Margin call is a warning or collateral demand under the provider’s terms; stop out is forced position closure. Thresholds and their calculation basis differ by account and applicable rules. Do not assume a notification or time to react between them. This article uses hypothetical numbers to separate current losses, margin capacity and the effects of closure.

Start with margin level and the account rules

Before we separate margin call from stop out, you need to understand the number both thresholds rest on. It is the margin level — in MetaTrader 5 it sits in the bottom panel, in the Trade tab. The formula is almost trivial, and yet few beginners can reproduce it from memory:

Margin level = (equity ÷ used margin) × 100 percent, when used margin is positive

In a simple model, equity is balance plus signed floating P/L. Credit, commissions and blocked amounts can also affect the actual platform figure; it is not a guaranteed liquidation receipt. Used margin follows the instrument and account rules, including any order reserves. At 100%, equity equals used margin in the percentage model, but this does not establish a universal warning. The difference between balance, equity and used margin explains the fields separately.

Margin call — a warning, not a verdict

A margin call is a signal, not the closing of your account. The warning threshold and its units are provider-specific; check whether the configured level is a percentage or a cash amount. As an unrealised loss grows, equity shrinks and the margin level slides toward the threshold. MT5 can highlight the account state in red. That display does not establish a universal new-order block or guarantee an interval before liquidation; check the provider’s actual thresholds and policy.

A warning does not guarantee a reaction interval. A cash deposit affects the account only when credited and also exposes additional money to risk. Closing exposure requires execution and can change both margin and equity through costs or prices. Moving a protective order does not itself restore missing collateral, and an ordinary stop can slip.

Stop out — when the algorithm takes over

A stop out is forced position closing under the account’s rules. The applicable EU retail CFD protection requires closing one or more open CFDs when account funds and net unrealised profits fall below half the total initial margin protection requirement for those CFDs. This does not guarantee a fill at that boundary or prescribe a universal liquidation order. Outside that regime, read the actual entity’s thresholds and calculation basis rather than assuming a common offshore rule.

A provider may use sequential liquidation under its account policy. In a simplified model with unchanged equity and reduced used margin, the margin level rises after closing a position. Actual fill prices, charges and changed or offsetting margin requirements can alter that result. The account policy determines the order and stopping condition; it does not promise a particular number of positions will remain. Check leverage and margin separately from the planned stop-loss budget.

Hypothetical PLN account: three long EUR/USD positions of 0.3 lot; exact 1:30; fixed EUR/PLN 4.30 and USD/PLN 4.00. No costs, margin changes or earlier closure; illustrative warning at 100%, close-out below 50%.
Starting balance and equity20,000 PLN
Notional 90,000 EUR; margin 90,000 / 30 = 3,000 EUR12,900 PLN margin
Combined pip value: 0.9 × 10 USD × 4.0036 PLN per pip
Starting margin level: 20,000 / 12,900 × 100%155.04%
Model loss of 7,100 PLN: 197.222… adverse pips; equity 12,900 PLN100%: model warning boundary
377 adverse pips: loss 13,572 PLN; equity 6,428 PLN49.83%: below model close-out threshold
Assume one position closes at the same valuation; remaining margin 8,600 PLN, equity 6,428 PLN74.74%; no new profit

With fixed margin, the model’s warning boundary and 50% boundary are about 179.17 pips apart: (12,900 − 6,450) / 36. This establishes no time available to react, and a gap can cross both. If total size were 0.3 lot instead, initial margin would be 4,300 PLN and initial margin level about 465.12%, but that ratio would still not establish general safety.

A threshold crossing does not create a “50% price”

A percentage rule defines when action is required. It does not create an executable quote exactly at that level or guarantee the amount after liquidation.

Scroll sideways to see the full diagram

A gap between readings and the post-liquidation balanceThe hypothetical model closes below 500 USD equity. A reading jumps from 650 to 380 USD; the entire position closes at that valuation, and a 5 USD exit fee leaves a 375 USD balance.TRIGGER ≠ GUARANTEED PRICEFixed margin: 1,000 USD · model trigger: 50%Model boundary: 500 USD equityBefore gap: equity 650 USDMargin level: 65%Next reading after gap: 380 USDMargin level: 38% → condition metNo available price at 500 USD is assumed.Full close at the 380 USD valuationExit fee 5 USD → balance 375 USD

Original hypothetical USD account with one position; fixed margin 1,000 USD and a model close-out trigger below 50%. No credit, blocked amounts or other positions. After the gap, full execution occurs at the same 380 USD valuation; separate 5 USD exit fee. This is an imposed scenario, not a promise of broker behaviour. MQL5 distinguishes thresholds and their modes; KNF, point 1b separately describes close-out protection for Polish retail CFDs.

650 → 380 USD depicts two readings in a hypothetical gap, not passage through every intervening price.

After closing, this model’s margin is zero, so we do not add another equity/margin percentage. A 375 USD balance does not imply failed negative balance protection: it does not promise to preserve 500 USD. Separate the threshold basis, reading time, execution price and fees.

