Brokers With Negative Balance Protection
In the hands of a skilled trader, leverage can reap large profits from modest price movements by increasing the size of their position. The reverse is also true, as losses from a single careless or unlucky leveraged trade can grow to substantial proportions, and without the presence of a safety net can completely wipe a trader out and put them in debt.
Luckily, such a safety net exists for retail traders in the United Kingdom, where the country’s regulatory body, the Financial Conduct Authority (FCA), requires trading brokers and platforms to offer negative balance protection on certain trades. Ensuring you are covered by this protection, and understanding how it works, are two important concepts for traders to get to grips with when they start trading with leverage.
This guide breaks down the pros and cons of the safety net, alongside a list of the top trading brokers with negative balance protection in 2025.
- Negative balance protection ensures a trader’s losses do not exceed their account balance
- Traders who use brokers with negative balance protection are prevented from becoming indebted to their platform
- FCA-regulated trading brokers are required to offer negative balance protection
- Negative balance protection generally covers retail but not professional traders
Top Brokers With Negative Balance Protection
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Founded in Australia in 2010, Pepperstone is a highly regarded broker specialising in forex and CFDs. Serving more than 400,000 clients globally, it provides access to over 1,300 financial instruments through popular platforms like MT4, MT5, cTrader, and TradingView. Its fee structure is both low and transparent. With regulation by reputable bodies such as the FCA, ASIC, and CySEC, Pepperstone guarantees a safe trading environment for traders at every level.
Instruments Regulator Platforms CFDs, Forex, Currency Indices, Stocks, Indices, Commodities, ETFs, Crypto (only Pro clients), Spread Betting FCA, ASIC, CySEC, DFSA, CMA, BaFin, SCB MT4, MT5, cTrader, TradingView, AutoChartist, DupliTrade, Quantower Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:30 (Retail), 1:500 (Pro) -
Established in Poland in 2002, XTB caters to over a million clients worldwide. This forex and CFD broker offers a robust regulatory framework, a diverse range of assets, and prioritises trader satisfaction. It provides an intuitive proprietary platform equipped with excellent tools to support aspiring traders.
Instruments Regulator Platforms CFDs on shares, Indices, ETFs, Raw Materials, Forex currencies, cryptocurrencies, Real shares, Real ETFs FCA, CySEC, KNF, DFSA, FSC, SCA, Bappebti xStation Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:30 -
Founded in 1989, CMC Markets is a reputable broker publicly listed on the London Stock Exchange. It holds authorisation from top-tier regulators such as the FCA, ASIC, and CIRO. The brokerage, which has received multiple awards, boasts a global membership exceeding one million traders.
Instruments Regulator Platforms CFDs, Forex, Stocks, Indices, Commodities, ETFs, Treasuries, Custom Indices, Spread Betting FCA, ASIC, MAS, CIRO, BaFin, FMA, DFSA Web, MT4, TradingView Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:30 (Retail), 1:500 (Pro) -
FXCC, a well-established brokerage since 2010, offers cost-effective online trading. Registered in Nevis and regulated by CySEC, it is distinguished by its ECN conditions and absence of a minimum deposit requirement. The account opening process is efficient, taking under five minutes.
Instruments Regulator Platforms CFDs, Forex, Indices, Commodities, Crypto CySEC MT4, MT5 Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:500 -
IC Markets is an internationally acclaimed forex and CFD broker, admired for its competitive pricing, diverse trading instruments, and superior technology. Established in 2007 and based in Australia, the firm is under the regulation of ASIC, CySEC, and FSA. It has successfully drawn over 180,000 clients from more than 200 nations.
Instruments Regulator Platforms CFDs, Forex, Stocks, Indices, Commodities, Bonds, Futures, Crypto ASIC, CySEC, FSA, CMA MT4, MT5, cTrader, TradingView, TradingCentral, DupliTrade, Quantower Min. Deposit Min. Trade Leverage $200 0.01 Lots 1:30 (ASIC & CySEC), 1:500 (FSA), 1:1000 (Global) -
Founded in 2006, FxPro has built a reputation as a reliable non-dealing desk (NDD) broker, providing trading access across more than 2,100 markets to over 2 million clients globally. It has received over 100 industry awards, reflecting its favourable conditions for active traders.
