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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 a Warning that you receive in your trading platform to notify you 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) to support your Open trades any further.

 

The Stop Out level is also a required margin level defined as a percentage, 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 negative territory – below USD 0.


For Classic accounts, the Margin Call and Stop Out levels stand at 25% and 15% of the required margin; for Pro accounts it’s at 100% and 80%, respectively.


EXAMPLE: Let’s assume that you have an open position of 1 lot on USDCHF on a Classic account with a leverage of 1:200. The margin will be: 100000/200= USD 500. As we stated earlier, the Margin Call on Classic accounts occurs when your equity is at 25% of the margin. Therefore, we multiply our margin of 500 by 25%, giving us USD 125. 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 closed (Stopped Out). Following our example, this will happen when your equity 500*15%=75USD.


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Views: 2431 Created on: Apr 17, 2017
Date updated: Oct 08, 2019

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