Short answer: A margin call is a warning that your account equity is getting too low to support your open trades. A stop-out is when the broker starts closing them for you. For retail clients in the UK, EU and Australia, positions must be closed once equity falls to 50% of the margin required.
Margin level is the number to watch
Margin level = equity ÷ used margin × 100. If you have $1,000 of equity and $500 of margin in use, your margin level is 200%. As losses grow, equity falls and so does your margin level.
What happens, step by step
- Margin call level (often 100%): you get a warning and usually can’t open new trades.
- Stop-out level (50% for UK, EU and Australian retail): the broker closes positions, usually the biggest loser first, until your margin level recovers.
- Offshore brokers set their own stop-out levels, sometimes as low as 20%, which means bigger losses before anything is closed.
A worked example
You deposit $1,000 and open a $30,000 position at 1:30, using $1,000 of margin. Your margin level starts at 100%. A loss of $500, which is a 1.7% move against you, takes equity to $500 and margin level to 50%, and the position is closed.
How to stay well clear
- Risk a small, fixed share of your account per trade. Our position sizing guide shows how.
- Use a stop-loss, so you choose the exit, not the broker.
- Don’t use all your available leverage just because it’s there.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