Why a stop out sometimes fails to save the account

A close-out threshold does not guarantee an executable price at that boundary. During a gap, the next available execution may imply a deeper loss, and costs can further change the final balance. Closing occurs under the provider’s policy and market conditions; do not assume a universal Sunday clock or execution at the first displayed quote.

On 15 January 2015 the Swiss National Bank discontinued its minimum exchange rate of CHF 1.20 per euro. This documented policy change is a historical context, not a price-loss probability for today’s account. Ordinary stops and close-out rules do not guarantee fills at their trigger levels. Applicable negative-balance protection addresses liability separately from execution and does not preserve the account funds.

Negative balance protection — the last line of defence

For covered European retail CFDs, account-level negative-balance protection limits aggregate liability for the linked CFDs to funds in that CFD account. It is separate from the margin close-out rule and does not guarantee an execution price or that the platform never displays a temporary negative balance. Confirm entity, product and client classification; it is not a worldwide safeguard.

The statutory retail-CFD safeguard need not cover a professional account; a provider may nevertheless offer separate contractual protection. Check the actual classification, product and terms rather than assuming automatic loss of every protection. The historical 74–89% range cited by ESMA in March 2018 is also distinct from a provider’s required warning, which uses its own account-loss calculation under the applicable rule.

The most common mistakes at both thresholds

The first and most dangerous is treating margin call and stop out as synonyms. A trader who has only heard of the "margin call" panics at 100 percent or, worse, relaxes — thinking that since a warning arrived, the broker will somehow close the position "if need be" without a loss. In reality, between the warning and the forced close lies a whole stretch in which the account melts away.

Waiting for a reversal does not resolve an insufficient margin buffer. Review price exposure, losses, financing and changing margin requirements instead of assuming a margin breach proves a particular trend. Plan a price-loss budget and understand that an ordinary stop can slip or fail to limit a gap loss to its trigger level. Also check negative-balance protection: the statutory retail CFD safeguard need not apply to a professional account, although a provider may offer contractual protection. Without applicable protection, losses can create liability beyond the account funds.

Why might closing a profitable position release more margin?

A synthetic account has a 1,000 USD balance. Position A has +150 USD floating P/L and requires 1,000 USD margin; B has −550 USD floating P/L and requires 500 USD. Equity is 600 USD and additive margin is 1,500 USD. We assume independent requirements, unchanged prices and no new costs; this is neither a hedging nor portfolio-margin model.

Under a hypothetical “largest released margin” rule, closing A leaves a 1,150 USD balance and B's −550 USD floating result. Equity remains 600 USD, margin falls to 500 USD and margin level is 120%. Under a “largest loss” rule, closing B leaves a 450 USD balance and A's +150 USD floating result. Equity is still 600 USD, but 1,000 USD margin gives a 60% level.

Same valuation, two closing sequences

Same valuation, two closing sequencesOwn model: equity 600 USD, margin 1,500 USD. Closing A releases 1,000 USD; closing B releases 500 USD. Prices and costs stay fixed.Before600 / 1 50040%Close A600 / 500120%Close B600 / 1 00060%Released margin differs; model equity remains 600 USD.
Own model: equity 600 USD, margin 1,500 USD. Closing A releases 1,000 USD; closing B releases 500 USD. Prices and costs stay fixed.

These are two explicit rules chosen for the example, not your broker's policy. cTrader documents broker-set conditions and distinct stop-out mechanisms. Our table does not implement those algorithms. Establish whether your account uses full or partial closure, current requirements and actual execution records. Price movement, exit fees and collateral relationships change the numbers.

Check yourself: does A's +150 USD prove that A will remain open?

No. The sign of its result alone does not determine liquidation order. A is closed under our modelled margin-release rule. An actual account requires the applicable provider policy and event record.

What to do before you close this page

  1. Check warning and close-out rules in the account terms. Record the calculation basis, threshold units, permitted margin changes and liquidation policy. Compare them with the applicable legal safeguards; an overseas address or a percentage alone does not establish account safety.
  2. Estimate your margin level before opening exposure. Use an order preview, a demo account or the provider’s margin calculator for the intended volume; no live order is needed for this exercise. Divide equity by the estimated used margin and multiply by one hundred, when margin is positive. Compare that ratio with the actual thresholds and your chosen buffer. Assess planned price loss separately: a ratio of 500 percent alone does not establish suitable volume.
  3. Check protective orders against the planned loss budget. Verify their direction, trigger and execution rules. An ordinary stop does not itself release margin or guarantee a price during a gap; moving it is not a substitute for addressing insufficient collateral.
  4. Verify your client status and protection terms. Check which statutory safeguards apply to the actual category and whether the provider adds contractual protection. Professional status is not an automatic higher-leverage entitlement. For a deeper treatment, see the risk management section on ForexMechanics.
  5. Size your positions by the one-percent rule. Before you open the next trade, estimate the loss at the planned stop using your chosen one-percent budget, allowing separately for costs and worse execution — the position-sizing formula does not automatically keep margin level clear of close-out. Check the resulting required margin and account-level exposure separately.