Brokers with Negative Balance Protection
Protect yourself through negative balance protection. These brokers will prevent your account from entering negative territory.
Brokers we recommend
We rate brokers across 5 categories and 18 criteria, following a standardised methodology. Here are our overall and category-specific ratings:
* Availability is subject to local laws and regulations.
Note: for brevity, this table only shows the most popular payment methods and regulators. Open a free account with any of these brokers to view funding options available in your country.
- CFDs on 250+ instruments.
- FxPro accepts all trading styles on MT4/5 and cTrader.
- Trade on fixed or floating spreads, with or without commission.
- Many deposit methods, including crypto and broker-to-broker transfers.
- Get daily trading signals from Trading Central.
- You cannot trade CFDs on ETFs or government bonds.
- Copy trading isn't available.
It's hard to find fault with FxPro, a broker with a 20-year track record. We've traded through FxPro's Raw account and enjoy the razor-thin floating spreads and low commissions. This account, which comes with a $1,000 minimum deposit, will appeal to experienced traders.
If you're new to trading, you could also open a Standard account with a low $100 deposit. You'll enjoy a more predictable trading environment with fixed, albeit wider, spreads. In short, FxPro is a platform you can grow into as you gain experience.
The educational content available on FxPro.com also caught our attention. You'll find learning paths for both beginners and advanced users, in the form of online courses, video tutorials and webinars.
- Over 750 financial instruments on MT4/5.
- Get free daily trading signals.
- Easily copy professional traders.
- No fees on deposits or withdrawals.
- Get one-on-one assistance when you deposit US$1,000.
- You cannot trade on raw spreads.
- Quarterly and annual inactivity fees.
The breadth of assets available to trade through its platform sets AvaTrade apart from the competition. You'll find over 750 instruments, including currencies, stocks, indices, ETFs (and leveraged ETFs), precious metals, commodities, cryptocurrencies, and government bonds.
AvaTrade supports the MT4 and MT5 platforms, available for Windows and iOS devices. Its web trading platform is sleek, with advanced charting tools. AvaTrade's spreads are competitive and fixed, which can provide a more predictable trading environment, well-suited for beginners.
Its customer service is excellent too. Every time a question has arisen, we've been able to speak to a customer support agent easily through a local telephone number. Our queries were resolved within minutes. AvaTrade support is available five days a week through various channels, including WhatsApp.
What is negative balance protection?
In the summer of 2018, the European Securities and Markets Authority (ESMA) required that EU-regulated CFD brokers provide retail investors with "negative balance protection". So what does negative balance protection (NBP) mean? We turned to ESMA's definition for specifics, and placed emphasis on words we consider particularly important.
"Negative balance protection means firms must limit the retail client’s aggregate liability for all CFDs connected to a CFD trading account to the funds in that CFD trading account. This implies that a client can never lose more money than the funds specifically dedicated to CFD trading."
ESMA's definition tells us that negative balance protection applies at the account rather than at the trade-level, across all and only CFD positions. If your account also holds shares or units in exchange traded funds, they will not be covered by ESMA's guidelines, unless your broker choses otherwise.
Funds held in a CFD trading account are defined as cash as well as any unrealised net profits across open CFD positions. If you are unable or unwilling to meet a margin call, your broker will close your positions at their current market price. This is known as "close out" or "stop out", in an attempt to realise your profits and cap your losses.
On rare occasions, large market events can cause sudden changes in prices which prevent some of these automatic protections from being effective. When markets are volatile, stop outs can experience delays. "Gapping" can arise when prices drop sharply, creating a wedge between expected and actual prices. Leverage also has the potential to magnify losses. In the past, you would have been liable for the entirety of these losses, which may, in some cases, have exceeded your investment. Nowadays, negative balance protection means that your broker will ultimately cover your losses, should they exceed the funds in your CFD trading account.
What brokers say about negative balance protection
Some brokers have applied the law to the letter, offering negative balance protection only to retail investors trading with their EU-regulated entities. However, some have gone above and beyond. We've reviewed how some leading brokers have implemented these protections.
FxPro.com offers negative balance protection for all clients, regardless of their categorisation and jurisdiction. The company also provides a stop out level, which will cause trades to be closed when a certain margin level percentage is reached. The stop-out level will depend on the account type and jurisdiction under which you are registered.
Likewise, AvaTrade.com provides negative balance protection for all clients, regardless of their categorisation and jurisdiction. This applies across all its entities, whether they are regulated in Europe, the British Virgin Islands, Australia, South Africa, Japan and Abu Dhabi. AvaTrade allows you to trade Forex and CFDs on a wide range of asset classes on the MetaTrader 4 and 5 platforms.
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About the author
I'm Stéphane, a trader and an entrepreneur. My mission with TrustedBrokers is to help you find the right broker for you, whether you're a beginner or a pro. I've personally used and tested the brokers on our service, opening and funding real-money accounts, contacting customer service and placing trades. I started my career in investment banking in London.
- 1. European Securities and Markets Authority. (2018). ESMA's temporary product intervention measures on the marketing, distribution or sale of CFDs and Binary options to retail clients. https://www.esma.europa.eu/sites/default/files/library/esma35-36-1262_technical_qas_product_intervention.pdf