Brokers with Negative Balance Protection

Nope.

Risk Disclaimer:

"The potential losses, or profits, for margin traded products are unlimited..."

http://cdn.activtrades.com/documents...disclosure.pdf

That is contradictionary with this post on their website:

Can my account go into negative?
AThe trade out level on your account is in place to help ensure you don't lose more money than you deposit. As an added safeguard, we offer Balance Protection Policy and will credit your account to a zero balance if your account goes into negative as a result of trading activity.

Maybe, but it's the legalese in the t&c that we sign up for, not the marketing waffle. I'd just read through their risk stuff when I saw your post so was surprised. It might be worth talking to them about this - if they claim that you are right to think they have -ve balance protection, insist on seeing it in the contract you sign, otherwise tell them to stuff it.

Pepperstone have Negative Balance Protection (i.e margin call level) in normal market conditions. If you ended up with a negative equity for events like last week, Pepperstone will try to collect money from you.

You don't believe me, call them and ask.

BTW, I am a Pepperstone client and no I did not have negative balance.

Cheers,
FxTurtle

I don't know much about insurances. Is it possible to make an insurance against negative balances? I think brokers can make such insurances but is it possible for the trader to insure against negative balances?

Has anyone heard of Synergyfx? I think they're from Australia and they made hybrid accounts where they guarantee in their terms and conditions that you can't have a negative balance (all negative balances will be reset to 0).

I asked Plus 500 last year about margin calls and negative balances and they said I can't have a negative balance because they can make margin calls outside the trading hours. How can this be possible? How can a broker make margin calls outside trading hours?

I like it.

If you go into a casino with 10k you cannot lose more than those 10k. However, when you open a Forex account with 10k, you could potentially lose more than those 10k and end up in debt, which can be very dangerous.

thanks for the info. It seems that those "Hybrid Account" are in planning but are not yet available:

http://synergyfx.com.au/negative-balance-protection

absolutely. It does not matter what kind of execution the brokers make. What matters is the cost of spread, for scalpers. Other than that, Retail Forex traders have no advantage in this models.

I have heard that Synergy is an excellent broker. I am yet to try their hybrid account but it seems to be very popular.

Know many of brokers which provide NBP, and suprised that you create such topic.. you'd better write what company don't do so

There is nothing wrong with market makers, I do agree.
But...an STP broker can bet against your success too.
Generally, unless you are able to see your order in the Depth of Market, it means that it doesn't necessarily go to the market.
An STP broker may execute your trade at the best available price, but it doesn't mean it will send it to the market. It only means you not gonna get a requote.

There are some discrepancies with the policies of Pepperstone, in particular the Negative Balance Protection.

On their website, it is CLEARLY stated that they offer Negative Balance Protection, and Automated Risk Management system. (screenshot from their website, just in case they decide to remove it http://oi60.tinypic.com/2j1v9rm.jpg). The fact, however, is they don't offer Negative Balance Protection. I have a negative balance with them, not much, 174$, but the contradiction is really what upsets me. So Marketing is all that they have.

Below is their chat transcript:

Start Time:
06/18/2015 22:00:52
End Time:
06/18/2015 22:19:09
Operators:
Pepperstone Client Support


