Is the 50% stop-out operational in the Championship?

[Electronaut]

I either misundrestood the principle of stop-out or the rules are not applied. Let's calculate: When a bot buys 5.0 lots of GBPUSD with 10.000 balance, than the margin is 7938.6 at present price. Only 2061.4 USD free margin is left in the account. As 50% stop-out level means that the position will be closed if free margin is less than 50% of the margin needed to hold the position, such position should not be opened at all or closed immediately. Something is wrong here.

[Valerii Mazurenko]

Electronaut:
I either misundrestood the principle of stop-out or the rules are not applied. Let's calculate: When a bot buys 5.0 lots of GBPUSD with 10.000 balance, than the margin is 7938.6 at present price. Only 2061.4 USD free margin is left in the account. As 50% stop-out level means that the position will be closed if free margin is less than 50% of the margin needed to hold the position, such position should not be opened at all or closed immediately. Something is wrong here.

Margin Level = (Equity / Margin) * 100;

if Margin Level < 50% -> Stop Out.

 When a bot buys 5 lots of GBPUSD with $10k balance, stop-out would come , when Equity will be less 7938.6 * 0.5 = 3969.3

[Electronaut]

notused:

Margin Level = (Equity / Margin) * 100;

if Margin Level < 50% -> Stop Out.

 When a bot buys 5 lots of GBPUSD with $10k balance, stop-out would come , when Equity will be less 7938.6 * 0.5 = 3969.3

If the stop-out was based on equity than it would be preceded by margin calls which does not make much sense. With 5.0 lots GBPUSD per 10k balance you are immediately cca 40 pips from margin call, you have large equity, but margin call closes all your positions. That is the common practice of fx brokers. Should this be not applied in the Championship then it would be completely unrealistic.

[Valerii Mazurenko]

Electronaut:
If the stop-out was based on equity than it would be preceded by margin calls which does not make much sense. With 5.0 lots GBPUSD per 10k balance you are immediately cca 40 pips from margin call, you have large equity, but margin call closes all your positions. That is the common practice of fx brokers. Should this be not applied in the Championship then it would be completely unrealistic.

Many exUSSR's "brokers" use Margin Call less 50% and Stop Out in diapason 10-30%. I understand than you mean. In terms, used in Metatrader5, you mean that Stop Out = 100%. It's possible, if change appropriate setting at server side of MetaTrader5. But, at championship, Stop Out is staying equal 50%

[Daniel Lewis]

Thanks to notused as I had the same question for this year's contest.  The wording in this year's article explaining the 50% Stop Out Level rule makes it seem the other way around (i.e. margin must be 50% or more of equity).  Many are used to margin calls when margin exceeds equity.

https://championship.mql5.com/2012/en/news/153 

The example given here by notused should be used in future ATC articles that explain 50% Stop Out Level rule, IMO.