Negative balance protection (NBP) means that that any realised losses incurred as a result of trading cannot exceed the clients trading account balance. When trading financial products on margin such as CFDs on FX, Indices, Equities, Commodities and other financial instruments, it is possible for a trading account to result into a negative balance. As a service to its clients, ThinkMarkets offers Negative Balance Protection whereby the client cannot lose more than their balance and be in a situation where they owe ThinkMarkets. Negative balance protection gives traders peace of mind when trading with ThinkMarkets.
Example
Sara deposits $1,000 into her trading account with ThinkMarkets. Sara places trades on EURUSD, Gold and the NAS100 CFDs. Following a market news announcement, the prices moved sharply against Sara which resulted in her trading account balance falling to -$200. Sara lost a total of $1,200 trading, however ThinkMarkets would cover the -$200 she incurred and bring her account balance back to $0
ThinkMarkets offers tools for clients to manage their risk, however Negative Balance Protection provides a backstop to their trading.
The following outlines the ThinkMarkets Negative Balance Protection Policy conditions:
- Negative balance protection only applies to retail clients of ThinkMarkets
- Money Managers and clients of Money Managers are not eligible for Negative balance protection
- ThinkMarkets will cover any negative balances by way of a cash adjustment to the account balance as soon as practically possible
- ThinkMarkets reserves the right to use positive balances from other trading accounts a client might also hold with ThinkMarkets to cover a trading account negative balance
- ThinkMarkets reserves the right, at its sole discretion, to refuse to cover any negative balance where it deems that the negative balance occurred as a result of abuse, this can for example include taking a position immediately prior to a data release
- Negative balance protection does not cover trading fees such as commissions, swaps, and corporate actions such as dividends
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