Stop Out in Forex
A clear definition of Stop Out, with practical context for reading markets and making better trading decisions.
Definition
Definition
In a leveraged retail trading account, a stop out commonly means the broker automatically closes one or more positions because account equity has fallen too far relative to required margin. The term can also be used more generally when a stop-loss closes a trade, so context matters.
How It Works
Leverage and margin describe exposure and collateral, not free buying power. A relatively small amount of account equity can support a much larger notional position, which means ordinary market moves can have a large effect on the account.
Why It Matters
Understanding the term helps you recognize account-pressure warnings before placing a live trade. Broker thresholds differ, so learners should read the platform's own margin rules instead of assuming one universal percentage.
Key Takeaway
In a leveraged retail trading account, a stop out commonly means the broker automatically closes one or more positions because account equity has fallen too far relative to required margin.
Practical forex example
Why Stop Out matters
Understanding Stop Out helps traders interpret market information, plan decisions, and manage risk with more context.
Related forex terms
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