1. Concept & Definition
The 10% stop-out level means when the account’s Margin Level ≤ 10%, the system will force-close part of the positions to prevent further losses.
Notes:
Stop-out ≠ loss of all funds; it is an automatic risk-control action.
It is the last line of defense to prevent negative balance.
2. Glossary
Term | Definition |
Equity | Account balance ± floating P/L |
Used Margin | Margin currently tied to open positions |
Margin Level | Equity ÷ Used Margin × 100% |
Stop-out Level | Forced liquidation threshold, e.g., 10% |
3. How the 10% Stop-out Triggers (Example)
Example:
Account balance: $1,000
Used margin (for one position): $500
Floating loss reaches $950 → Equity = $50
Margin Level calculation:
Margin Level = 50 ÷ 500 × 100% = 10%
📉 If the loss expands further and Margin Level drops below 10%, the system starts auto close-outs.
4. Stop-out Flow (Diagram)
✅ Healthy (Equity sufficient)
↓
⚠️ Margin Level ≤ 50% → Margin call/notification (optional)
↓
🚨 Margin Level ≤ 10% → Stop-out: system auto-closes losing positions
↓
🧯 Loss reduced / Equity recovers → Margin Level rises, stop-out ends