Margin call and stop out in MetaTrader 5: what they are and how to avoid them

A margin call is a warning; a stop out is a forced close. Both depend on your margin level, the MetaTrader 5 figure that divides your equity (what your account is worth right now) by the margin held as collateral. When it drops to your broker’s margin call level, often 100%, MT5 warns you; if it reaches the stop out level (50% for retail clients in the EU, the UK and Australia), the broker’s server closes your positions, biggest loser first. You keep both at a distance with a lot size that’s small for your account and a stop loss that triggers well before.

Margin, free margin and margin level in MT5: where to find them

Open the Toolbox (View → Toolbox, or Ctrl+T; on a Mac, also with Ctrl) and go to the Trade tab. Below your positions you’ll see your account status line. According to the MetaQuotes help:

• Balance: the money in your account, not counting open positions.
• Equity: your balance plus or minus the floating profit or loss of what’s open. What you’d have if you closed everything right now.
• Margin: what the broker holds as collateral for your open positions and, according to the help, for pending orders too.
• Free Margin: equity minus margin. What you have left to open more.
• Margin Level: equity ÷ margin × 100. The gauge that both the margin call and the stop out depend on.

On a gold CFD, margin is, in simple terms, lots × contract size × price ÷ leverage; the contract size (usually 100 ounces) is in the Specification window, as we saw in how to calculate lot size in gold. Margin isn’t a loss, and it’s released when you close. Equity moves with every tick while margin barely changes, so when your positions lose money, your margin level falls.

What a margin call is, and what a stop out is

The name comes from stock accounts bought on credit, where a margin call was the broker’s call asking you for more collateral. In MT5 it’s a level: when you reach it, the account status line turns red, but nothing gets closed. Many brokers set it at 100%, others at 90% or some other figure; below 100%, your free margin is negative and MT5 rejects any order that needs more margin.

The stop out is where the warning turns into action, and it’s carried out by the broker’s server, even if your MT5 is closed. According to MetaQuotes, in normal mode it closes the position with the biggest loss first; under the FIFO rule (first in, first out), the biggest loser among the oldest positions in each symbol. Each close frees up margin and, if the level is still below the threshold, another position goes. In the History tab, the comment on those closes usually carries the tag “so” with the margin level at that moment, something like “[so 49.50%…]”.

Your own levels are in your broker’s trading conditions or in the terms of your account type; if you can’t find them, ask support. They can be set as a percentage or as an amount of money.

The 50% stop out and negative balance protection: who gets them

Since August 1, 2018, following a decision by ESMA (the EU’s securities markets authority), brokers that sell CFDs to retail clients in the EU apply, among other measures, two protections that national regulators made permanent in 2019. We covered the leverage caps in gold leverage; here’s the fine print on the close-out:

• Close-out at 50%. The broker must close positions when the funds in the account plus the net unrealized profits of open CFDs fall below half of the initial margin: a margin level of 50%.
• Per account, not per trade. All open CFDs count; according to ESMA, including those with a guaranteed stop.
• Negative balance. Your loss on the CFDs in that account can’t exceed what’s in it: you don’t end up owing the broker money.

Keep in mind that these protections are for retail clients. If you ask to be treated as a professional client, you give them up. Outside the EU, it depends on the regulator: the UK (FCA) and Australia (ASIC) also require the 50% close-out and negative balance protection for retail clients, but many firms in other jurisdictions set the stop out at 20% or 30% and don’t protect you from a negative balance. Some countries don’t allow retail CFDs at all: the US is one of them, so regulated brokers don’t offer gold CFDs to US residents. And a firm that isn’t authorized where you live is outside your regulator’s reach (we look at this in brokers outside the EU).