Transcripts:
If you do not want to wait, please click here to leave us a message.
Operator Pepperstone Client Support has joined the chat.
[07:00:54]
Pepperstone Client Support: Hi there, welcome to Pepperstone. How may we help you today?
[07:00:59]
XXXX: hi, account 123456789
[07:01:08]
XXXX: I ahve a negative balance of 174 EUR
[07:01:14]
XXXX: can you please adjust it to 0 ?
[07:01:39]
Pepperstone Client Support: You will need to send us an email to [email protected] and make the request. normally we require clients to pay back negative balances
[07:01:53]
XXXX: wow
[07:01:54]
Pepperstone Client Support: but we can work with you to wipe it out, especially if you plan
[07:01:54]
XXXX: https://pepperstone.com/trading-acco...s-standard.php
[07:01:56]
Pepperstone Client Support: on funding again
[07:02:19]
XXXX: it says on your website - negative balance protection
[07:02:25]
Pepperstone Client Support: yea thats for the margin call feature with the auto close out
[07:02:37]
Pepperstone Client Support: but in rare instances when negative balance occurs, we require pay back
[07:02:41]
XXXX: nice marketing, I will switch to another broker then
[07:03:25]
XXXX: in rare ? I can't imagine what could happens if I was long on eurchf 15th of January
[07:04:11]
Pepperstone Client Support: Yes, those clients were required to pay back. But we did work with many people ... those who deposited again we matched their deposit, which in many cases wiped out their negative balance
[07:04:23]
Pepperstone Client Support: since many people negative balance wasnt in the thousands
[07:04:37]
XXXX: did you ask all your clients to pay back after 15th ? You are market maker, so it's kind of you profit from both sides, clients money and then again you ask clients to refund because of negative balance
[07:04:45]
Pepperstone Client Support: No, we dont make what you lose, which is why
[07:04:49]
Pepperstone Client Support: we must ask you to pay back the negative
[07:05:00]
Pepperstone Client Support: we end up owing our liquidity providers when they reconcile
[07:05:06]
Pepperstone Client Support: the profit.loss
[07:05:09]
Pepperstone Client Support: then they see $100 missing
[07:05:19]
Pepperstone Client Support: either way pay them out of our pocket, or we ask you
[07:05:20]
Pepperstone Client Support: so, we ask you since its your loss
[07:05:27]
XXXX: but you said that you asked them to pay back , buuut you worked with many people..... if deposit - no pay back?
[07:05:50]
Pepperstone Client Support: Right, no pay back. You pay back. The EURCHF case was rare, so in good faith
[07:05:54]
Pepperstone Client Support: we spent money to keep people happy
[07:05:58]
Pepperstone Client Support: so if you were negative 100
[07:06:01]
Pepperstone Client Support: and you deposit 100
[07:06:05]
Pepperstone Client Support: then we gave you 100 back
[07:06:07]
Pepperstone Client Support: so you have 100 balance
[07:06:16]
Pepperstone Client Support: so we paid back with our money and took the hit
[07:06:20]
XXXX: and if it was 100.000 ?
[07:06:25]
XXXX: what would you do?
[07:06:36]
Pepperstone Client Support: I dont know if we had someone with that much. i mean
[07:06:38]
Pepperstone Client Support: if you have negative 100
[07:06:41]
Pepperstone Client Support: you didnt have 100,000 in your account
[07:06:43]
XXXX: on cTrader - you are market maker, you can ask your dealing desk
[07:06:45]
Pepperstone Client Support: you know what i mean?
[07:07:03]
Pepperstone Client Support: so if it was 100,000, then probably not
[07:07:07]
XXXX: it depends on what price you closed eurchf that day
[07:07:08]
Pepperstone Client Support: that would be too much to credit back
[07:07:45]
XXXX: ok, anyway I see your point
[07:07:58]
Pepperstone Client Support: So please keep in mind, when you trade with Pepperstone, the fact
[07:08:08]
Pepperstone Client Support: we are STP required us to ask you for money back
[07:08:09]
Pepperstone Client Support: on negative
[07:08:25]
Pepperstone Client Support: or we will just end up paying on your behalf and make no money in the end
[07:08:25]
Pepperstone Client Support: how much did you pay in commission?
[07:08:33]
Pepperstone Client Support: so if you paid us say $50 in commission
[07:08:36]
Pepperstone Client Support: then we have to cover your $100
[07:08:41]
Pepperstone Client Support: we just lost money on you overall
[07:08:46]
Pepperstone Client Support: we would be out of business quicklty
[07:08:51]
Pepperstone Client Support: quickly*
[07:09:16]
XXXX: I will keep in mind what you just said and I will send a screenshot from your website to ASIC about NBP
[07:09:36]
Pepperstone Client Support: Ok, no one can stop you on doing what you want to do. All i can tell you is how we do things.
[07:10:50]
XXXX: sure, thanks a lot. But when you say " Negative balance protection, automated Risk Management System " - it should meant what it is. And not that it is working only on auto close out.
[07:11:13]
Pepperstone Client Support: I will pass on your senitment to our directors. I am sorry if there
[07:11:14]
Pepperstone Client Support: was confusion
[07:11:17]
Pepperstone Client Support: but as I said before
[07:11:21]
Pepperstone Client Support: if you want to trade again, our audit team
[07:11:27]
XXXX: with this kind of marketing - you will be out of business quicker btw
[07:11:30]
Pepperstone Client Support: is pretty good at working with people and going good faith credits
[07:11:34]
Pepperstone Client Support: to keep people happy
[07:11:44]
Pepperstone Client Support: so in your scenario, given this was a confusion based on that line on websie
[07:11:47]
Pepperstone Client Support: website
[07:11:55]
Yan: of course, market maker always can refund
[07:11:55]
Pepperstone Client Support: i tend to think they will work with you on the negatiove balance, so we take the hit
[07:11:57]
Pepperstone Client Support: to keep you around
[07:12:00]
XXXX: thanks anyway
[07:12:03]
Pepperstone Client Support: ok thanks good bye
[07:12:38]
XXXX: I see, you are kind of those good people that taking all the hit on you but reimburse your clients...yeah.
[07:12:40]
XXXX: cheers
The transcript will be sent to [email protected]
The visitor has left the chat.
The chat is ended.



