loser first, rechecking after each close until margin recovers.
Why it matters for partnership: A stop out ends an account's commission stream instantly, so IBs who teach margin discipline retain revenue longer. A few brokers advertise very low stop-out levels as a feature — a niche marketing angle for high-leverage traders.
An IB promotes an offshore broker with a 20% stop-out level. A referred client over-leverages EUR/USD and the trade runs deep into loss. The platform waits until the account's margin level hits exactly 20%, then liquidates the largest losing position, protecting the broker from negative equity but ending the client's ability to trade — and the IB's rebate flow — that day.
| Aspect | Margin Call | Stop Out |
|---|---|---|
| What it is | A warning notification | Forced closure of positions |
| Typical level | Around 100% margin level | 0–50% margin level |
| Action taken | None — trader must react | Automated liquidation |
| Reversible | Yes — add funds or cut size | No — trades are closed |
When marketing to aggressive traders, list each partner broker's exact stop-out level — full-margin traders actively search for 0% stop-out accounts.
Letting clients confuse a margin call with a stop out — they ignore the warning thinking they have more room, then get liquidated and blame the broker (and often the IB).
It depends on the broker — common thresholds are 50%, 20%, or 0%. EU and UK regulated retail CFD accounts use a standardized 50% close-out.
No. A margin call is a warning that your margin level is getting low; a stop out is the broker actually force-closing your positions.
Most platforms close the position with the largest unrealized loss first, then recheck your margin level and continue if needed.
With EU/UK regulated brokers, negative balance protection means retail clients cannot lose more than they deposit. Offshore brokers may not offer this.
Use lower leverage, keep a healthy free margin buffer, set stop losses on individual trades, and add funds or reduce size when you get a margin call.
A 0% or 10% stop out lets high-leverage traders keep positions open until nearly all margin is used, giving a losing trade maximum room to recover — at much higher risk.