Automatic closure of open orders can occur in the case of:
Stop out
The most common cause of orders closing automatically is stop out. Stop out is the automatic closure of orders when the margin level of a trading account hits 0%, the default stop out level for all trading account types.
When the margin level reaches 0%, stop out occurs since 0% is the stop out level .
Stop out closes multiple open orders, starting with the least profitable orders, until the margin level is returned above 0%.
Knowing how to calculate your margin level can help you anticipate a stop out:
Margin level = (Equity / Margin) x 100%
A trading account has the following:
- Equity = USD 50
- Margin = USD 10
So margin level = (50/10 x 100 = 500%) = 500%
- Loss drops equity to USD 6.
- Equity = USD 6
-
Margin = USD 10
So margin level = (6/10 x 100 = 60%) = 60%
Stop out doesn’t occur yet since the margin level is above 0% .
- Loss drops equity to USD 1 .
- Equity = USD 1
-
Margin = USD 10
So margin level = (1/10 x 100 = 10%) = 10%
Since the margin level is still above 0% , stop out still does not happen but the trading account will receive a margin call.
- Finally more loss drops equity to USD 0 .
- Equity = USD 0
-
Margin = USD 10
So margin level = (0/10 x 100 = 0%) = 0%
Stop out occurs as the margin level hits 0%, closing orders automatically until margin level is above 0%.
The stop out level for all trading account types registered under the Exness (KE) Limited is 20% by default. For stocks during daily break hours, the 0% stop out level is adjusted to 100%, resulting in automatically closing open stock orders.
Stop loss (SL) and take profit (TP)
Another possible reason is a type of pending order: stop loss (SL) and take profit (TP). These can automatically close orders when an order reaches a level of loss or profit set. Trailing stops are a type of pending order that change the level of SL as an order’s price updates. SL and TP don’t happen without being set by a user.