What is a Margin Call and Stop Out?
A margin call is a reminder sent from the broker when the level of funds for maintaining/holding position(s) in the customer’s account is low. The margin call level is at 80%, which means that you will receive a margin call when your equity is 80% of the margin required on your open position(s). Equity is calculated as (Balance + Open Profit/Loss).
Stop out level is at 50%. This means that if your free margin falls below 50%, your positions will be automatically closed. The platform will automatically close them in order of the largest losing position to the smallest.
The margin stop out level is calculated using the following formula:
Margin level = equity / used margin x 100%
The margin on a $10,000 USD (equity) trading account with 1 standard lot open position on USD/JPY and 100 times leverage would be calculated as follows:
= Equity/Margin x 100%
= 10,000 / 1,000 x 100%
= 1000% margin level
If the position moved against you and your equity fell to $5,000, the calculation would be:
= 5,000 / 1,000 x 100%
= 500% margin level
If the position moved against you even further and the equity fell to $499, the position would be stopped out as the margin level would have fallen below 100%.
= 499 / 1,000 x 100%