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June 20, 2018

Question:How is stop-out level affected by ESMA's new regulation?

Answer:

A margin close out rule on a per account basis is also implemented aiming to standardize the percentage of minimum required margin at 50%.

This means that when the sum of funds in the CFD trading account and the unrealized net profits of all open CFDs connected to that account falls to less than half of the total initial margin, the close out rule comes into effect.

Example

If your current stop out level is 20% and you have one open position with margin requirement 300 USD, then the position would be stopped out when the equity drops to the value of 60 USD.

If your stop out level is 50% and you have the very same position open with same margin requirement, the positions would be stopped out when the equity drops to the value of 150 USD.

For more details of your account’s stop-out levels, please contact your broker directly.

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