Margin Call and Stop-Out Levels

What is the Importance of Margin Call and Stop-Out Levels?

In trading, Margin Call and Stop-Out Levels are essential safeguards to help manage risk and protect your account balance. Understanding these levels ensures that you maintain control over your trades and avoid unnecessary losses.

• 100% Margin Call Level: When your Margin Level reaches 100%, you will no longer be able to open new trades. This acts as an early warning to take action, such as adding funds or closing losing positions, to prevent further risk exposure.
• 70% Stop-Out Level: If your Margin Level drops to 70%, a Stop-Out is triggered, and your most unprofitable positions will begin closing automatically. This mechanism helps restore your account to healthier levels and prevents further losses.

The Margin Levels are calculated using the following formulas:

Used Margin: Equity - Free Margin
Free Margin: Equity - Used Margin
Margin Level: (Equity / Used Margin) × 100

To maintain healthy margin levels and avoid margin calls or stop-outs, you can increase your equity by depositing additional funds into your account or reduce your exposure by lowering position sizes or closing some trades to free up margin.

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