HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
XM information and reviews
XM
82%

Negative Balance Protection: What Is It And How Does It Work


Contract for Difference (CFD) trading is a popular form of investment, but as with any investment, it involves a degree of risk. Managing risk in trading is critical to protect your capital from excessive losses. There are many ways traders can mitigate or lower their risk exposure, and one of them is negative balance protection. What is Negative Balance Protection? Negative balance protection is a system put in place by most regulated brokers to help protect traders against losses that exceed the amount of capital they have deposited. In other words, you will not lose more than what is on your account as any losses which go into the negative territory will be covered by the brokers.  

How Can Negative Balance Protection Work For You? 

For example, a trader deposited $100 and decided to open a trading position with high leverage. Unfortunately, the market was volatile and the position was force-closed in response to a sharp drop in price, wiping out the $100 of initial capital and leaving another $20 in negative balance due to leverage. In this case, without negative balance protection, the trader would have to repay the $20 owing to the broker. However, under negative balance protection, the loss will be capped at $100 and the account balance will be restored to zero.  

Hence, trading with a broker which offers negative balance protection essentially lowers your risk exposure and assures that you will never lose more than your account balance.  

How else can you prevent losses that exceed initial capital? 

Market conditions can vary dependent on the financial instrument traded. To prevent losses that may exceed capital, here are 3 things traders can consider doing: 

Does Vantage offer negative balance protection? 

Retail traders can be protected from losing more money than they deposit into their trading account with negative balance protection. However, this feature is not offered by all brokers. In the unfortunate event that your trading account falls to a negative balance, you can reach out to us through the mediums listed here. This allows us to assess and determine whether your account qualifies for restoration to zero balance, after which you may continue to deposit funds and resume trading normally. Negative balance resulting from trading abuse (such as excessive leverage or position size during periods of high volatility) will be evaluated on a case-by-case basis and may not be eligible for the protection. 

Vantage fully understands and comprehends that such events are uncommon occurrences, hence, please remain vigilant of market conditions and ensure your trading account is properly funded.   

#source


RELATED

Trading on Forex - A Primary Source of Income

There are a lot of discussions about trading within the boundlessness of the Internet, both in conventional businesses and state-financed organizations...

What Is Stop Loss and Take Profit?

Stop-Loss is a pending order used by traders to minimize risks. When analyzing the market, traders may misinterpret the asset price movement and incur losses...

The Advantages of Commodities Trading

Commodity trading relates to the buying and selling of a large range of instruments including oil and gas, metals and cocoa, coffee, wheat and sugar. Commodities are categorised as hard and soft...

Ten Most Valuable Currencies in the World

The United Nations recognizes 180 currencies in the world as legal tender. But while currencies such as the US dollar and the euro are popular and widely used, they do not hold the highest values...

Are you looking for a new hobby? Put Your Skills to Better Use

Are you looking for a new hobby, but aren't quite sure where to start? Have you considered you might be a trader? Below are a series of questions that will help...

Trade Silver Online: A Complete Guide for Beginners

To start with, what is silver trading? Traders have highly valued silver for many years now. The metal has various usages including jewellery or as a form of currency....

A Guide to Demo Trading Accounts

Embarking on your trading journey is akin to stepping into a vast, dynamic universe with its own set of rules. Whether you aim to explore the realms of forex, delve into precious metals...

A Guide to Understanding Inflation and How It Affects Traders

Inflation is becoming an increasingly important factor in our everyday lives. Google searches are up, and it has reasserted itself as a topic of popular conversation. Traders are having to familiarise...

Understanding CFD Trading in Forex and Other Markets

Contracts for Differences (CFDs) stand out as intriguing financial instruments, offering traders the ability to capitalize on price fluctuations without actually owning the underlying assets...

Crypto and NFTs: The New Age of Art

Crypto and NFT art can be an even more promising pair for the future of art as a whole. Fiat currencies and art have both been around for a long time. We are equally...

Exciting Benefits of Trading Forex

Forex trading is the exchange of one currency for another to generate profits. If you’re reading this, you probably know that and are now looking to choose between the existing options like stock...

Why trade shares?

Why trade shares, continue to read and learn more. Trading shares involves buying and selling company shares listed on a stock exchange. Traders choose to trade shares...

What is crypto mining?

Cryptocurrency mining has brought about a new gold rush where individuals and businesses are deploying mining hardware to earn as much cryptocurrency as possible as so-called miners...

Risk Management on Forex: Basic Rules

Senior traders would say that there is no chance to build a successful career without risk management. Whatever your trade duration is, the trade should...

How to use MT4 WebTrader: A Useful Guide

In 2005, the MetaQuotes Software released the MetaTrader 4 trading platform which is an electronic trading platform that includes all the required features...

Guide to EOS trading for beginners

EOS appeared on the crypto scene with a record-breaking ICO that raised over $4 billion dollars for the development of the blockchain venture...

How to start trading in Forex for free: first steps

A simple web search query "how to trade in Forex" will yield dozens of on-site and online classes for beginners and traders of various experiences...

What is the MIB Index?

The MIB Index is the leading stock market index for companies listed in Italy. It includes the 40 largest companies in the country and across a wide range of sectors...

Liquidity: How to Find the Right Assets and Markets

Liquidity is a common term in the financial world. Market liquidity determines the speed of market operations and an investor's ability to earn money on a specific asset...

Position Trading vs. Swing Trading: Differences and Similarities

Position trading and swing trading are two prominent trading strategies that you can use to access the markets. Both methods provide market opportunities as you trade...

FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%
FXNovus information and reviews
FXNovus
75%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.