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Stop Out occurs when the account’s equity drops to 40% (or lower) of used margin (cumulative used margin from all opened positions, is considered during Stop Out calculations), and orders are closed automatically until the margin level is restored above required 40%.
Example: If you opened a trade for 1 Lot at 1:500 leverage, and you have a $1000 account. You would need a $200 margin.
40% of $200 is $80 (200 * 0.40 = 80) Therefore, if your equity goes below $80, positions will be closed one by one, starting from the position with the highest loss, until the margin level has recovered above 40%.
In addition, please note that Meta Trader platform takes current equity (balance + bonus +/- current PnL) into consideration when it shows you the “Margin Level” at Meta Trader terminal. However, in case you have a Deposit Bonus, you must exclude it from equity and re-calculate margin level.
To calculate Margin level by yourself, you need to divide Equity with Used Margin and multiply it with 100 to get percentage value:
Margin level (%) = Equity/Used margin * 100 Then, using the same example above: = 80 / 200 * 100 = 40%