Stop-Out Protection
If equity continues to decline beyond the broker’s stop-out level, positions are automatically closed.
This happens to:
Prevent negative balance situations.
Protect both trader and broker from extreme losses.
For example, if your broker has a 20% stop-out level and your margin level drops below that threshold, trades may start closing automatically, starting with the largest losing position.
This is why understanding equity is critical for survival in leveraged trading.
