What is Stop Out? – Bex500 Exchange
In cryptocurrency futures or derivatives trading, you may hear about “stop out”. It is a signal given by the trading platform system to force close a position when a trader doesn’t have inadequate free equity (margin) to support the open trade.
Stop out also refers to automatically exiting a position when the margin ratio falls to a specific percentage level, for limiting potential losses. Stop out can protect traders from losing all balance in the trading account, if betting on the wrong market direction.
- When will Stop Out be Triggered in Bex500?
In Bex500, when the maintenance margin is lower than 0.5%*Initial Position Value, the positions will be stopped out.
A maintenance margin represents the amount of money currently in the trading account.
Maintenance Margin = Balance + Floating Profits/Losses
Stop Out Level
Stop out Level = 0.5 % * Initial Position Value
Calculation of Stop Out Price
1 + [(X — $8,000)*1]/X — 0.001–0.0009 ≤ 0.005
X ≤ 4013.85
When BTC reaches $4,013.85 or lower, your position will be liquidated.
Bex500 provides low Stop out Level so that your loss positions will not be liquidated easily. In addition, you have more chance to hold the position until the market reverses.