A margin call occurs when the account's margin level, equity divided by the margin held against open positions, falls below a threshold set by the broker, commonly 100 per cent. At that point the platform warns you and refuses new orders that would increase margin. A stop out occurs when the level falls further, commonly to 50 per cent, and the broker begins closing positions, usually the largest loser first, until the level is back above the threshold.
How it plays out
An account with £5,000 equity and £2,000 margin in use has a margin level of 250 per cent. Losses on the open positions reduce equity. At £2,000 equity the level is 100 per cent and the margin call triggers. At £1,000 equity the level is 50 per cent and the stop out begins. The broker closes positions at whatever price is available at that moment, which in a fast market is a bad one, and it continues until the level recovers.
A stop out is not a safety feature for the trader. It protects the broker, it happens at the worst possible time, and it closes positions the trader may have wanted to keep. In the UK, negative balance protection means the account cannot go below zero, but it can go to zero.
Why it happens
Almost always through position size. An account with a sensible amount of risk per trade and total open risk of a few per cent never approaches a margin call, because the losses that would take it there are stopped out by the trader's own stops far earlier. Margin calls belong to accounts running large positions relative to equity, to positions without stops, and to grid and martingale systems, which add positions as losses grow and hit the margin limit precisely when the market has moved furthest against them.
A trader with £3,000 in an account at 1:30 leverage opens two lots of EUR/USD, using about £5,700 of margin. The broker refuses the order for lack of free margin. The trader opens one lot instead, using about £2,850 of margin and leaving £150 free. The margin level is 105 per cent. A move of 15 pips against the position, about £120, takes equity to £2,880 and the level below 100. The margin call arrives within the hour. The trader has risked the entire account on one position with no stop, and the broker's thresholds are the only thing standing between the account and zero.
A well-built EA never gets near a stop out, because its own drawdown limits halt it long before, and its stops close each losing position at a fraction of the account. If an EA's record shows margin levels falling low, or its documentation warns that a large account is needed to avoid margin calls, that is an EA whose sizing is not under control.
The practical check is simple. With the EA running at its intended risk setting and its maximum number of positions open, the margin level should stay comfortably in the hundreds of per cent. If it does not, the risk setting is too high for the account or the leverage cap, and the EA should be run lower or the account funded larger.