what is stop out level & why does it matter in trading
The most common answer you are going to get is that the stop out level is the percentage that if your margin level falls to, then all your trades will be forcibly closed by the broker.
Now, you can also look at stop out level this way:
Stop out level can also be said to be the least amount of money that will remain in your account after your broker forcibly closes all your trades because they are in heavy losses and threatening to finish the money in your trading account.
Your broker implements stop out levels because they do not want you to spend all the money in your trading account on a trade, so they always want some money to be left in your account so you can lie to fight another day.
Example:
Assume you have $100 in your trading account and you open a trade without setting a stop loss, you do know you could lose the entire $100 if the market keeps moving against you right?
Now, assume your broker stop out level is 20%, even if you forgot you had an open trade and the losses keep increasing, your broker will eventually close your trade(s) but you will still have $20 left in your trading account (because $20 is 20% of $100).
Stop out level is your brokers emergency stop loss order which they execute for you incase you didnt set a stop loss for your trade.
Imagine you have $1,000 in your account then you open a trade and do not set a stop loss, your broker will invoke the stop out level to prevent you from losing all the funds in your account when your trades are on the losing side of things.
Basically a stop out level of 50% means once your account balance falls below 50% the broker will start closing your trades to free up more margin and bring your account balance up.