It refers to the point at which all active orders in the forex market are closed automatically by a broker due to a reduction in the trader’s margin to levels that can no longer sustain the open orders. I am careful about the number of positions I open per day since my stop out level is 15%.
When a traders position goes against him, it leads to a margin reduction. And once the margin reduces past the stop out, all open trades are automatically closed by the broker. Remember, the stop out level varies from one broker to the other, so please check with your broker regarding this..