A margin call is a warning; a stop out is the broker closing your trades for you. Both are triggered by one number on your trading platform — the margin level. Understand that number and you will never be surprised by a closed account.
The terms you need
- Balance – your account value excluding open trades.
- Equity – balance plus or minus the floating profit/loss of open trades.
- Used margin – the deposit locked by the broker to keep your positions open.
- Free margin – equity minus used margin; what is available for new trades or to absorb losses.
- Margin level – equity ÷ used margin × 100, shown as a percentage.
Margin call and stop out levels
Each broker sets two thresholds for the margin level. Typical values:
| Threshold | Typical level | What happens |
|---|---|---|
| Margin call | 50%–100% | You are warned and usually cannot open new trades. |
| Stop out | 20%–50% | The broker starts closing your losing positions, largest loss first, until the margin level recovers. |
Retail clients of EU, UK and Australian brokers have a regulatory stop out at 50%. Offshore brokers often use lower levels such as 20% or even 0%, which lets trades run deeper into loss.
Worked example
You deposit $1,000 and open 1 standard lot of EUR/USD at 1.0850 with 1:100 leverage.
- Used margin ≈ 100,000 × 1.0850 ÷ 100 = $1,085. That is already more than your balance, so the trade would be rejected. Let's use 0.5 lots instead.
- Used margin ≈ $542.50; margin level at the start = $1,000 ÷ $542.50 × 100 ≈ 184%.
- Each pip on 0.5 lots = $5.
- Margin call at 100%: equity must fall to $542.50, a loss of $457.50 ≈ 91 pips against you.
- Stop out at 50%: equity must fall to about $271, a loss of about $729 ≈ 146 pips.
Now the same trade with 0.05 lots: used margin is about $54, and you could absorb roughly 1,900 pips before a stop out. Lot size — not leverage — is what decides how close you are to the edge. Try it with the margin calculator.
Five ways to avoid margin calls
- Always use a stop loss sized so the loss is 1–2% of the account. The position size calculator sets the lot size for you.
- Keep used margin low – many traders aim to keep the margin level well above 500%.
- Watch correlated trades – long EUR/USD plus long GBP/USD is close to one large position.
- Avoid holding through high-impact news with large positions; spreads can widen and push margin level down instantly.
- Understand bonus credit – with a credit bonus, withdrawals can reduce equity suddenly and trigger a stop out on open trades.
Negative balance protection
In a fast market, stop outs can fill at worse prices and an account can go below zero. Regulated brokers in the UK, EU and Australia must offer negative balance protection to retail clients, so you cannot lose more than your deposit. Many offshore brokers offer it voluntarily — check the client agreement.
Recovering from a drawdown
Losses take a larger gain to recover: a 50% drawdown needs a 100% gain to break even. See the numbers in our drawdown recovery calculator and the drawdown recovery guide.