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What are your Margin Call and Stop out Levels?

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Question
What are your Margin Call and Stop out Levels?

Answer

A Margin Call is literally a Warning that you receive in your MT4 trading platform that your account has slipped past a certain percent of the required margin and there is not enough equity (unused balance + floating profits – floating losses) on the account to support your Open trades any further. Stop out level is also a certain required margin level in percent, at which the MT4 trading platform will start to automatically close trading positions (starting from the least profitable position and until the margin level requirement is met) in order to prevent further losses into the negative territory – below 0 USD.


For Classic accounts, the Margin call and stop out levels stand at 25% and 15% of the required margin and for Pro accounts at 100% and 80%, respectively.


EXAMPLE: Let’s assume that you have an open position of 1 lot on USDCHF in a Classic account with a leverage of 200. The margin will be: 100000/200=500 USD. As we stated earlier margin call on Classic accounts occurs when your equity is at 25% of the margin. Therefore we multiply our margin 500 by 25% this gives us 125 USD. Furthermore, if your account equity continues to fall further below and eventually reaches the point where it becomes equal to 15% of the required margin, your trade will be compulsory closed (stopped out). Following our example, this will happen when your equity 500*15%=75USD.


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Views: 673 Created on: Apr 17, 2017
Date updated: Jun 06, 2017

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