I really think that this deserves to be notified to ASIC.

And on another note, if you have a negative balance, and you match it with your new deposit, then they will forgive the negative balance... Come on... That is ridiculous. I am disappointed with them.

you planning on blowing your account

excellent

Haha now this is funny. I didn't know about this thread.
But last week I opened two live accounts after some research. I have chosen FxPro and Oanda.

So good to know now that I am protected.

Aha so now when I read carefully, not really there is a protection with Oanda. Was a surprise to me, because they didn't tell me during my 5 phone calls.
Anyway not a big deal for me. First thing I do with a new broker is set 1:50 leverage. I do not risk more than 1% per trade.
So I cannot really see how exactly should I go into minus. IF I follow my rules, yes.

Say your deposit is $500 and you took a trade of BUY $20000 EURUSD and EURUSD dropped 15% in one minute. which is $3000 and your depodit is only500 so you have now negative balance of $2500 and liable to pay to broker.

Thanks

As far as I know, Octafx has a negative balance protection. Having read your previous comments, I'm no longer 100% sure since this issue seems to have a lot of peculiarities, but that's what they state on their website:
Our client’s losses cannot exceed their deposits, and if a client’s OctaFX trading account balance becomes negative, this does not mean the client is liable – OctaFX will compensate the client’s OctaFX trading account balance back to zero.
Regardless of the market circumstances OctaFX protects the client from losses exceeding their deposits with OctaFX, which comes in handy in a constantly changing economic situation. However, the client’s capital is at risk and they may lose their initial investment.
What do you think?

Sorry to resurrect and oldish thread, but I would like to point out that a lot of this confusion and disagreement is caused by misinterpretation of words. "protection" and "guarantee" do not have the same meaning. Negative balance protection means nothing more than having automatic liquidation systems in place to close your positions before your account equity becomes negative. If your positions cannot be liquidated at a suitable price by this protection mechanism, you can still be left with a negative balance. What happens if you do end up with a negative balance, when the protective measures fail, is an entirely different policy.

To give an example of what I mean: Using a condom does not guarantee there will be no pregnancy or disease transmission, but it is considered to be a form of protection.

NBP is not possible under real market condition.
It is just trick to attract clients.