> For the complete documentation index, see [llms.txt](https://flipper-3.gitbook.io/flipper-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://flipper-3.gitbook.io/flipper-docs/flipper-trading/stop-out-protection-and-external-liquidation.md).

# Stop-out Protection & External Liquidation

Stop-out Protection is an optional risk-management feature that attempts to close a leveraged position before the external execution venue reaches its liquidation threshold.

## <mark style="color:$primary;">How It Works</mark>

If a position approaches the external liquidation level, Stop-out Protection may attempt to close it and return any remaining collateral, if any, to the user's trading balance.

Enabling Stop-out Protection requires a separate wallet approval.

A protection fee applies when Stop-out Protection is enabled for a position. The applicable fee is displayed before the trade is confirmed.

## <mark style="color:$primary;">External Liquidation</mark>

External liquidation occurs when the execution venue closes your position according to its own margin requirements.

Flipper records the result and updates the Portfolio automatically.

## <mark style="color:$primary;">Limitations</mark>

Stop-out Protection helps reduce liquidation risk but cannot guarantee that liquidation will always be avoided.

Fast market movements, network congestion, delayed confirmations, or execution venue conditions may prevent protection from triggering in time.

{% hint style="warning" %}
**Important** You can reduce risk by using lower leverage, maintaining sufficient collateral, monitoring your Health Factor, and closing positions before they become critical.
{% endhint %}