Formula
| Item | Expression |
|---|---|
| Required margin | Trading size × rate (in yen) ÷ leverage |
| Unrealized loss at stop-out | Account balance − required margin × stop-out level (%) |
| Price move to stop-out | Unrealized loss at stop-out ÷ value of 1 pip |
Equity is calculated as balance + unrealized profit or loss.
How the stop-out works
When the margin level (equity ÷ required margin) falls below the level set by the broker, your positions are force-closed. The level differs by broker and account, such as 20% or 0%.
High leverage reduces the required margin, but for the same lot size the loss from price moves is the same. The price move you can withstand is determined by your lot size.
A guide to the price move you can withstand
With a balance of 100,000 yen, 1 lot of USD/JPY, 1,000× leverage and a 20% stop-out, the stop-out is about 97 pips away. At 0.1 lot it is about 970 pips.
- Cutting your lot size to one-tenth makes the price move you can withstand about ten times larger
- Raising leverage barely changes the price move you can withstand (it increases only slightly because the required margin gets smaller)
- On an account with a 0% stop-out level, positions are not closed until your balance reaches zero
Points to note
Spread, swap and bonuses are not included. At brokers that count the bonus toward equity, the price move you can actually withstand is larger. Check the broker's stop-out level on the broker page and in the official specifications.