The Stop Out Level is similar to the Margin Call Level, which was covered in the previous lesson, except that it’s much worse!
In forex trading, a Stop Out Level is when your Margin Level falls to a specific percentage (%) level.
When this happens one or all of your open positions are closed automatically (“liquidated”) by your broker.
This liquidation happens because the trading account can no longer support the open positions due to a lack of margin.
The Stop Out Level is when the Equity is lower than a specific percentage of your Used Margin.
When this level is reached, the broker will automatically start closing out trades, starting with the most unprofitable one.
They will continue to close your trades until your Margin Level is back above the Stop Out Level.
If your Margin Level is at or below the Stop Out Level, the broker will close any or all of your open positions as quickly as possible in order to protect you from possibly incurring further losses.
This act of closing your positions is called a Stop Out.
Keep in mind that a Stop Out is not discretionary. Once the liquidation process has started, it is usually not possible to stop it since the process is automated.
Your broker’s customer support team probably can NOT help you aside from lending an ear while you weep loudly over the phone.