What's Indices Stop Out Indices?
What Happens When Your Free Stock Margin Runs Out?
A stop out is when a trader's account free indices margin goes below the required margin level that's set by the broker. This means that because the free indices margin in the trader's account has gone below required margin level then the trader gets a indices stopout and some of the open trades in trader's are closed by the broker until this indices margin level goes back up to above required margin level.
Some of the open trades may be closed or all of the open trades might be closed-out if this indices stopout is automatically executed by broker.
What's Indices Margin Requirement Level?
Now if Your Stock Leverage is 100:1
When trading if you have $1,000 & use leverage of 100:1 & buy a trade - your indices margin on this trade transaction is $1000 in your account, this is the money that you will lose is your open trade transaction moves against you the other $99,000 that's borrowed, broker will close out the open trades automatically using a Indices Stop Out once your $1,000 has been taken by the trading market.
But this is if your broker has set 0% Margin Requirement before closing out your stock trades automatically using this Indices Stop Out.
What's 20% Margin Requirement Level?
For 20% margin requirement before closing your stock trades automatically using a Indices Stop Out, then your stock trades will be closed once your trade account balance gets to $200 - at $200 you will get a indices stop out.
What's 50 percent Indices Margin Requirement Level?
For 50 % requisite of this level before stopping out your stock trades automatically using a indices stop out, then your trades will be stopped out once your balance gets to $500 - at $500 you will get a indices stop out.
What's 100 Percent Indices Margin Requirement Level?
If the broker sets 100 Percent indices margin requirement of this level before closing out your open transactions automatically using a Indices Stop Out - at $1,000 you will get a indices stop out, then your stock trades will be closed once your trade account balance gets to $1,000: Meaning stock trades will close-out as soon as you execute a 1 standard lot on this account because even if you pay 1 point spread your trading account balance will get to below $1,000 and needed margin requirement percentage is 100 Percent that's $1,000 dollars, therefore your orders will immediately get closed using a Indices Stop Out once your indices margin requirement falls below 100 percent.
Most brokers do not set 100 Percent indices margin requirement, but there are those brokers that set 100 Percent indices margin aren't suitable for you at all, even those who set 50 percent indices margin requirement are still not suitable. Choose those set 20% margin trading requirements, in fact, those brokers that set at 20% Margin Requirement are some of the best since due to the likely hood they stop out-out your trade using a Indices Stop Out is reduced as pictured in the example above.
To Learn and Know More about Stock Leverage & Stock Margin - How to Read the Learn Topics Below:
Leverage & Stock Margin Described
What's a Trade Plan? - Written Plan Example Template
Alternatives: Automated EA Trading or Copy and Paste Signals
