Gold XAUUSD stop-out price: what it is and how to calculate it

A stop loss and a stop-out are different things

A stop loss is an order you place yourself. A stop-out is the broker automatically closing your position when equity relative to used margin falls below the level the broker sets.

If your stop loss is further away than the stop-out price, the position is closed before your planned exit, and the fill can differ from what you expected because of spread and market movement.

Equity, margin and margin level

• Equity = account balance + unrealised profit or loss
• Margin = money set aside as collateral for open positions
• Margin level = equity ÷ margin × 100

Example: balance 1,000 USD, buy 0.1 lot of gold at 2,000 USD, contract size 100 oz, leverage 1:100. Margin used is 200 USD. At opening, margin level = 1,000 ÷ 200 × 100 = 500%.

All numbers are hypothetical to explain the formula. They are not real market data and not a trading recommendation.

How to find the stop-out price

As price moves against you, unrealised loss shrinks equity until it reaches the stop-out level of the account. The steps are:

1. Margin of the position = price × contract size × lots ÷ leverage
2. Equity at stop-out = stop-out level (%) × margin
3. Loss you can absorb = balance − equity at stop-out
4. Price distance = that loss ÷ (lots × contract size)

Stop-out price = entry ± (stop-out level × margin − balance) ÷ (lots × contract size)

Continuing the example with a 50% stop-out level: equity at stop-out = 0.5 × 200 = 100 USD. Loss you can absorb = 1,000 − 100 = 900 USD. Distance = 900 ÷ (0.1 × 100) = 90 USD. The stop-out price is 1,910 USD, 4.5% from entry.

How lot size shrinks the distance

Same 1,000 USD account, buy at 2,000 USD, 50% stop-out level, but 1.0 lot at leverage 1:500. Margin = 2,000 × 100 × 1 ÷ 500 = 400 USD. Equity at stop-out = 200 USD. Loss you can absorb = 800 USD. Distance = 800 ÷ (1 × 100) = 8 USD. The stop-out price is 1,992 USD, only 0.4% from entry.

Compared with 0.1 lot at 90 USD away, you can see that high leverage lets you open a larger position but sharply reduces how far price can move against you before the account is closed.

What to watch out for

• Stop-out level and margin method differ by broker and account type. The example uses 50% only to explain the formula. Check the terms of the account you actually use.
• This formula uses margin at the entry price. Some platforms recalculate margin at the current price, so results can differ slightly.
• Price can gap past a level during news or market opens, closing you at a worse price than calculated.
• Spread, swap and fees are not included and drain equity faster than you may expect.
• With several open positions, add up the margin and the losses of all of them.

How to use this

1. Calculate the stop-out price before every trade with the stop-out price calculator.
2. Place your stop loss well before the stop-out price to allow for spread and slippage.
3. Choose lot size from the amount you can afford to lose using the lot size calculator, not from the maximum leverage allows.
4. Check the margin used with the margin calculator.

Related tools

Sources and further reading

• BabyPips: margin call and stop-out level example
• FxPro: what is a stop-out level

External sources are not affiliated with us.

Limits and risk

This tool is educational. Results are estimates from the numbers you enter and are not investment advice. Trading CFDs is high risk and you can lose everything. Read the full risk warning