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TICKMILL: Do you offer negative balance protection/cover negative balance?
Source: | Author:finance-102 | Date2023-01-06 | 170 Views | Share:
Traders who use the maximum leverage available face the risk of a negative balance.

For example: Let’s assume that you have 200 USD on your account and you open 1 lot on USDJPY on Friday evening, with 1:500 leverage and 200 USD margin.*

Traders who use the maximum leverage available face the risk of a negative balance.


For example: Let’s assume that you have 200 USD on your account and you open 1 lot on USDJPY on Friday evening, with 1:500 leverage and 200 USD margin.*


On Sunday night, the market opens 30 pips away from Friday’s closing price in a direction against you, so your position will immediately have a loss of 30 pips x 10 USD = 300 USD loss, while you have only 200 USD on your account.


The position will be automatically closed and your account would have a negative balance of -100 USD. This situation is 100% impossible when a trader uses 1:1 leverage. The higher leverage a trader uses, the more risks they take. Please also note that a negative balance may occur due to a slippage during high volatility.


Tickmill grants negative balance protection to all clients. The company may chose not to grant negative balance protection if the negative balance has been incurred as a result of fraudulent purposes or market abuse.


Moreover, our Risk department is constantly monitoring our clients’ risk-taking and if we see that a client trades irresponsibly, then we will notify the client via e-mail and ask them to reduce risk exposure. Also, we might reduce the leverage on the client’s account.


*This is an illustrative example.