Hey guys, I’m just trying to find out if a stock can go into minus on a trading platform? E.g USOIL, it hit 0.3 on a trading platform. Can it go into minus? Or would it just stop at 0 or never really get to 0? If anyone can help and explain this to me I would be very grateful.
Of course, history knows such moments when everything went beyond the usual, but in fact it’s so rare that you should not worry about it at all. You can trade quietly and not think about it. But of course, don’t forget to monitor the news that concerns the stock…
The price of an asset or of a derivative of such an asset as offered to a private retail trader cannot go negative. As soon as price fell to a certain level your broker would simply cease offering this asset or its derivative.
However, your account balance with some types of brokers can go negative. This can happen whether the asset’s price rises or falls but you can end up owing more money to the broker than you had in your account if you get the price movement’s direction wrong and do not exit the position and if the broker does not force a close on your position when your margin cover is all used up.
This cannot happen when using a broker regulated under ESMA rules in the UK as the FCA requires them to provide negative balance protection.