Margin Call and Stop Out: Margin Level Explained

A margin call is a warning that your account's equity has fallen close to the margin your open positions need; a stop out is the point where the platform starts closing those positions for you. Both are driven by one number, the margin level, which compares what the account is worth now with the margin it has reserved. Learn how free margin and margin level are calculated and you can see a stop out coming long before it arrives, and size trades so it never does.

Balance, equity, free margin and margin level

Your account screen shows five key figures:

Balance: deposits plus closed-trade results; it does not move while positions are open.
Equity: balance plus or minus the floating profit or loss, what the account is worth now.
Used margin: the amount reserved to keep positions open. For one position, margin = contract size × price × lots ÷ leverage.
Free margin: equity minus used margin, the room left to open new trades or absorb losses.
Margin level: equity ÷ used margin × 100, shown as a percentage.

Once a trade is open, the margin level is the most important number on your screen.

What margin call and stop out actually mean

When a trade loses money, equity falls while used margin stays roughly the same, so the margin level drops. At 100%, equity equals used margin and free margin is zero: you cannot open new positions, although the existing ones stay open.

Brokers set two thresholds on this scale:

The margin call level is the warning: the account is approaching forced closure and needs your attention.
The stop-out level sits lower. When the margin level reaches it, positions are closed automatically at the available market price, usually starting with the one losing the most.

The name dates from when brokers phoned clients for more money; today it is a platform notification. In a fast market or after a weekend gap, a stop out can close at a price noticeably worse than the level that triggered it.

A worked example with real numbers

Your balance is $2,000. With leverage of 1:100, you buy 1 lot of EURUSD at 1.1500:

Position value: 100,000 × 1.1500 = $115,000.
Used margin: 115,000 ÷ 100 = $1,150.
Free margin: 2,000 − 1,150 = $850.
Margin level: 2,000 ÷ 1,150 × 100 ≈ 173.9%.

Each pip (0.0001) on 1 lot of EURUSD is worth $10. Used margin shifts by only a few dollars as the price moves, so we hold it at $1,150 for clarity. Now the price falls:

At 1.1450, 50 pips against you: loss $500, equity $1,500, free margin $350, margin level ≈ 130.4%.
At 1.1415, 85 pips against you: loss $850, equity $1,150, free margin $0, margin level 100%. No new trades are possible.

Now assume, purely for illustration, a stop-out level of 20%. The platform would step in when equity falls to 20% of $1,150, which is $230. That is a loss of $1,770, or 177 pips, with EURUSD at 1.1323. A move of about 1.5% in the pair would have taken 88.5% of the account.

At 0.10 lots, the same trade uses $115 of margin, starts at a margin level of about 1,739%, and the price would have to fall 1,885 pips before free margin ran out. Same account, same leverage, a completely different risk. Position size decides how close you live to a stop out.

A quick formula: how far away is your stop out?

Stop-out equity = used margin × stop-out level ÷ 100
Distance in pips = (equity − stop-out equity) ÷ what your open positions gain or lose per pip

In the example: (2,000 − 230) ÷ 10 = 177 pips. Use your own account's level, and redo the sum with every new position, which raises both the used margin and the money at stake per pip.

Leverage does not make you safer

Higher leverage lowers the margin each position needs, so the stop out looks further away. The trap is what that allows. At 1:500, 1 lot of EURUSD at 1.1500 needs only $230 of margin, so the same $2,000 account could open 5 lots for $1,150, the used margin of the example above. The starting margin level is identical, but each pip is now worth $50, and a 17-pip move against you, a few minutes of ordinary trading, wipes out the free margin.

Leverage changes how large a position your balance can open, not what a pip is worth, so the risk lives in the size you choose. See spread and leverage and lots and pip value.

How to stay well clear of a stop out

Size trades from your stop loss, not your free margin. Decide what you accept losing, then calculate the lot size with the position size calculator.
Put a stop loss on every position, so losing trades close long before the stop-out level; see stop loss and take profit.
Count related positions as one. Buying EURUSD and GBPUSD together is largely one bet against the dollar, with double the margin and double the money per pip.
Never add to a losing trade to rescue it. Each extra lot eats free margin and pulls the stop out closer.
Act at the margin call, not after it. Reducing a position yourself is a decision; a stop out is the market making it for you.

Margin call and stop out on IKLIL MARKETS

On IKLIL MARKETS the levels depend on the account type: the Standard and Islamic (Swap-Free) accounts have higher margin call and stop-out levels than the Pro and Elite accounts, so the platform steps in earlier on them. The current levels are published in the trading conditions, and you can compare the accounts side by side.

Check the margin a position needs with the margin calculator before opening it. Every position can carry a stop loss and take profit, and a free demo account with 10,000 virtual USD, refillable at any time, lets you practise without risking real money. Negative balance protection means you cannot lose more than your balance.

A word on risk

CFDs are leveraged products. In a fast market a stop out can take most of an account within minutes, and you can lose your whole balance quickly. Trade only with money you can afford to lose, and read the risk disclosure before you start.