Negative balance after a gap: who pays?

[Fairman]

Negative balance after a gap: who pays?

A violent move jumps past a stop and leaves the account below zero. Whether the trader owes the difference depends on the broker and the jurisdiction.

Some brokers offer negative balance protection, resetting the account to zero. In some regions it is mandatory for retail clients. In others it is a marketing promise that may have conditions, or none at all.

Offshore entities often lack it, and the contracts may include clauses allowing the broker to pursue the client for the balance.

For scalpers using high leverage with small accounts, the risk is real during rare events, like the 2015 franc move, when several brokers faced client deficits.

The check is simple. Look in the client agreement for the phrase "negative balance protection" and read the exact wording, including any exceptions. Then ask support which entity the account sits under.

Knowing the answer is not pleasant but is better than learning it from a margin notice.

Some traders also keep the leverage lower than the maximum available. It is the simplest protection against a gap taking the account below zero, whatever the contract says.

What does the agreement say about negative balances, and was it read before funding?