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What are Margin Call and Stop Out?


A Margin Call is a notification displayed on the MT4 platform when the level of funds for maintaining/holding position(s) in your account is low.

The margin call level is triggered when the Margin Level reaches 80% and it is calculated using the following formula:

Margin Level (%) = Equity / Margin * 100

and

Equity = Balance + Open Profit/Loss (unrealized profit or loss)

Stop Out is a functionality triggered when you no longer have enough capital to keep trades open on the market. When the Margin level reaches 50%, the system automatically starts closing trades from the least profitable one in an attempt to prevent a negative balance.

Example

Equity = $2,000

Margin = $2,000

Margin Level = Equity / Margin * 100 = 2,000/2,000 *100 = 100%

If the markets go against you and:

  • Equity falls to $1,600 the Margin Level = 80% thus triggering a red line notification on your MT4, referred to as a Margin Call
  • Equity falls to $1,000 the Margin Level = 50% thus triggering a Stop Out. At this stage, the system will start closing trades from the least profitable one.
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