At what price does the stop out hit? A gold example at 1:20

A USD account with $5,000, 1:20 leverage, a 100-ounce contract and gold at $4,000, the round number we used in how to calculate lot size. You buy 0.20 lots, with the margin call at 100% and the stop out at 50%, ignoring spread, commissions and swaps:

1. Margin: 0.20 × 100 × 4,000 ÷ 20 = $4,000.
2. When you open: equity of $5,000, free margin of $1,000 and a margin level of 125%.
3. What each dollar is worth: 0.20 × 100 = $20 for every dollar gold moves.
4. Margin call (100%): equity has to fall to $4,000, a $1,000 loss, and 1,000 ÷ 20 = $50. It triggers with gold at $3,950.
5. Stop out (50%): equity has to fall to $2,000, a $3,000 loss, and 3,000 ÷ 20 = $150. It triggers with gold at $3,850.

For a buy: stop out price = entry − (equity − stop out level × margin) ÷ (lots × contract size). Here, 4,000 − (5,000 − 0.5 × 4,000) ÷ 20 = 3,850; for a sell, the threshold sits above the entry, at $4,150. And $150 is less than 4% of the price. Same account, other lot sizes:

Margin and level are at the open; in parentheses, how far gold has to fall. And one thing the table doesn’t show: with 0.05 lots, reaching the stop out would mean losing $4,500, 90% of the account. The stop out isn’t a safety net, it’s the end of the road; what protects you is the stop loss on each trade.

Many brokers calculate margin at the current price (in MT5, if gold is set up in Forex mode, the ounces held as collateral are converted to dollars at the current rate): so as gold falls, the margin falls too, and the threshold moves a few dollars further away; with 0.20 lots, the margin call lands at about $3,947 and the stop out at about $3,846. And in an account in another currency (euros, pounds, rand…), the exchange rate shifts it too.

Weekend gaps: when the stop out comes too late

The stop out is checked against the prices that come in, and gold doesn’t trade from Friday night to Sunday night (see the gold trading hours). If it reopens past your threshold, the server closes you out at the first available price.

With the account from the example: on Friday gold closes at $3,900, equity is $3,000 and the margin level is 75%: margin call, but no stop out. On Sunday it reopens at $3,800: equity of $1,000, a margin level of 25% and a close right there, with $4,000 lost instead of the $3,000 you’d have lost at the $3,850 threshold. If it reopened at $3,740, equity would be −$200: with negative balance protection, the broker brings the account back to zero; without it, you’d owe them $200.

On a smaller scale, the same thing happens around major economic releases, as we saw in stop loss, take profit and break-even. And if your broker raises its margin requirement before a weekend or a big event, your margin level drops without the price moving at all.

How to avoid a margin call and a stop out

• Size from your stop loss. Your lot size comes from how much you’re willing to lose and how far away your stop is (the lot size formula); margin is a limit, not a target.
• Work out your stop out price before you open. If gold could get there in a few days, the position is too big for your account.
• Make sure your stop loss comes first. It closes with a loss you chose; the stop out closes with whatever loss the margin level dictates.
• Watch free margin, not balance. Positions, pending orders and robots in the same account all draw on the same margin.
• If the warning comes, decide calmly. Reduce or close, deposit or wait: the last two keep the risk in place, and depositing to hold on to a losing position raises what you have at stake.

Margin call and stop out with a trading robot: what changes

An Expert Advisor doesn’t react to the red line unless it has been programmed to: it trades by its own rules. The server applies the stop out to the whole account, whatever that logic is, and it can close a position the robot was managing. A manual trade or another robot in the same account shares the same margin, and the position with the biggest loss goes first, no matter who opened it.

The first symptom usually shows up earlier. According to the troubleshooting section of the AUREUM guide, the “Not enough money” message means there isn’t enough free margin for that trade’s lot size, and the robot doesn’t open it.

AUREUM’s home page describes its reference lot mode: 0.01 lots per 1,000 in your account, with your broker’s minimum lot as the floor and a cap of 1 lot; with 5,000, it trades 0.05 lots, the first row of the table. According to its guide, every trade has its stop and target on the broker’s server, and the automatic Friday close only happens if the robot is running. In manual mode, on the other hand, you can pick a lot that’s too big for your capital. None of this removes the risk.

Frequently asked questions about margin call and stop out