Margin close-out level

A broker-defined threshold where positions may be automatically reduced or closed to prevent the account from going negative. It’s effectively the broker’s hard stop.

1 min

Why it matters

It turns drawdowns into forced exits. When volatility rises, close-out can happen at exactly the worst price.

Decision use: treat this term as a risk input. If you can’t observe it, you can’t size for it.

Common trap

Sizing right up to your margin limit because ‘my stop will handle it’. Stops can slip; margin close-out doesn’t negotiate.

Example

A gap moves against you, margin drops below the close-out level, and the broker liquidates positions into illiquidity, locking in maximum pain.

Operational cue: if you can’t point to it on the chart, in the DOM, or in your broker logs, treat it as a story and trade smaller.

Notes

Quick rule

If you see this repeatedly, you are in a different regime than your model assumes.
Regime change usually means position size change.
When in doubt: trade smaller, or don’t trade.