Stop-Out Level Definition

The stop-out level is the point at which a broker automatically closes open positions due to insufficient margin.

What is a Stop-Out Level?

It is typically set as a percentage of required margin and acts as a final safeguard against negative account balances.

Reaching the stop-out level usually follows a margin call if the situation is not addressed.

If a broker's stop-out level is 20%, positions may be automatically closed once account equity falls to that percentage of required margin.

Scalping is a short-term trading strategy that aims to profit from very small price movements, often within seconds or minutes.

A sector is a group of companies operating in the same segment of the economy, such as technology, energy, or healthcare.

Securities are tradable financial instruments representing ownership, a creditor relationship, or rights to ownership, such as stocks and bonds.