Margin Call and stop-out
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Thread: Margin Call and stop-out

  1. #1

    Margin Call and stop-out

    Lots of beginners are often confused about the concepts and terms. Let’s go to the page

    Margin Call
    It’s the broker or dealer requirement for to deposit additional cash or other assets to guarantee discharge of obligations for a loss-making position of the client.

    Stop out
    It’s an order for the forced closure of positions without the customer's consent or any prior notice in case of a shortage of funds to maintain an open position.

    In case of funds shortage position is going to be eliminated and Margin Call comes. And during an account is coming near Stop Out, the Margin Call is declared, - it’s time for trader to make a decision whether to deposit an account or just waiting for Stop Out. The difference is that in case of the Margin Call transaction is still visible on the account but colored with red on the terminal display. This is a kind of warning level, beyond which the Stop Out can follow.

  2. #2

    Margin Call

    The regulations prescribed different values ​​for different types of account. As the most popular are cent accounts, they will be considered in the example.

    12.3.1 Margin Call value makes 40% for Fix-Cent and Pro-Cent accounts on MetaTrader 4 and Metatrader 5.
    It means, as soon as the level of value approaching the mark of 40% the bottom tab "Trade" in the terminal, where balance, equity, level and order’s opening are displayed, becomes red. This light remains as long as the client deposit the account, or until the level is changed to a higher number. In case of reduction and passing mark of 10% Stop Out comes.

    On weekends, many brokers increase the level of Margin Call, but do not mix it up with a Stop Out level. On weekends, there are jumps in prices, so the broker warns about this issue by the Margin Call increase (such a request upon to deposit funds in case the price flare-up will be on Monday).

    Likewise, everything is with other types of account, the different in values only.

    There is an extract from the Regulations:

    Margin Call value makes 40% for Fix-Standard and Pro-Standard accounts on MetaTrader 4 and Metatrader 5.

    Margin Call value makes 60% for Fix-ECN and Pro-ECN accounts on MetaTrader 4 and Metatrader 5.

    Margin Call value makes 60% Pro-ECN accounts on cTrader.

  3. #3

    The formula for Stop-Out and Margin Call calculating.

    First of all, Equity should be divided by the Margin and multiplied by 100. So we get the level of Equity.

    For example:
    “Funds” column or as it is called Equity (floating amount showing the total profit / loss for the current moment) shows $ 200. Margin, with 0.01 lot by EURUSD with 1:500 leverage at a price of 1.3000 makes up $ 2.60.

    Hence, 200/2, 6 * 100 = 7692.30%
    As you can see we have enough Equity, and Stop Out is far-out, therefore there is no reason to worry. Stop Out rate is 10% for Cent accounts 10% according to the rules of the RoboForex.
    Stop Out value makes 10 % for Fix-Cent and Pro-Cent accounts on Metatrader 4 and Metatrader 5 platforms.
    Thus, stop-out occurs when the level will pass a hurdle at 10% or below. It happens that the following quotation pushes the Stop Out up to 9,999% pounding at minus. But it is very rare case of non-market prices. In such cases, the broker is obliged to observe the rule of 10% and offset balances if the account is closed at the level of 5% for example. It is necessary to write a claim to receive the delta, especially if it is a snug amount. In case of an Stop Out, all transactions are closed, according to the RoboForex rules.

    Stop Out is different for each type of account in accordance with the Company’s regulations:

    Stop Out value makes 20 % for Fix-Standard and Pro-Standard accounts on Metatrader 4 and Metatrader 5 platforms.

    Stop Out value makes 40 % for Fix-ECN and Pro-ECN accounts on Metatrader 4 and Metatrader 5 platforms.

    Stop Out value makes 40 % Pro-ECN accounts on the cTrader platform.
    It’s very important for trader to be sensible of the fact that Stop Out level can be different, especially for those who prefer to trade with a small deposit and high risk level.

    P.S. The Stop Out and Margin Call may be changed, so, please, follow the changes in the rules, which about the broker usually informs by all available means.

  4. #4
    Trader Razor1911's Avatar
    Join Date
    May 2013
    Indian Air Force
    The margin call and the stop out is the worst that can happen to a trader, it is a very good article above where we can now the functions of MC and Stop out, in simple words it means that the trader lost almost all of the funds of the accounts, what worse can happen to a trader after that.
    Like my posts? Don't hesitate to like it by clicking Thumbs Up button, Happy Pipping!!

  5. #5
    the margin call and stop out when you have small capital account you must trade according to, but if you have an huge capital you can trade without think about your margin because already have an free margin

  6. #6
    Registered user mohamed reda's Avatar
    Join Date
    Aug 2013
    we can say that using the highest leverage will be so bad if you are trading with a high capital so i think the best leverage is 1:100 and i had many margin call but in fact it may be a disaster for any trader but if you are a beginner trader it may be a great opportunity for you to learn from your mistakes .

  7. #7
    stop out and margin call level both is the same, isn't it? as i know some people like to call it margin call and some call it stop out because broker going to close all position when there is no margin left in your account.
    but some broker allowed trader to use margin till 30%, so stop out level is 30%, not 0 free margin.

  8. #8
    f we do not want to hit a margin call using a small example 10% lots of your capital so that we can hold in large quantities because if we use large lots then we will often hit by a margin call.

  9. #9
    The organization has a right to shut client's roles without informing him, in case value is less than 20% of the required edge (for starting out positions). If several roles are starting out, the organization can near one or several of them, starting from the one, producing the biggest loss. The business account situation is managed by the server, which ends all roles instantly, if the edge level gets to 10% (or less) for “Lite” records. This situation is known as “Stop Out”. It is conducted by the rate. Of real records they are 50% and 20%.

  10. #10
    Registered user
    Join Date
    Mar 2013
    Margin call is an alarm that our trades are in danger and stop out is near. This usually occurs when we take high risks to earn huge profits or trade without discipline. Thus experts advice us not to risk over 20 % of our capital on all our open positions at any point of time.

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