Short answer: Negative balance protection means you can’t lose more than the money in your account. If a fast market gaps through your stop-out, the broker absorbs the shortfall instead of billing you. It’s compulsory for retail clients of UK, EU and Australian regulated brokers.
When it matters
Usually your stop-out closes trades before your balance hits zero. But markets can gap, jumping past every price in between, after weekend news or a sudden central bank move. When the Swiss franc was unpegged in January 2015, some traders ended up owing their brokers far more than they’d deposited. Negative balance protection exists to stop that happening to retail clients.
Who has to offer it
| Where your account is held | Negative balance protection |
|---|---|
| UK (FCA), retail | Required |
| EU (CySEC and other EU regulators), retail | Required |
| Australia (ASIC), retail | Required |
| Professional clients anywhere | Usually not |
| Offshore entities | Varies. Many offer it as policy, but it’s not a legal right |
What it doesn’t cover
- Losses down to zero. You can still lose your whole deposit.
- Accounts classed as professional, which give up this protection.
- Some offshore entities, where it’s a promise in the terms rather than a regulatory rule.
Check which company holds your account under “Which entity holds your money” on our broker profiles.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
