What is an equity lock or stop-out level in prop trading?
An equity lock (also called a stop-out level) is an automatic mechanism that closes all open trades once your account equity hits the drawdown limit. It's an automated safety net that prevents traders from manually staying in losing positions past the limit.
What is an equity lock or stop-out level in prop trading?
An equity lock (also called a stop-out level) is an automatic mechanism that closes all open trades once your account equity hits the drawdown limit. It's an automated safety net that prevents traders from manually staying in losing positions past the limit.
Key Points
- Triggered automatically when equity breaches the limit
- All open trades are closed simultaneously
- Cannot be overridden by the trader
- Applies to both challenge and funded accounts
- Different from a manual breach — the system acts immediately
Firm Comparison
| Firm | Policy | Threshold | Consequence |
|---|---|---|---|
| FTMO | Stop-Out | Below 90% of initial balance | Auto-close all positions |
| FundingPips | Equity Lock | Below 90% of starting balance | All trades closed |
| BrightFunded | Stop-Out Level | Equity below max loss threshold | Forced liquidation |
| FXIFY | Stop-Out | Equity hits 92% of initial | Auto-liquidation |
| The5ers | Equity Lock | Below trailing drawdown floor | All positions closed |
| E8 Markets | Stop-Out | Account equity floor breached | Auto-termination |
Frequently Asked Questions
What is an equity lock in prop trading?
It is an automatic stop-out that closes all open positions when your account equity drops to a predefined floor level.
Is equity lock the same as a margin call?
Not exactly — equity lock is prop-firm specific and permanently terminates the account; a margin call only closes losing positions.
Can I stop an equity lock from triggering?
You can avoid it by managing your position sizes and not letting floating losses exceed the daily or max drawdown threshold.
Does equity lock apply during the challenge phase?
Yes — equity locks apply in both challenge and funded phases at most firms.