How a stop-out works
A stop-out is the broker automatically closing your positions when your account equity falls too far against your margin. It is not a stop-loss you set; it is a protective mechanism that kicks in when losses erode your margin to a defined level, closing trades to stop the account going negative. It is the final backstop after a margin call goes unanswered.
Worked example
You hold leveraged positions and the market moves hard against you. As losses mount, your equity drops toward the maintenance margin. First you get a margin call warning; if you add no funds and the equity keeps falling, the platform hits the stop-out level and force-closes positions, starting with the worst, until your margin is restored. You do not choose which or when; the system does.
Stop-out on Volity
The stop-out exists to protect both you and the broker from a runaway loss, and on Volity it works alongside negative balance protection, which caps the absolute worst case at your deposit so a stop-out cannot leave you owing money. The way to never see one is to keep free margin well above the maintenance level and to size with position sizing.
Why it matters
A stop-out is the market closing your trades for you at the worst possible time, so reaching one means your sizing was already too aggressive. Treat the margin call as a serious warning, not a suggestion. Related: margin call and margin.
Learn more in our forex trading guide.
