LiteFinance Margin Call and Stop Out: 100%, 20% and 50% Explained

LiteFinance's FAQ sets out two thresholds. First, the company has the right to close a client's positions without prior notice if equity falls below 100% of the margin needed to keep them open; with several positions, it may close one or more, starting with the most loss-making. Second, the server monitors every account and, once the margin level reaches 20% or lower, automatically closes the position or all positions. That is the stop out. Cent accounts stop out at 50%.

Stop outs are executed at the current market price, first come, first served, and recorded in the log with the comment 'stop out'.

Margin level explained

Margin level is equity divided by used margin, times 100. Equity is your balance plus or minus floating profit and loss. MetaTrader shows both at the bottom of the terminal.

A worked example

Say you have a $1,000 ECN account and open positions needing $250 of margin, a margin level of 400%. At 100%, when equity falls to $250, LiteFinance may start closing positions. Once equity reaches $50, a 20% level, the server stops the account out automatically.

Credit stop out on bonus accounts

If you hold a bonus, LiteFinance applies a 'credit stop out'. When the margin required for open positions is less than the bonus, stop out happens as soon as equity falls to the margin requirement. If the margin required is equal to or more than the bonus, stop out happens when equity falls to the bonus amount, or when the margin level reaches 20% (50% on Cent). These closures are logged with the comment 'cso'. A non-tradable bonus is also deducted once floating losses equal your own funds. See our LiteFinance bonus page.

Negative balance protection

LiteFinance says it applies negative balance protection on ECN accounts: if your balance goes negative, it converts the loss to zero so you don't owe the company. That matters in fast markets, where a stop out can fill below the point it was triggered. Our LiteFinance regulation guide covers its other protections.

Why a trade closed without you

• The margin level reached 20% (50% on Cent) and the server stopped the account out.
• A credit stop out was triggered on a bonus account.
• Your stop loss or take profit was hit, or a trailing stop followed the price and triggered.

LiteFinance notes that a trailing stop only works while your terminal is running and connected; if you switch it off, the last stop loss level stays on the server.

Avoiding a stop out

1. Risk 1% to 2% of your balance per trade, sized from your stop.
2. Keep margin level well above 100%; many traders aim for several hundred percent.
3. Use lower leverage, or smaller positions, before news.
4. Know how a bonus changes your stop out before accepting one.

Margin call in practice

LiteFinance's 100% clause means the company may start closing positions as soon as your equity can no longer cover the margin in use, without warning. In practice, the server's automatic stop out at 20% is the hard limit, but the earlier clause is a reason not to rely on the gap between them.

Check your margin level in MetaTrader before news and before the weekend, and reduce positions if it is anywhere near 100%.

Hedging and margin

Holding opposite positions on the same instrument can freeze a loss, but both positions still cost spreads, commissions and swaps. A hedge doesn't fix an oversized position; closing part of it usually does.

Margin level targets

There is no single right margin level, but a simple rule helps. Above 500%, you have plenty of room for normal moves. Between 200% and 500%, watch closely around news. Near 100%, LiteFinance may begin closing positions. At 20% on ECN and Classic, or 50% on Cent, the server closes them automatically.

Stop out and copy trading

Copied trades use your account's margin, so a trader's large positions can push your margin level down quickly. Use LiteFinance's copy stop to limit losses, and keep free margin well above the trader's typical needs. If your copy type rounds tiny volumes up to 0.01 lot, a small account can reach stop out faster than the trader's own account.

Every account will have losing streaks. The difference between a drawdown and a stop out is almost always position size.

Stop out levels are a last resort for the broker. Your own stop losses should close a bad trade long before LiteFinance's 100% or 20% thresholds come into play.

Frequently asked

Related reading

• LiteFinance leverage
• LiteFinance account types
• LiteFinance cent account
• Is LiteFinance safe?
• LiteFinance bonus
• Our full LiteFinance review