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Stop out: meaning in forex and gold trading

A stop out is when the broker automatically closes positions because your margin level has fallen to its minimum.

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Definition

Stop out: A stop out is when the broker automatically closes positions because your margin level has fallen to its minimum.

How stop out works

The stop out level is a margin level, such as 50%, at which the broker starts closing your positions to prevent the account going negative. It comes after the margin call warning. Positions are closed at the market price, which can be far from where you would have chosen to exit.

For UK and EU retail CFD clients, brokers must close positions when margin falls to 50% of the required level.

Stop out versus stop loss

A stop loss is your planned exit. A stop out is the broker's emergency exit. A trader who always uses a stop loss and sensible size should never see a stop out.

Worked example

Used margin $2,000 and stop out at 50%. If equity falls to $1,000 the broker begins closing positions, starting with the one making the largest loss.

Common mistakes

  • Relying on the stop out instead of a stop loss.
  • Holding large positions through high impact news with little free margin.

If you follow trade signals, for example the gold signals or EUR/USD signals, understanding this term helps you size and manage each trade yourself. The free Forexuro Telegram channel shares daily market updates where these ideas are used in practice.

Margin call

A margin call is a warning that your equity has fallen close to the margin required to keep positions open.

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Margin

Margin is the deposit a broker holds to keep a leveraged position open, set by the position value divided by t...

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Stop loss

A stop loss is an order that closes a trade at a set price to cap the loss if the market moves against you.

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Leverage

Leverage lets you control a position larger than your deposit, which magnifies both profits and losses.

Read more

Tools and guides

Frequently asked questions

Who decides the stop out level?

The broker, within regulatory limits. Check your account terms.

Is a stop out the same as a stop loss?

No. A stop loss is your order; a stop out is forced closure by the broker.

Education only, not financial advice. Trading forex, gold and CFDs carries a high risk of losing money, and leverage magnifies both gains and losses. Past performance is not a reliable guide to future results. Read our risk disclosure.