Stop-out sequence: which position closes first
Posted: Sat Oct 31, 2026 2:19 pm
When margin level hits the stop-out threshold, the platform starts closing positions. Which one goes first is not always the one a trader would choose. Many servers close the position with the largest loss, and others close the one with the largest margin usage, depending on the rules.
For scalpers running several positions, this can lead to unexpected outcomes. A small, profitable hedge might be closed, or a large losing position might be closed while a smaller one that was the true source of the problem remains.
The stop-out process can also run in steps. After the first closure, margin level is rechecked, and if still below the threshold, the next is closed. In a fast market, spreads and slippage can eat more margin between steps.
Read the broker's terms on the stop-out procedure. Some publish the logic, others leave it vague. A demo account with a tiny balance can reveal the behavior in practice.
The safest policy is never to rely on the stop-out mechanism. Keep margin usage low enough that it never comes into play.
How does the broker describe its stop-out order, and does the behavior match the description?
For scalpers running several positions, this can lead to unexpected outcomes. A small, profitable hedge might be closed, or a large losing position might be closed while a smaller one that was the true source of the problem remains.
The stop-out process can also run in steps. After the first closure, margin level is rechecked, and if still below the threshold, the next is closed. In a fast market, spreads and slippage can eat more margin between steps.
Read the broker's terms on the stop-out procedure. Some publish the logic, others leave it vague. A demo account with a tiny balance can reveal the behavior in practice.
The safest policy is never to rely on the stop-out mechanism. Keep margin usage low enough that it never comes into play.
How does the broker describe its stop-out order, and does the behavior match the description?