Instruments Regulator Platforms CFDs, Forex, Stocks, Indices, Commodities, Futures, Spread Betting FCA, CySEC, FSCA, SCB, FSA FxPro Edge, MT4, MT5, cTrader, AutoChartist, TradingCentral, DupliTrade, Quantower Min. Deposit Min. Trade Leverage $100 0.01 Lots 1:30 (Retail), 1:500 (Pro) -
Founded in 1974, IG is a part of IG Group Holdings Plc, a publicly listed brokerage (LSE: IGG). The company provides spread betting, CFD, and forex trading, offering access to over 17,000 markets. Its platforms and investing apps are notably user-friendly. Over the past 50 years, IG has consistently been an industry leader, excelling in all essential areas for traders.
Instruments Regulator Platforms CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA, FINMA, CONSOB, AFM Web, ProRealTime, L2 Dealer, MT4, TradingView, AutoChartist, TradingCentral, ProRealTime Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:30 (Retail), 1:222 (Pro) -
Eightcap, an acclaimed broker regulated by the FCA, offers exceptionally low trading costs. Recognised as the top-rated brand by TradingView's vast user base of 100 million, traders can directly access the platform. UK traders can open a live account with a minimum deposit of just £100.
Instruments Regulator Platforms CFDs, Forex, Stocks, Indices, Commodities ASIC, FCA, CySEC, SCB MT4, MT5, TradingView Min. Deposit Min. Trade Leverage £100 0.01 Lots 1:30 -
Established in 1999, FOREX.com is now integrated into StoneX, a prominent financial services entity catering to more than one million clients globally. The broker is regulated in numerous jurisdictions, including the US, UK, EU, and Australia. It offers a vast array of markets beyond forex, delivering competitive pricing on state-of-the-art trading platforms.
Instruments Regulator Platforms Forex, CFDs, Stocks, Indices, Commodities, Futures, Options, Crypto NFA, CFTC, CIRO, FCA, CYSEC, ASIC, SFC, FSA, MAS, CIMA MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral Min. Deposit Min. Trade Leverage $100 0.01 Lots 1:30 -
Fusion Markets, an online broker since 2017, operates under the regulation of ASIC, VFSC, and FSA. Renowned for offering cost-effective forex and CFD trading, it provides various account options and copy trading solutions to suit diverse trading needs. New clients can begin trading with a simple three-step registration process.
Instruments Regulator Platforms CFDs, Forex, Stocks, Indices, Commodities, Crypto ASIC, VFSC, FSA MT4, MT5, cTrader, TradingView, DupliTrade Min. Deposit Min. Trade Leverage $0 0.01 Lots 1:500
How Negative Balance Protection Works
In trading, leverage allows you to borrow funds and take a position in a trade that exceeds the amount of cash you have deposited. In the UK, the amount of leverage available to retail traders is capped at 1:30, which means that you are able to borrow enough to take a position 30 times larger than the amount of cash you have deposited.
The attraction of this is that it will increase profits from even small price movements, but leverage will work in exactly the same way to magnify losses if a trade turns against you.
Example
If you deposit £1,000 cash into your trading account and open a long position with 30x leverage, a 1% price increase, which would ordinarily net you £10, will instead earn you £300. But what if there’s an unexpected and dramatic movement the other way? If the price were to suddenly fall by 10%, you would be down £3,000, losing everything in your account and putting you in £2,000 debt to your broker.
This was precisely the scenario in January 2015, when the Swiss National Bank made the unexpected announcement that it was ending its four-year practice of fixing the price of the Swiss Franc (CHF) at 1.20 to the Euro (EUR). The CHF price suddenly soared by 20% against the euro, taking traders with leveraged short CHF-EUR positions by surprise and leaving a great many of them in debt to their brokers.
Some of the largest online brokers agreed to forgive most of the debt, averting disaster. But the aftermath of the 2015 panic led several leading regulators to implement negative balance protection rules.
The FCA & Negative Balance Protection
The FCA’s permanent negative balance protection regulations, implemented in 2019, cover firms offering contracts for difference (CFD) and similar derivatives, stipulating that retail traders’ losses should not exceed their account balance.
