Beware, Very few brokers offer real negative balance protection

[BlackViper]

I would like to inform all the dear members of the forum, that many things have changed in the last months, with more and most brokers adding in their risk disclosures (at the very bottom of their sites many times), the phrase that ''trading forex is very risky and your losses can be more than your initial deposit ''!
This simply means that the brokers who REALLY offer negative balance protection (and they will never go after their customers demanding any negative balances after a wild market reaction ) are now VERY FEW.

We should never underestimate the possibility of a big event like a stock bloody Monday, a terrorism action or a central bank unpredictable decision (like with the Swiss) which can easily wipe out the positions and create negative balances even for the most careful and experienced traders.
This the reason why we all have to be extremely choosy when we decide for our next broker.

The only brokers with REAL NBP, I personally know are FXPRO and Xm.
Please feel free to add your favorite brokers with negative balance protection, in order to inform all the members of the forum.
Thank you

 

[Pharaoh]

I think there used to be a few more offering it - but the SNB fiasco helped to bankrupt some of them.

 

[BlackViper]

Indeed there are some more, and it would be nice for all to know exactly which are the brokers REALLY offering something like this.
Some lists of 2015 including negative balance protection brokers are now out of date. For example thinkforex and forex.com don't offer negative balance protection anymore.
Furthermore there are many brokers who say they offer protection but their site says that your loses can exceed your deposits (!)
Example: forextime. Probably they mean that they liquidate almost fast but if something big happens, probably you are owning them money and surely you are not covered, so there is no protection from negative balance after all!
Finally there are many brokers who don't declare the phrase ''you may lose more than you deposit '' into the main risk disclosure but into their agreement they don't say anything about covering their client's negative balance.
Example: Titan Fx, Aafx or HiwayFx

In all this savage market maybe this is one of the first parameter, if only the very first we should worry about, giving power with our choices mainly to the most trustworthy brokers who offer clearly real protection from negative balances. Not to brokers who play with words.

I welcome any information about other brokers related with this section

 

[Jazzaglazza]

I think that the Force Majeur was the biggest issue, as should something that significant happen (Act of God/Terrorism/etc) nobody is covered for that..

 

[BlackViper]

Let's be reasonable,
In reality NO broker EVER has used the force majeure in order to characterize any of so many cases that caused extreme volatility in the last years. For example after the massacre in Paris (European stock markets opened at -4%), the Greek refenderum decision (-4%), the uk refenderum outcome (even -15%) etc.

On the other hand the brokers that have in their risk disclosures the phrase ''losses can exceed deposits'' have increased and there are many brokers that will gladly go after their clients if their account turns to negative with a.... good sum. Or in the easy scenario, they will ask you to cover it in order to trade again (if the sum is not so important).

The difference between the trustworthy brokers who are insuranced and cover their clients, with the other brokers who are trying to take money when a trader has a negative balance (and usually try to cancel his profits when a trader is very profitable too... lol!) is legendary and mentioning the ''force majeure'' case is really unfair for the good brokers.
We must underline this and everyone of the dear traders should be VERY careful choosing his broker.
Nowadays many even well known brokers like cmc, ig, gainsy etc clearly state in their risk disclosures that the client can loose MORE than they deposit... And everyone should be aware of this!!

 

[Pharaoh]

Think about this.

If the broker keeps trades in house, then you could run your balance to negative 1 billion dollars and the broker would not be harmed. On the other hand, if you made a billion at such a broker, they'd have no way to pay you. This puts the broker on the opposite side of all your trades, and withdrawal attempts.

If the broker passes trades onto the real market and you go negative, the broker offering negative balance protection is footing the bill. Most such brokers will have stricter policies which will lead to margin calls long before you reach zero. Many will have fine print limited the amount of coverage. I doubt any broker wants to wager that the Swiss and other Central bankers have sworn off of big surprises.

I prefer a broker which gives me simple, straightforward rules and passes my trades onto the real market. My SL's are tight enough to keep me and Mr. Margin far apart. If I see any hints of something unusual, I'll limit my exposure on weekends.