Best Brokers With Negative Balance Protection

The best brokers with negative balance protection offer additional security to traders using leverage and demonstrate a dedication to client safety and experience. Whether you are looking for an Australian forex broker, a US CFD broker or just an international firm offering a wide range of products, negative balance protection should be an important consideration.

Read this article to learn what negative balance protection is, how it works, different regulation rules, and how to choose brokers with negative balance protection.

Best Brokers With Negative Balance Protection

These are the top 5 brokers with negative balance protection based on our experts' tests:

#1 - FOREX.com

Why We Chose FOREX.com

Founded in 1999, FOREX.com is now part of StoneX, a financial services organization serving over one million customers worldwide. Regulated in the US, UK, EU, Australia and beyond, the broker offers thousands of markets, not just forex, and provides excellent pricing on cutting-edge platforms.

"FOREX.com remains a best-in-class brokerage for active forex traders of all experience levels, with over 80 currency pairs, tight spreads from 0.0 pips and low commissions. The powerful charting platforms collectively offer over 100 technical indicators, as well as extensive research tools."

- DayTrading Review Team
  • Instruments: Forex, Spot Metals
  • Regulator: NFA, CFTC
  • Platforms: MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral
  • Minimum Deposit: $100
  • Minimum Trade: 0.01 Lots
  • Leverage: 1:50

Pros

  • FOREX.com offers industry-leading forex pricing starting from 0.0 pips, alongside competitive cashback rebates of up to 15% for serious day traders.
  • With over 20 years of experience, excellent regulatory oversight, and multiple accolades including runner-up in our 'Best Forex Broker' awards, FOREX.com boasts a global reputation as a trusted brokerage.
  • Alongside a choice of leading platforms, FOREX.com offers a superb suite of supplementary tools including Trading Central research, SMART Signals pattern scanner, trading signals, and strategy builders.

Cons

  • Despite increasing its range of instruments, FOREX.com's product portfolio is still limited to forex and CFDs, so there are no options to invest in real stocks, real ETFs or real cryptocurrencies.
  • Demo accounts are frustratingly time-limited to 90 days, which doesn’t give you enough time to test day trading strategies effectively.
  • Funding options are limited compared to leading alternatives like IC Markets and don’t include many popular e-wallets, notably UnionPay and POLi.

#2 - Interactive Brokers

Why We Chose Interactive Brokers

Interactive Brokers (IBKR) is a premier brokerage for experienced traders, providing access to 150 markets in 33 countries, along with a suite of comprehensive investment services. With over 40 years of experience, this Nasdaq-listed firm adheres to stringent regulations by the SEC, FCA, CIRO, and SFC, amongst others, and is one of the most trusted brokers for trading around the globe.

"Interactive Brokers is one of the best brokers for advanced day traders, providing powerful charting platforms, real-time data, and customizable layouts, notably through the new IBKR Desktop application. Its superb pricing and advanced order options also make it highly attractive for day traders, while its diverse range of equities is still among the best in the industry."

- DayTrading Review Team
  • Instruments: Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, Cryptocurrencies
  • Regulator: FCA, SEC, FINRA, CBI, CIRO, SFC, MAS, MNB
  • Platforms: Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, eSignal, TradingCentral
  • Minimum Deposit: $0
  • Minimum Trade: $100
  • Leverage: 1:50

Pros

  • There's a vast library of free or paid third-party research subscriptions catering to all types of traders, plus you can enjoy commission reimbursements from IBKR if you subscribe to Toggle AI.
  • The TWS platform has clearly been built for intermediate and advanced traders and comes with over 100 order types and a reliable real-time market data feed that rarely goes offline.
  • The new IBKR Desktop platform takes the best of TWS while adding bespoke tools like Option Lattice and Screeners with MultiSort to create a genuinely impressive trading experience for day traders at every level.

Cons

  • TWS’s learning curve is steep, and beginners may find it challenging to navigate the platform and understand all the features. Plus500's web platform is much better suited to new traders.
  • Support can be slow and frustrating based on tests, so you might find it challenging to reach customer service representatives promptly or encounter delays in resolving issues.
  • You can only have one active session per account, so you can’t have your desktop program and mobile app running simultaneously, making for a sometimes frustrating trading experience.

