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Negative Balance Protection

  • #1
  • First Post: Aug 17, 2020 12:14pm Aug 17, 2020 12:14pm
Hello, ladies and gentlemen. I wonder one thing about Negative Balance Protection. One of my favorite ASIC broker doesn't offer Negative Balance Protection probably due to offshore regulation. I'm curious about is it a problem if I'm always risking 1% of capital per trade using stop-loss? How can this missing become critical disadvantage? And also assume that I'm a day trader so I track my positions multiple times during day and with help of the alerts. Thanks in advance
  • #2
  • Aug 17, 2020 1:04pm Aug 17, 2020 1:04pm
Quoting fuadik88
Hello, ladies and gentlemen. I wonder one thing about Negative Balance Protection. One of my favorite ASIC broker doesn't offer Negative Balance Protection probably due to offshore regulation. I'm curious about is it a problem if I'm always risking 1% of capital per trade using stop-loss? How can this missing become critical disadvantage? And also assume that I'm a day trader so I track my positions multiple times during day and with help of the alerts. Thanks in advance
The event where you would really need negative balance protection is a very low probability event. Or there has to be a serious issue with risk management system/dept. of your broker.
  • #3
  • Aug 27, 2020 12:30pm Aug 27, 2020 12:30pm
I think it's a really useful service that helps keep your capital under control even if you're not on the platform right now. But on the other hand, my colleague has correctly noticed that some super speculations happen quite rarely, so you can limit yourself to a normal stop-loss, and it will be enough to control the situation and keep your capital. So I don't think that this can be a reason to change the brokerage company, especially if all the other points in the functionality and maintenance of the brokerage company you are completely satisfied with. Do not worry, continue to work qualitatively, especially since you have chosen a safe and attractive format.
  • #4
  • Aug 27, 2020 12:35pm Aug 27, 2020 12:35pm
Quoting Cogra
I think it's a really useful service that helps keep your capital under control even if you're not on the platform right now. But on the other hand, my colleague has correctly noticed that some super speculations happen quite rarely, so you can limit yourself to a normal stop-loss, and it will be enough to control the situation and keep your capital. So I don't think that this can be a reason to change the brokerage company, especially if all the other points in the functionality and maintenance of the brokerage company you are completely satisfied...
Thank you for taking time to write answer. I also did some research, ok, I'm comfortable now. :-)
  • #5
  • Sep 21, 2020 3:45am Sep 21, 2020 3:45am
One of my broker hotforex offers negative balance protection but still i am not sure how it works..
  • #6
  • Sep 21, 2020 12:45pm Sep 21, 2020 12:45pm
Quoting jollypk
One of my broker hotforex offers negative balance protection but still i am not sure how it works..
The broker is a market maker. Your loss is its win. In the case your account goes into negative, the broker then forgoes that part of his profit.
Return To Disorder
  • #7
  • Sep 21, 2020 12:51pm Sep 21, 2020 12:51pm
Quoting rockit
{quote} The broker is a market maker. Your loss is its win. In the case your account goes into negative, the broker then forgoes that part of his profit.
Hotforex is stp actually, but I'm doubtful of they may use virtual dealer plugin. Because there're some complains on Internet about hotforex using virtual dealer plugin.
  • #8
  • Edited 4:01pm Sep 21, 2020 3:34pm | Edited 4:01pm
There are no brokers that would pay the bill of a client’s negative balance, this is particular true if your trades will not kept in-house and your trades will be directly forwarded against the real market.

If you go below $0 like -$2.000 USD (which could happen) probably nothing much would happen from the broker side instead of them friendly asking you to add another $2.000 USD to your account if you wish to keep trading with them, but that’s it.

They probably wouldn’t go for this kind of money filling a lawsuit against you.

Now i am not sure how this would look like if you went negative for a few billion dollars instead and these trades were truly forwarded against the market.

i suggest better go with a broker offering you a true DMA environment having your trades placed against real other players and pay the com/spread instead of playing against them by going with a market maker, where you maybe have less trading costs, but advertising some shiny things that sounds to good to be true, especially stay away from those offering bonuses for what ever kind of action.

Don‘t worry to much about the negative balance thing, most likely you will get a margin call / stop out long before this will happen anyways.

Best regards
  • #9
  • Sep 21, 2020 5:07pm Sep 21, 2020 5:07pm
Quoting lddd
There are no brokers that would pay the bill of a client’s negative balance, this is particular true if your trades will not kept in-house and your trades will be directly forwarded against the real market. If you go below $0 like -$2.000 USD (which could happen) probably nothing much would happen from the broker side instead of them friendly asking you to add another $2.000 USD to your account if you wish to keep trading with them, but that’s it. They probably wouldn’t go for this kind of money filling a lawsuit against you. Now i am not sure how...
Thank you for honest and informative answer. If you know some, can you list DMA brokers?
  • #10
  • Sep 22, 2020 4:13am Sep 22, 2020 4:13am
Quoting fuadik88
{quote} Thank you for honest and informative answer. If you know some, can you list DMA brokers?
How much u trading with?
  • #11
  • Sep 22, 2020 4:20am Sep 22, 2020 4:20am
Quoting Trader4818
{quote} How much u trading with?
20k usd, but I can add more.
  • #12
  • Oct 7, 2020 10:03am Oct 7, 2020 10:03am
Quoting fuadik88
{quote} Hotforex is stp actually, but I'm doubtful of they may use a virtual dealer plugin. Because there're some complaints on the Internet about hotforex using virtual dealer plugin.

Hotforex is not an STP broker. It is a market maker. 100% positive. I am working in the industry, I can teach you how to check those things. Nonetheless, there is nothing wrong with a market maker if their pricing and execution are fair to the client.

Regarding the virtual execution plugin, it should be forbidden by the regulator, but such methods are still used by brokers, especially for their offshore entities. There are still brokers that during big events they set dealing to manual and give clients negative slippage. Be aware of the offshore companies, they may promise you higher leverage but they can kill you with delays and slippage.
  • #13
  • Dec 2, 2020 2:27am Dec 2, 2020 2:27am
I think negative balance protection is a great service that can help you keep your balance under control.
  • #14
  • Dec 4, 2020 1:53am Dec 4, 2020 1:53am
Negative Balance Protection is definitely important. Fxview is one broker that I know is providing this. What are the other reliable option with nbp?
  • #15
  • Last Post: Dec 4, 2020 1:56am Dec 4, 2020 1:56am
Quoting Adrus
Negative Balance Protection is definitely important. Fxview is one broker that I know is providing this. What are the other reliable option with nbp?
All the regulated CFD Brokers in EUROPE provide NBP to retail clients
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