When trading on leverage, MetaTrader terminals use automated risk management features to protect your account balance. The two most critical thresholds to understand are Stop-Out and Margin Call.
What is a Stop-Out?
A Stop-Out occurs when your losses increase to a point where your account can no longer sustain your open positions. When your Margin Level drops to 50% or lower (on Standard and Raw Spread accounts), the system automatically closes your trades to prevent your balance from becoming negative.
What is a Margin Call?
A Margin Call is an early warning notification that alerts you before a Stop-Out may happen. It is triggered when your Margin Level drops to 100% or lower. It indicates that your equity is no longer sufficient to properly support your open trades and your available funds are at risk.
How is the margin level calculated?
The margin level is a key indicator displayed in MetaTrader terminals and is calculated using this formula:
Margin Level (%) = (Equity / Margin) * 100
You can monitor this indicator under the "Trade" tab inside the "Terminal" window (in MT4) or the "Toolbox" window (in MT5).
Here is an example of a Margin Call situation in the terminal, where the margin level drops below 100% and highlights in red to alert you:
Margin Call vs. Stop-Out
Feature | Margin Call | Stop-Out |
Trigger condition | Margin Level ≤ 100% | Margin Level ≤ 50% |
System action | Sends a warning notification | Automatically closes positions |
Primary purpose | Alerts you to account risk | Protects remaining balance from further loss |