Protecting a trader's account from a negative balance

No matter how much they talk and write about the fact that using leverage it is practically impossible to lose the broker’s money.

But as practice shows, in some situations and in individual brokerage companies this option is possible.

After this happens, everything depends on the loyalty of the broker and the trading conditions specified in the client agreement, which rarely anyone reads.

In the worst case scenario, you will have to return your account balance to a positive state by depositing your own funds into it.

To prevent this from happening, you should choose the right broker and adhere to a few simple rules.

Rules that will help protect against negative balance:

We read the client agreement - most of these documents indicate at whose expense and how the negative balance is repaid.

In addition, you will learn a lot of other, equally useful information from the client agreement.

We use leverage carefully - it is advisable to use high leverage only at times when your account is under control.

It is high leverage that most often causes a negative balance to arise when trading forex.

Stop orders – don’t forget about stop orders; setting a stop loss in most cases will allow you not only not to go into the negative, but also to save part of your funds.

We do not leave positions for the weekend gaps most often occur after the weekend , during which stop orders are not triggered.

In these cases, not only the stop loss and trailing stop do not work, but also the stop order from the broker - stop out , therefore, after a price gap occurs, a large leverage can easily take the account into the negative.

Trading on the stock exchange is a rather risky activity and situations vary; no one will take better care of your financial security than you.

When opening a new account with a broker, try to carefully study the company’s website; some brokers guarantee protection of client accounts from a negative balance:

A guarantee is the best option for a trader, since there is no longer any need to fear that a mistake will lead to debt.

In most cases, it is account protection that serves as an indicator of the company’s reliability and its honest attitude towards its clients.