Educational content. This article defines the stop-out level and explains how forced liquidation works on a CFD account. It does not constitute investment advice or a trading recommendation. CFD trading carries significant risk of loss and may not be suitable for all investors.
The stop-out level is the last line the broker draws on a leveraged account. Above it, the trader decides what to close and when; at it, the platform decides. Knowing where the line sits, how the platform behaves when the account reaches it, and how far away it is for a given position is the difference between managing a losing trade and having it managed.
This article defines the stop-out level, shows how margin level is calculated, describes exactly what MT5 does at the threshold, works through the distance to a stop-out on a gold position at two leverage ratios, and separates the stop-out from the margin call and the stop-loss.
What Is the Stop-Out Level?
The stop-out level is the margin level at which a broker's trading platform automatically starts closing a client's open positions, so that floating losses cannot consume all of the collateral that supports them.
It is expressed as a percentage of margin level and set by the broker for the account. When a losing position drags the account's margin level down to that percentage, the platform closes positions without any instruction from the trader until the margin level is restored above the threshold, or until no positions remain. The stop-out is not a penalty and it is not optional; it is the mechanism that keeps a leveraged account from running out of collateral entirely.
At Vanto the stop-out level is 50% on both the Standard and the Raw account.
How Margin Level Is Calculated
Margin level is equity divided by used margin, multiplied by 100, so it measures how many times over the account's current value covers the collateral locked by its open positions.
Margin level (%) = equity / used margin × 100
Equity is the account balance plus or minus the floating profit or loss on open positions, and it moves with every tick. Used margin is the collateral the open positions have locked, which is fixed while the positions stay open. An account with USD 6,000 of equity and USD 860 of used margin has a margin level of about 698%. If floating losses reduce equity to USD 430, the margin level is 50%, and at Vanto that is the stop-out.
What is margin in trading defines equity, used margin, and free margin in full; this article uses them without re-deriving them.
What Happens When the Stop-Out Level Is Reached
When margin level reaches the stop-out level, MT5 closes the open position with the largest floating loss at the current market price, recalculates the margin level, and repeats the step until the level is above the threshold again.
The sequence has three consequences that surprise traders the first time they see it. First, the positions close at market, at whatever price is available, so in a fast market the fill can be worse than the price at which the threshold was crossed, as explained in what is slippage in trading. Second, the largest loser goes first, which is the position the trader was most likely hoping would recover. Third, closing one position releases its used margin, which raises the margin level, so an account with several positions may lose only one or two of them and keep the rest open. A stop-out is therefore not the same as the account being closed out; it is the platform trimming exposure until the collateral is sufficient again.
A stop-out can also occur outside the trader's own session, for example over a weekend gap or during an overnight news release, because the platform evaluates margin level continuously whenever the market is open.
Worked Example: How Far Away Is a Stop-Out on XAUUSD?
On a USD 6,000 account trading one lot of XAUUSD, the stop-out is about USD 38.50 an ounce away at 1:100 leverage and about USD 55.70 away at 1:500, but on five lots at 1:500 it is only about USD 7.70 away.
The example uses a gold price of USD 4,300, a contract size of 100 troy ounces, so a notional of USD 430,000 per lot and a value of USD 1 per 0.01 move per lot, and Vanto's stop-out level of 50%.
| Scenario | Used margin | Equity at stop-out (50%) | Loss that triggers it | Adverse move on gold |
|---|---|---|---|---|
| 1 lot at 1:100 | USD 4,300 | USD 2,150 | USD 3,850 | USD 38.50 per ounce (about 0.9%) |
| 1 lot at 1:500 | USD 860 | USD 430 | USD 5,570 | USD 55.70 per ounce (about 1.3%) |
| 5 lots at 1:500 | USD 4,300 | USD 2,150 | USD 3,850 | USD 7.70 per ounce (about 0.2%) |
Two things follow. On a fixed position size, higher leverage locks less margin, so the stop-out is further away and the account can absorb a larger loss before the platform intervenes; that larger loss is still a loss, and in the second row it is 93% of the account. The danger of high leverage is the third row: the same USD 6,000 supports five lots at 1:500, and on five lots a move of less than a quarter of one percent in gold, an ordinary hour on a data day, triggers the stop-out. The distance to a stop-out is set by how much notional the account carries relative to its equity, and leverage is what allows that notional to grow. Leverage amplifies both the gains and the losses on every one of those lots.