#3 - DNA Markets

Why We Chose DNA Markets

DNA Markets is a forex and CFD broker established in 2020. The broker operates two entities in Australia and the offshore jurisdiction, St Vincent and the Grenadines. Traders can access 250+ markets, with a Standard account for beginners and a Raw account for experienced traders. The reliable MetaTrader 4 and MetaTrader 5 platforms are available, alongside Signal Start.

"DNA Markets is an excellent choice for short-term traders familiar with the MetaTrader platforms. The smooth sign-up process also makes it easy to get started while the $100 minimum deposit is accessible. That said, DNA Markets trails the top brokers in education, research and mobile trading. "

- DayTrading Review Team
  • Instruments: CFDs, Forex, Indices, Commodities, Stocks, Crypto
  • Regulator: ASIC
  • Platforms: MT4, MT5
  • Minimum Deposit: $100
  • Minimum Trade: 0.01 Lots
  • Leverage: 1:500

Pros

  • Convenient account funding with 7 base currencies, a $100 deposit and a wide range of payment methods
  • Top-rate platforms and charting tools for day traders with access to MT4 and MT5
  • Low trading fees with spreads from 0.0 pips in the Raw account and zero non-trading fees

Cons

  • The investment offering trails alternatives, especially in terms of stocks, cryptos and commodities
  • Despite access to MT4 and MT5, there is no proprietary trading app
  • Although it continues to strengthen its client base and reputation DNA Markets lacks the track record of top brokers like Vantage

#4 - LQDFX

Why We Chose LQDFX

LQDFX is a straight-through processing (STP) broker based in the Marshall Islands. The offshore trading firm offers competitive spreads from 0.0 pips, free deposits, 24/5 support and access to the hugely popular MetaTrader 4 platform. LQDFX also runs a competitive bonus program for short-term traders.

"LQDFX is best for active day traders looking for ultra-tight spreads, low fees and high leverage up to 1:1000. Forex traders will particularly appreciate the strong range of 70+ currency pairs with minimum deposits starting from $20."

- DayTrading Review Team
  • Instruments: Forex, CFDs, Stocks, Indices, Commodities, Crypto
  • Platforms: MT4
  • Minimum Deposit: $20
  • Minimum Trade: 0.01 Lots
  • Leverage: 1:1000

Pros

  • The $20 minimum initial deposit is accessible for beginners, and the Micro account will serve those looking to trade in smaller volumes
  • Leverage is available up to 1:1000 for experienced day traders
  • Tight forex spreads from 0.0 are available in the raw spread account and the $3.50 per lot commissions are in line with competitors

Cons

  • It's a shame that there's no copy trading platform for beginners or experienced strategy providers
  • The lack of regulatory oversight is a concern, although the broker does claim to use segregated accounts and balance protection
  • There are no additional charting platforms available, such as MT5 or a proprietary solution

#5 - IG

Why We Chose IG

Founded in 1974, IG is part of IG Group Holdings Plc, a publicly traded (LSE: IGG) brokerage. The brand-US offers spread betting, CFD and forex trading across an almost unrivalled selection of 17,000+ markets, with a range of user-friendly platforms and investing apps. For 50 years, IG has maintained its position as an industry leader, excelling in all key areas for traders.

"IG continues to provide a comprehensive package with an intuitive web platform and best-in-class education for beginners, plus advanced charting tools, real-time data, and fast execution speeds for experienced day traders."

- DayTrading Review Team
  • Instruments: CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting
  • Regulator: FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA
  • Platforms: Web, ProRealTime, L2 Dealer, MT4, AutoChartist, TradingCentral
  • Minimum Deposit: $0
  • Minimum Trade: 0.01 Lots
  • Leverage: 1:30 (Retail), 1:250 (Pro)

Pros

  • As a well-established broker, IG operates under strict regulatory guidelines in multiple jurisdictions, maintaining a high level of trust
  • IG is amongst the best in terms of its range of instruments, which includes stocks, forex, indices, commodities, and cryptocurrencies, providing ample diversification opportunities
  • The ProRealTime advanced charting platform is free as long as certain modest monthly trading activity requirements are met

Cons

  • While there is negative balance protection in the UK and EU, there is no account protection or guaranteed stop losses for US clients
  • IG has discontinued its swap-free account, reducing its appeal to Islamic traders
  • IG applies an inactivity fee of $12 per month after 2 years, deterring casual investors

What Is Negative Balance Protection?

