What does Liquidation (Margin closeout) mean?

A margin closeout occurs when a trader's account no longer has sufficient margin to support their open positions. This happens when the equity in the account falls below the required margin level, often due to adverse price movements. To protect the trader from incurring further losses and to ensure the broker is not exposed to excessive risk, the platform will automatically close one or more of the trader’s positions. This process helps maintain the margin requirement.

How is liquidation (margin closeout) triggered on MT5?

A margin closeout, also known as a stop-out, is triggered when the equity in a trader’s account falls below a predefined percentage of the required margin. This predefined percentage is known as the stop-out level. When the account equity drops below this level, the platform will automatically start closing the trader's open positions to prevent further losses and ensure the account maintains sufficient margin.

For Bybit MT5, the Stop-Out level is 50%. Therefore, once the Margin Level of the user’s MT5 account drops to or below 50%, the margin closeout process will be triggered.

Important Note: MT5 does not take into consideration Mark Price/Liquidation Price during liquidations

When the Margin Close-out is triggered on MT5, it will be displayed in the following manner in the History tab.

Looking closer at the description, users can see the following components:

1. Margin Level, calculated as (Equity/Margin Used) x 100%.

2. Equity

3. Margin Used

4. P&L

For traders with multiple open positions, MT5 will close position(s) based on “Largest Loss First” during a margin close-out. If the Margin Level reaches or drops below 50%, the position with the largest losses will be closed first, followed by the next largest, and so on until the Margin Level % moves back above the required minimum amount. This is done to protect traders from incurring further losses.