Margin Call vs Stop-Out: The Two Levels That Close Your Gold Trades for You

If your broker has ever closed a position you did not close yourself, it was a stop-out. A margin call is the warning before it. Both are triggered by one number: your margin level.

Margin level

Margin level = equity ÷ used margin × 100%.

• Equity is your balance plus or minus open profit and loss.
• Used margin is the margin locked by open positions.

Margin level falls as open losses grow.

Margin call vs stop-out

Offshore entities often use lower stop-out levels, such as 20% or even 0%, which lets losses run further before closing.

A worked example

• Balance: 5,000 dollars.
• Position: 1 lot of gold at 4,000 dollars, 20:1 leverage → used margin 20,000 dollars.

That position cannot be opened: the account only has 5,000 dollars. At 20:1, 5,000 dollars supports at most 0.25 lot (margin 5,000 dollars), and the account would be at a 100% margin level the moment it opened.

Take a sensible position instead: 0.10 lot, margin 2,000 dollars.

• Margin level at open: 5,000 ÷ 2,000 = 250%.
• Stop-out at 50% means equity of 1,000 dollars → a loss of 4,000 dollars.
• At 10 dollars per dollar of movement on 0.10 lot, that is a 400-dollar fall in gold.

A planned stop-loss should close the trade long before that. If the stop-out is closer to the price than your stop-loss, the position is too large. The margin calculator and position size calculator show both numbers.

How to avoid ever being stopped out

1. Size from your stop-loss, not from available margin.
2. Keep margin level well above 300% on all open positions combined.
3. Count correlated positions together: a long in gold and a long in silver are, in a sell-off, one larger position.
4. Reduce size before weekends and major releases, when gaps can jump past stops.

Questions traders ask

Why did the broker close a different position from the one losing most? Brokers usually close the position with the largest loss first, but the rule is in your client agreement and varies.

Does a margin call mean I owe money? No. It is a warning. You only owe money if the account goes negative and you do not have negative balance protection.

Can I add funds to stop a stop-out? Yes, if you do it before the level is reached. Adding money to save a losing trade is usually a mistake, though; it is the same as increasing the position's risk.