The stop-out level is the equity threshold at which a broker or platform automatically closes all open positions to prevent an account balance from going negative. It is a platform-level mechanism, not a program rule — it fires when equity falls to a defined percentage of used margin, regardless of any evaluation limits in place.
In funded evaluations, the stop-out level is a backstop that should never be reached. The program’s drawdown floor and daily loss limit are designed to end the evaluation long before equity approaches the stop-out threshold. Reaching the stop-out in an evaluation context means the program’s own limits were already breached — the evaluation would have ended before the platform intervenes.
How the stop-out level is calculated
The stop-out fires when equity drops to a specified percentage of used margin — commonly 20% to 50%, varying by broker and instrument. The relationship between equity, used margin, and the stop-out level is:
Stop-out triggers when: equity ÷ used margin × 100 ≤ stop-out %
Example: A platform with a 20% stop-out, $10,000 equity, and $8,000 used margin has a margin level of 125% — well clear. If equity falls to $1,600 against the same $8,000 used margin, margin level hits 20% and all positions are closed automatically, starting with the least profitable.
Stop-out versus margin call
A margin call is a warning — issued when margin level falls below a threshold (often 100%) — alerting the trader to deposit funds or reduce positions. The stop-out is the automatic execution that follows if action is not taken. In fast-moving markets, the two can occur in rapid succession with no practical window to intervene between them.
Why it matters in evaluations
On a simulated evaluation account, hitting the stop-out carries the same consequence as hitting the drawdown floor — positions are closed, the session ends. The distinction is that the stop-out fires based on leverage and margin usage, while the drawdown floor fires based on the absolute equity level. An evaluation with very high leverage and large position sizes can hit the stop-out before the drawdown floor if position sizing is not calibrated against both constraints simultaneously.
For the related program limits, see drawdown floor, daily loss limit, margin, and leverage.
FundedProp provides simulated trading evaluations. All accounts are demo accounts; no real capital is traded by participants. This is not investment advice.