The question no page answers
Most writing on stop-outs explains what it is and stops there. The question a trader actually asks while looking at a losing position is entirely different: at exactly what price does my account get closed?
That question has a precise numerical answer, computable before entry rather than after. Four steps: find the held margin, then the equity matching the stop-out threshold, then the loss that gets you there, then convert it to a price distance. The example below runs those steps with real numbers.
Which position closes first
With several positions open, a broker does not close the account at once; it closes progressively until margin level returns above the threshold. The common rule is to start with the largest loser, though policy varies between brokers.
The practical effect is harsh: winning positions may survive while losers are liquidated at the worst price, turning a floating loss that might have recovered into a realised one. This is why a stop loss you place yourself always beats one the broker imposes: you choose the price, otherwise it chooses for you.
Where this term sits in the account chain
The chain has a fixed order, and each term is derived from the one before it:
Balance → (add the profit or loss of open positions) → equity → (subtract the margin held) → free margin. The ratio of equity to held margin is the margin level, the single number a broker watches to decide a margin call and then a stop-out.
Learn the definitions separately and you know what each word means without knowing the price at which your account closes. Every page in this family runs the same account through the same numbers to reach exactly that price.
The formula
Stop-out price = entry − (equity − margin × stop-out ratio) ÷ value per point
A worked example
The reference account used across this family: a $1,000 balance, 1:500 leverage, and a 0.10 lot buy on gold at 2,400.00 — 10 ounces, $24,000 notional.
Margin held = 24,000 ÷ 500 = $48. Every $1 of gold price is $10 of profit or loss on 10 ounces.
At a 50% stop-out threshold, equity must fall to half the held margin: 48 × 0.5 = $24. The required loss is 1,000 − 24 = $976, a 97.6-point move, putting the stop-out at 2,302.40.
Set against the margin call at 2,304.80, the important truth appears: they are $2.40 apart. Anyone waiting to "see what happens" after the warning usually has no time to decide.
Where the same account ends up: margin call at 2,304.80, stop-out at 2,302.40. The position survives a $97.60 fall — about 4% — before the broker intervenes. Run your own numbers in the margin calculator.
Common mistakes with this term
- Relying on the stop-out as if it were a stop loss; it is liquidation at the worst point, not an exit plan.
- Not calculating the stop-out price before entry, when four simple steps produce it.
- Assuming a stop-out closes everything at once; closure is progressive, and winners may survive while losers are liquidated.