Since the ESMA changes all retail clients must be offered negative balance protection.
This means that a retail traders account cannot go into negative equity.
In other words, a retail trader cannot lose more than the value of their account and end up owning their broker money.
It’s actually a sensible move by ESMA, as during Black Swan events like the CHF cap removal some inexperienced traders were left owing hundreds of thousands of pounds.
However, if as an experienced trader you opt to upgrade your account to professional status (you can compare professional trading accounts here) negative balance protection no longer applies.
This means if you have a pro account it is possible to lose more than the value of your account and end up owning your broker money.
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Richard started the Good Broker Guide in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously acting as multi asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2000.