Negative balance protection is an important feature to look for in a broker. It gives you the security that you will not lose more money than you deposited in your account.
There are several ways in which your balance can turn negative. For example, it can turn negative when swaps are charged or when investors use high leverage, and the losses exceed the invested capital. It may also happen when there is an abrupt and unexpected price change in the market, also known as gaps, and the broker cannot activate the stop loss, if any. Gaps may occur when the market is very volatile or when there is an event that has a significant impact on the market (e.g., government statements, terrorism, pandemic, etc.)
Most brokers offer negative balance protection. However, some of them only provide it for specific markets depending on the applicable regulation. That is why it is very important that you check with your broker if it offers negative balance protection for the market or the specific country you are operating in.
Some of the brokers offering negative balance protection in Europe and Latin America as of June 2020 are the eToro, Plus500, XM and Admiral Markets.