Stop Out Definition
Stop Out is an event that happens when trading Forex and CFDs. It’s when your positions start to be automatically closed because your account does not have enough margin to maintain them. It can happen for lots of different reasons, such as managing your risks badly, not understanding risk management or the market price moves against your favour to fast for you to react. Stop Out can be prevented by hedging or using Stop Losses or deposing more funds to your trading accounts. Stop Out is a very important subject in trading and every trader should do their research as it cannot be summed up in a few sentences (unfortunately). cTrader has two different Stop Out types and you should be aware of both of them. These are Smart Stop Out and Fair Stop Out. They both work very differently but the purpose of them is the same, to close your positions when you run out of margin. We suggest reading up on both of them.