A Stop Out is a crucial, automatic safety feature on your Tradin account. It is designed to prevent you from losing more money than you deposited, protecting your account from going into debt (Negative Balance Protection).
When your account health drops below a critical point, the system automatically closes your losing trades to protect your remaining capital.
To know when a Stop Out happens, you need to understand three core numbers:
| Term | What It Is |
| Equity | The current, real-time value of your account (Balance + Floating P&L). |
| Margin | The money held as a security deposit to keep your trade(s) open. |
| Margin Level % | The single most important number that shows the health of your account. Formula: (Equity / Margin) × 100 |
The Stop Out process is triggered when your Margin Level % falls to or below your account's required threshold (e.g., 30% for Standard accounts or 20% for Swap-Free accounts).
The Impact of Leverage on Stop Out
The level of leverage you choose dramatically changes how quickly your account hits the Stop Out threshold.
Higher leverage reduces the margin required for a trade. This gives your trade more "breathing room" against losses, even if the dollar amount of your loss is the same.
Comparison Scenario: Same $800 Loss
We use a $1,000 account and a large 1.0 lot trade on a Forex pair like EUR/USD (Total Trade Value: $100,000). The trade loses $800 in both cases.
| Feature | Scenario A: Low Leverage (1:100) | Scenario B: High Leverage (1:500) |
| Margin Required | $1,000 (Full account balance) | $200 (Only a small part of the balance) |
| Loss | -$800 | -$800 |
| New Equity | $200 | $200 |
| Margin Level % | ($200/$1,000) ×100=20% | ($200/$200) ×100=100% |
| Outcome | STOP OUT TRIGGERED (Trade is automatically closed at the 20% threshold). | TRADE STAYS OPEN (Margin Level is safely high). |
- In both cases, the dollar loss was identical, but the outcome was different.
- The higher leverage in Scenario B reduced the Margin needed, giving the trade a larger buffer against the Stop Out.
IMPORTANT:
While higher leverage provides more buffer against a Stop Out, it also significantly increases your risk of faster and larger dollar losses.
We encourage all clients to use Stop Loss orders to control risk manually, and understand that higher leverage means your total position size is much larger, making your account highly sensitive to small price movements.
