Can my account go negative? Is this broker dependent?

Broker Discussion Forex Brokers
1

Hi All,

I always trade the big currency pairs with a leverage (mostly 10 or 20) and a stop loss.
I understand that a broker is not always able to close my trade exactly at the stop loss due to slippage (Are there also other reasons?)

But what if slippage is so extreme leaving me with a negative account balance? Is this possible?
See what happened with EUR/CHF earlier this year where the price moved extremely fast.

Example:
I’ve got 10000USD and use a leverage of 100 (I never use such a high leverage, it’s an example).
Let’s say the trade goes against me really quick for 10% (10x100=1000% on my 10000 account) without the broker fast enough closing my trade at stop loss or margin call resulting in a (big) negative account.
Can this happen?

I can imagine users trading with only 100USD in their account and using high leverage.
If the trade goes well, lucky them, otherwise the trade will be closed by the broker because of the stop loss or the margin. That’s what they expect to happen.
But also here, what if the broker was not able to close the trade in time and the account becomes negative?

Thanks for your help.

2

Many brokers have a policy of not allowing your account balance to go negative. These brokers really got nailed when the SNB dropped the floor because of that policy, so they’ve become a bit more cautious. Best to check with your specific broker as it should be delineated in the terms and conditions.

3

The brokers hands are aldo tied by different country laws. I understand in the US brokers are not allowed to limit losses.
Best to check with your broker

4

Good to know that there are brokers with 'Negative Balance Protection’
I will narrow my search for this kind of brokers!

Thanks!!

5

Hey Eddie - is that really true: US brokers are forbidden from forgiving negative balances? Is that a new regulation? Where did you get that information? Can someone confirm?

Thanks!