Negative balance protection is a security feature that applies when trading leveraged products. It prevents users from being able to lose more money than they have in their accounts, no matter how far their open positions drop, stopping them from becoming indebted to their broker. While there are some firms without negative balance protection, most popular brokers, such as Interactive Brokers, eToro, markets.com, and XM offer the service. Generally, this applies to retail clients only and professional traders are not offered the same level of protection.

How Does Negative Balance Protection Work?

Negative balance protection ensures that, whenever you trade with leverage, you cannot lose more money than the balance of your account. It protects retail clients from becoming indebted to brokers.

The best way to explain how this works with one of the best brokers with negative balance protection is through an example. Let’s say that you have deposited £1,500 into a CFD trading account. The broker you are using offers maximum leverage of 1:30 and you decide to open a position with £1,000 at a leverage rate of 1:5.

This means that the position you actually open is worth £5,000. If the market is particularly volatile and your position suddenly drops by 40%, you will suffer a loss of £2,000, 133% of your account’s deposited funds (not the position margin). If you did not have negative balance protection, you would owe the broker £500.

However, if you got into this same scenario but your broker provided negative balance protection, your losses cannot exceed the deposited amount of £1,500. If the loss starts building, the broker will automatically close the trade when the loss hits £1,500, ensuring that you do not owe the broker money. Negative balance protection only protects funds up to the balance of your account.

If you had more than £2,000 deposited, you would lose the full amount.ecn brokers with negative balance protection

It is also worth noting that this is not always a guarantee. Most brokers will close the position as it becomes too large but significant margin volatility could cause the position to drop even further before the order is fulfilled. When this happens, you may still owe the broker some money. However, the best brokers with negative balance protection will guarantee this and take on that added loss themselves.

Why Did Negative Balance Protection Become Mainstream

Negative balance protection became particularly prevalent in January 2015. Up to this point, the Swiss National Bank (SNB) had been holding the Swiss Franc (CHF) at a fixed exchange rate with the Euro (EUR), which it had been doing since September 2011. On January 14th, 2015, the SNB announced that it would stop this practice and, as a result, the Swiss Franc soared against the single market currency.

While this would be seen as a success for the Swiss National Bank, it had some unfortunate repercussions. The Swiss market recorded unforeseen losses as many traders had been shorting the Swiss Franc. Many of these investors ended up with negative balances as a result and it was feared that the brokers would demand these losses be paid to cover their losses.

Some brokers, including FXCM, chose to “forgive” up to 90% of their clients given the unprecedented nature of the losses. The main outcome was that negative balance protection entered the limelight and regulatory bodies started to create measures to prevent such drastic losses from happening again.

Pros Of Negative Balance Protection For Traders

Negative Balance Protection Regulations

Following the events in 2015, many regulators have implemented different rules when it comes to negative balance protection. It is important to check each individual broker but here is an overview of some of the main regulatory bodies policies.

The Financial Conduct Authority (FCA), the UK’s regulatory body, has implemented rules to ensure negative balance protection is offered. They have stated that firms offering CFDs and CFD-like assets must guarantee that a client cannot lose more than the total funds in their trading account. Additionally, they must close out a customer’s position when their funds fall to 50% of the margin needed to maintain the open position on their CFD account. This applies to retail clients only, professional traders do not receive the same protection. The FCA’s supervisory team will work with brokers to ensure the proper management of negative balance protection.

