Can I still get stopped out even if I'm fully hedged?

The short answer is yes. While it’s a common belief that hedging "locks" your account in place, a fully hedged position only removes directional market exposure—it does not eliminate liquidation risk.

Here is a breakdown of why a stop-out can still occur even when your net exposure is zero.

1. Directional Risk vs. Liquidation Risk

When you hedge, you are offsetting price movements: if the market goes up, the gain on your "Buy" offsets the loss on your "Sell." However, your broker’s system doesn't trigger a stop-out based on which way the market is moving. Instead, a stop-out is triggered by your Margin Level and Equity conditions.

If your account equity falls below the required threshold relative to your used margin, the system will automatically close positions to protect the account from a negative balance.

2. The Impact of Widening Spreads

This is the most common culprit. Your account equity is calculated using the Bid and Ask prices. Even if you are hedged, a sudden "blow out" or widening of the spread (the gap between the buy and sell price) can instantly reduce your equity.

When does this happen? During major news releases, market openings, or "rollover" periods (when the trading day resets).

The Result: Even if the mid-price hasn't moved, the widened spread can push your equity low enough to hit the stop-out level.

3. Swap and Financing Costs

Holding positions overnight incurs swap or rollover charges. These fees are deducted from your account balance/equity daily. Over time, these costs can slowly erode your equity. If you are already trading with high leverage or low free margin, these daily charges can eventually push your margin level below the stop-out trigger.

4. Margin Requirements

It is a misconception that a hedge requires zero margin. 25% of margin is still required for both sides of the trade. If your equity fluctuates—even slightly—due to price gaps or volatility, you may no longer meet the margin obligations for those open positions.

We recommend that you always maintain a healthy "buffer" of free margin in your account, even when hedged, to account for spread fluctuations and financing fees.

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