In short
- Retail clients' maximum loss is limited to the funds in their CFD/spread betting account.
- If a gap pushes your balance below zero, the broker absorbs the deficit.
- It doesn't stop you losing your whole balance — position sizing still matters.
How it works
Normally, the 50% margin close-out rule closes positions before your balance runs out. But in a fast market or a price gap — for example, over a weekend — a position can close at a price far beyond your stop. Without protection, you could end up owing the broker money. With negative balance protection, the broker must reset a negative balance to zero.
Example
- You have £1,000 and hold a large GBP/USD position.
- Unexpected weekend news causes the market to open 300 pips lower.
- Your position closes at the opening price with a £1,400 loss.
- Your balance would be −£400; the broker resets it to £0.
Limits to know
- Applies per account; check how your broker treats multiple accounts.
- Doesn't apply to professional clients by default.
- Doesn't apply if your account is held by an offshore entity, unless that entity offers it.
Related protections
Negative balance protection works alongside the 30:1 leverage cap, the 50% margin close-out and client money segregation. If a broker itself fails, see FSCS protection.
Frequently asked questions
Do all UK brokers offer negative balance protection?
FCA-authorised CFD and spread betting providers must provide it to retail clients.
Does it apply to professional clients?
Not necessarily. Professional clients may not have negative balance protection unless the broker offers it voluntarily.
CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading these products. You should consider whether you understand how they work and whether you can afford to take the high risk of losing your money.