What is contract size in trading explains where the USD 430,000 notional comes from, and the trading calculator shows the used margin for any instrument and volume at the live price.
Stop-Out vs Margin Call
A margin call is a warning that margin level has fallen to a first, higher threshold, while the stop-out is the action taken at a second, lower threshold; the margin call closes nothing, the stop-out does.
On MT5 the margin call is shown by highlighting the account line in the terminal once margin level falls below the margin call level set for the account, which sits above the stop-out level. Positions stay open, and the trader can respond by depositing funds, which raises equity, or by closing positions, which releases used margin. If neither happens and the market keeps moving against the account, margin level continues to fall until it reaches the stop-out level, and the platform takes over. What is margin in trading covers the margin call in the context of the other margin figures. At Vanto the margin call level is 100% and the stop-out level is 50%: the warning appears when equity has fallen to the level of the used margin, and forced closing begins when it has fallen to half of it.
Stop-Out vs Stop-Loss
A stop-out is triggered by the platform at the account level when collateral runs low, while a stop-loss is an order placed by the trader on a specific position at a specific price; they are unrelated mechanisms that happen to share a word.
A stop-loss closes one position when its price reaches a level the trader chose, regardless of the state of the rest of the account. A stop-out closes whichever position is losing most when the whole account's margin level reaches 50%, regardless of any price the trader had in mind. Treating the stop-out as a substitute for a stop-loss means accepting that nothing will close until roughly half the used margin, and possibly most of the account, has been lost, and that the platform, not the trader, will choose which position goes. On instruments that can gap, such as gold over a weekend or an index at the open, the loss at the stop-out can also exceed the amount the 50% level implies.
Why Brokers Set Different Stop-Out Levels
Stop-out levels vary between brokers, commonly from 20% to 100%, because each broker chooses how much of a client's collateral it is prepared to let floating losses consume before intervening.
A higher stop-out level closes positions earlier and leaves more of the account intact; a lower level gives positions more room and leaves less. Neither is safer in every case, since a high threshold can close a position that would have recovered and a low one can leave an account nearly empty before acting. What matters is knowing the figure that applies. Vanto publishes its stop-out level, 50% on both account types, on the account types page, and it appears in the MT5 account specification.
Frequently Asked Questions
What is the stop-out level at Vanto?
The stop-out level at Vanto is 50% on both the Standard and the Raw account. When the margin level of an account falls to 50%, MT5 begins closing positions automatically, starting with the one carrying the largest floating loss.
What margin level triggers a stop-out?
A stop-out triggers when margin level, equity divided by used margin, falls to the broker's stop-out percentage. At a 50% stop-out level, that is the point at which floating losses have reduced equity to half of the margin locked by open positions.
Does a stop-out close all positions?
Not necessarily. MT5 closes the position with the largest floating loss first, then recalculates margin level. If closing that position releases enough margin to lift the level back above the threshold, the remaining positions stay open. If not, the next largest loser closes, and so on.
What is the difference between a margin call and a stop-out?
A margin call is a warning at a higher margin level that closes nothing; a stop-out is the automatic closing of positions at a lower margin level. The margin call gives the trader a chance to add funds or reduce exposure before the stop-out acts. At Vanto the margin call level is 100% and the stop-out level is 50%: the warning appears when equity has fallen to the level of the used margin, and forced closing begins when it has fallen to half of it.
How can I avoid a stop-out?
A stop-out is avoided by keeping margin level well above the threshold, which in practice means holding notional exposure small relative to equity and closing losing positions before floating losses approach the used margin. Position sizing and stop-loss orders are the tools that keep the account away from the line; the stop-out is what happens when they are not used.
Know Where the Line Is Before You Open a Position
The Vanto trading calculator shows the used margin for any instrument and volume, and with that figure and the account equity the margin level and the distance to the 50% stop-out follow directly. For the collateral concepts behind margin level, see what is margin in trading and what is leverage in trading. For the multiplier that determines how much notional a lot carries, see what is contract size in trading. A demo account shows the margin level moving in real time without risking capital.
Risk warning. Trading securities, futures, options, and contracts for differences are complex financial instruments that require knowledge and understanding. Prices can fluctuate significantly and securities may become valueless. Investors may incur losses exceeding the potential for profits. Trading on margin can result in losses greater than the amount initially deposited. Past performance is not necessarily a guide to future performance. The information in this article is for educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any financial instrument. Consider whether CFD trading is appropriate for your circumstances and seek independent advice if necessary.