The Cyprus Securities and Exchanges Commission (CySEC) is a regulatory body based in Cyprus and one of the main regulators for EU brokers. CySEC has taken a more lenient route for the implementation of negative balance protection. Under them, brokers must implement it on a per-account basis. This means that a client who has one large leveraged position within a portfolio can still lose more than the value of the initial position. The other positions or funds the client has will be used to cover the negative balance. Overall, a customer’s account can never have a negative balance and, if it does, that loss falls to the broker.

Australia’s regulatory body, the Australian Securities and Investments Commission (ASIC), also implemented similar rule changes in 2021. In addition to limiting the leverage offered on different assets to a maximum of 1:30, they have stated that brokers must provide negative balance protection. This ensures that clients losses are limited to the funds available in their account. As with the FCA and CySEC, these rules only apply to retail traders, professional traders still stand to lose more than their available funds.

Germany’s Federal Financial Supervisory Authority, better known as BaFin, also requires negative balance protection to be offered to clients. BaFin did not introduce a limit on leverage in 2017 but they have stated that all licensed brokers must offer negative balance protection to customers, ensuring retail clients cannot lose more than they have deposited into their accounts. Any losses on top of this are borne by the broker.best brokers with negative balance protection

How To Choose Brokers With Negative Balance Protection

When choosing from the best brokers with negative balance protection, there are many things to look out for. Below we have outlined our top recommendations.

One of the first things to check is which agency the broker is regulated by. Try to ensure that you use a broker who is regulated by a top-tier regulatory body, such as the FCA, CySEC or ASIC. On top of requiring that brokers offer negative balance protection, they implement fund segregation rules, offer dispute meditation and provide insurance cover.

Check each broker’s website and find the section on security. Here, it should clearly mention whether they offer negative balance protection, alongside other things like cybersecurity, login protection and two-factor authentication (2FA).

Customer reviews are a great way to learn about a broker’s practices. Many people will note down their experiences with brokers, positive or negative, on online forums and websites. Visit these to learn about brokers and how they deal with issues like negative balance, fund withdrawal issues and more.

Look at the funding procedures a broker provides. Check that they provide a variety of payment methods and that withdrawals and deposits are processed within two to three days. This allows you to trust that your funds will go through successfully and you do not have to worry about your money being lost. Lots of payment methods is also an indication of privacy and security levels, as each provider will have required standards.

Additionally, there are a host of other things to check when comparing the best brokers with negative balance protection. You should ensure that the chosen broker offers the assets you want to trade, be that forex or stock CFDs, for example. Moreover, compare fees and spreads, trading platforms, mobile apps and additional features.  For a full guide to selecting a broker, see our guide here.

Final Word On The Best Brokers With Negative Balance Protection

Opening accounts with the best brokers with negative balance protection helps protect your funds from serious market downturns and volatility. It ensures that, when trading a leveraged position, you cannot lose more than the amount you have deposited in your account,  preventing retail clients from becoming indebted to brokers. When choosing a broker, try to ensure that they offer negative balance protection as markets are volatile and you do not want unexpected losses. Additionally, follow our guide above to ensure you pick brokers that you can trade safely with.

FAQs

Does CySEC Require Negative Balance Protection?

Yes, CySEC does require negative balance protection. They are more lenient than some other bodies but they still state clients accounts cannot go into the red.

Do The Best Brokers With Negative Balance Protection Prevent Big Losses?

Brokers with negative balance protection don’t just automatically stop any major losses from hitting your account, they only protect you from a net zero balance. This means that major losses that don’t completely wipe out your capital are still let through, so you should still implement robust risk management.

What Should I Look For When Choosing A Broker?

There are many factors to consider and every trader will have different requirements. Generally, you should compare the best brokers with negative balance protection by checking that they are regulated by a top-tier body, they offer the assets you wish to trade on the platform you desire and have convenient payment methods and base currencies.

Does The FCA Require Negative Balance Protection?

Yes, the FCA requires all licensed brokers to offer negative balance protection. This is relevant for all retail clients, though professional traders are not afforded the same protection as they are expected to better understand the risks involved with margin trading.

Do The Best Brokers With Negative Balance Protection Remove Risk?

Negative balance protection removes the risk of being indebted to the broker, though general financial risk is still very much present and you can still lose your entire account balance.