Automatic closure of open orders can occur in the case of:
The most common cause of orders closing automatically is stop out. Stop out is the automatic closure of positions when the margin level of an account hits the stop out level set for the account by the broker, and in the case of Exness this is set to 0%* for all account types.
In other words, when the margin level reaches 0%, stop out occurs because 0% is the stop out level.
Here is how margin level is calculated, which can help understand when the stop out level is reached:
Margin level = (Equity / Margin) x 100%
An example of stop out in action:
My equity is USD 50 and margin USD 10, therefore the margin level will be 500%. (50/10 x 100 = 1000%)
- Loss occurs and now my equity drops to USD 6 with margin USD 10.
- 10/10 x 100 = 100%
Not enough yet to trigger a stop out.
- Greater loss occurs driving my equity down to USD 1 with margin USD 10.
- 1/10 x 100 = 10%
Still not enough to trigger a stop out, but by now I would’ve received a margin call.
- Finally my equity drops to USD 0 with margin USD 10.
- 0/10 x 100 = 0%
It is now that stop out occurs and this position would be closed automatically.
If you have multiple open positions, then stop out will close positions, starting with the least profitable ones until the margin level is returned above 0%.
Stop Loss (SL) and Take Profit (TP)
Stop Loss and Take Profit are types of pending orders that close positions automatically when a position's losses or profits reach a trader-defined level. Trailing stop is a type of SL that changes the level of stop loss along with price movements. SL and TP do not occur without the trader setting them in new or existing orders, so the trader will always be aware that an automatic closure could happen in this case.
We recommend following the link for a more in-depth look at pending orders if this interests you.