Margin Call

Investors trading in the financial market commonly face issues with equity, which creates difficulties in conducting operations with currency pairs and other assets. This lack of equity is primarily due to the modest income generated from investments. Consequently, investors explore various options to address this issue, with the most popular being a margin provided by brokerage companies as collateral while obtaining credit. However, the margin has its unique features and drawbacks that a trader must be aware of before making a decision.

In a nutshell, a Stop Out is actually a trader's bankruptcy. It occurs when there is not enough capital in the account to maintain open trades, and the broker closes them forcibly. This unfortunate situation is caused not only by losing positions but primarily by inappropriate money management. Today we will analyze why and under what conditions Stop Out occurs, and most importantly, how to avoid this situation.