Here is everything you need to know about the Margin Call and Stop Out levels for the various accounts we offer, at a glance:
|Account||Margin Call||Stop Out|
Mid-price stop out
This stop out approach calculates a “virtual mid-price equity” instead of real equity, which can lead to fewer instances of stop out in sudden spread widening; sudden spread widening occurs when a bid price goes down as the asking price goes up while the middle price (mid-price) stays the same.
Mid-price stop-out can help delay a stop-out until both mid-price equity and real equity create stop-out conditions.
Mid-price stop out evaluates stop out using not only bid or ask prices but divides this by 2 (bid+ask /2), providing a discount of half the spread for each open order (calculated as spread x number of lots /2). For account types with a commission, half of one side of the commission is provided along with this half current spread discount.
A trader has an account balance of USD 100.
- Their first order is 1 lot BUY with a floating loss of USD 40.
- Their second order is 1.5 lots BUY with a floating loss of USD 60.
- The current spread is USD 10.
Under normal conditions, these orders will result in stop-out because the equity is calculated to be 0. (100 account balance - 40 floating loss - 60 floating loss = 0 account balance). However, with mid-price stop out these orders are calculated differently (keeping in mind the USD 10 spread).
- The first order receives spread x lots / 2 = USD 10 x 1 / 2 = USD 5 discounted.
- The second order receives spread x lots / 2 = USD 10 x 1.5 / 2 = USD 7.5 discounted.
Under mid-price stop out conditions, the virtual middle price equity calculates the stop out as: 100 (equity) - 40 (floating loss) + 5 (discount) - 60 (floating loss) + 7.5 (discount) = -87.5 With an account balance of USD 100, returning USD -87.5 will not result in a stop out.
Should spread widen suddenly and symmetrically, with -5 for bid and -5 for ask resulting in a spread of USD 20, the virtual mid-price equity will remain USD -87.5 where: 100 (equity) - 45 (floating loss) + 10 (new discount) - 67.5 (floating loss) +15 (new discount) = -87.5
Therefore with mid-price stop out, the stop out is delayed until the virtual mid-price equity and real equity both return a stop out condition.