FAQ Section | Frequently Asked Questions
Stop-out refers to the broker's automatic intervention in which open positions are forcibly closed as soon as the margin level falls below a critical threshold. The aim is to prevent a negative account balance and limit the residual risk for brokers and traders. Closure usually takes place without the trader's consent.
Example / association: A broker sets the stop-out at 50% margin level. If the equity of an account falls to half of the used margin, the broker begins to close positions automatically - usually starting with the most loss-making position - until the margin level is above the threshold again.
The spread is the difference between the purchase price (ask) and sale price (bid) of an instrument. It represents an implicit transaction cost factor and has a direct impact on the trading result - especially for short-term strategies or high trading frequency.
Example / association: An instrument has a bid of €99.80 and an ask of €100.00. → The spread is €0.20. A trade therefore always starts "in the red", as the spread must first be overcome
Slippage refers to the deviation between the expected execution price and the price actually executed. It often occurs in the case of high volatility, low liquidity or market orders and can be both positive and negative.
Example / association: A trader places a stop order at €50.00, but the position is only executed at €49.70. → The difference of €0.30 is negative slippage and increases the actual loss.
A stop order only becomes active when a previously defined stop price is reached. From this moment on, it becomes a market order. It is primarily used to limit risk, but does not offer any price certainty on execution.
Example / association: A trader holds a long position at €50 and sets a stop at €47. → If the price falls to €47, the position is automatically sold at the next available market price.
A stop-limit order combines a trigger mechanism (stop) and a price limit (limit). Once the stop price is reached, a limit order is activated instead of a market order. This provides price control - but the risk of no execution.
Example / association: Stop at €47, limit at €46.80. → If the stop is triggered, the order may only be executed between €47 and €46.80. The position can remain open in the event of rapid price movements.
In real trading, concepts have an operational rather than a theoretical effect. Whether balance, equity or margin - every concept has direct consequences for scope for action, risk and possible intervention by the broker. Explanations of terms are therefore not an academic accessory, but an instrument for risk control. Those who misunderstand terms not only make poor decisions, but often systematically underestimate the actual exposure of their own account.
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