The regulations also state that customers’ positions must be closed out when their funds fall to 50% of the margin they need to maintain an open position on their CFD account – an action that is known as a margin call.
Brokers With Negative Balance Protection
Since UK regulations state that brokers must provide this safeguard as standard for CFD’s and CFD-like products, it may be a sign that something is amiss if you find a broker or trading platform that appears to operate without negative balance protection on leveraged trades. Check for negative balance protection by reading the broker’s terms and conditions or by conducting a search of their help centre. Alternatively, use our list of trading brokers that offer negative balance protection.
Another tell-tale sign of a legitimate brokerage that was introduced in the same 2019 FCA regulation is the requirement for brokers to “provide a standardised risk warning, telling potential customers the percentage of the firm’s retail client accounts that make losses.” If the broker makes this warning during your onboarding process or as you set up trades, it is a good sign that it will also offer negative balance protection. However, it is always worth checking to be sure, since even some reputable trading platforms which operate in the UK – Interactive Brokers, for instance – do not offer negative balance protection on margin accounts.
In some rare situations, an asset’s price movement will be so sudden and so extreme that it will bring your balance to negative cash equity in spite of negative balance protection. In these instances, brokers with negative balance protection should absorb the cost and return your balance to zero.
Margin Calls
Many good brokers will send traders a warning when their account balance gets close to a margin call, giving them time to top up their balance if they wish to keep a trade running. This may sometimes work out well for a trader who has the courage to back their convictions – if the price movement reverses, they can recoup some of their losses on a losing trade and may even make a profit.
But it’s important to recognise that not every trade will work out, and for every last-minute winner, you will find a hundred traders who have multiplied their losses by throwing good money after bad.
Other Safeguards for Leveraged Trades
Online brokers with negative balance protection will stop you from being wiped out in a single bad trade, but a wise trader will usually want to have measures in place to prevent such a course of events in any case. Setting stop-loss orders, for example, is an effective way to limit your losses and preserve enough capital for you to fight another day and recoup your money.
Bottom Line on Negative Balance Protection
Whether you plan to trade stocks, forex, commodities or cryptocurrencies, if you’re making leveraged trades with a UK broker you should check you are covered by negative balance protection. The presence of negative balance protection is a sign that your online broker is legitimate, and it will save you from the worst effects of inattention or bad luck in a trade. Retail traders can also add an extra layer of protection to their trades by setting stop loss orders. Finally, investors should be careful not to negate the effect of negative balance protection by wasting money in a fruitless attempt to turn a losing trade around.
Use our list of the best forex and stock brokers with negative balance protection to start trading.
FAQ
Why Use Brokers With Negative Balance Protection?
To put it simply, negative balance protection is a safeguard that protects retail traders from the most extreme effects of an unlucky or careless leveraged trade by preventing the balance of their trading accounts from going below zero.
Will Negative Balance Protection Stop Me From Losing Money?
Negative balance protection is the last line of defence against being liquidated and placed in debt due to a bad trade. However, investing is an inherently risky business. There is no protection from losing money on any investment, and you should not expect any regulator to step in if you put yourself in debt by losing money you don’t have in a series of bad trades.
Do All UK Trading Brokers Offer Negative Balance Protection?
The British financial regulator, the FCA, requires trading brokers to provide negative balance protection on CFDs and similar products and to close out a customer’s position when their balance falls to 50 percent of the amount required to keep a trade open. If you find a UK broker that does not appear to mention these safeguards for leveraged trades, it would be wise to be extra cautious if you sign up and trade on their platform.
Is Every Trade Covered by Negative Balance Protection?
Many regulators, including those in the UK, Australia, Cyprus and Germany, have made rules requiring negative balance protection in some form. However, by their nature these regulations usually apply to leveraged trades, so trading platforms and brokers which offer different services may not be required to offer this protection. At the same time, some companies that offer leveraged trades do not offer negative balance protection.
Which Broker’s Negative Balance Protection Is Most Reliable?
Since negative balance protection is FCA-regulated, all brokers should follow the same rules when applying it. However, some may provide clients with related services, such as sending them mobile alerts when their balance falls to a level close to a margin call. Pepperstone, CMC Markets and XM are two particularly popular trading brokerages that provide negative balance protection.