Negative balance protection protects your trading account from debt when forex trading. We look at the best Australian forex brokers with negative balance protection with ThinkMarkets our best Fx Broker with negative balance protection for Aussies.
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The best ASIC regulated Forex brokers with Negative Balance Protection are the following.
ThinkMarkets is a top ASIC regulated Australian forex broker offering some of the tightest spreads and fastest execution for a broker that offers negative balance protection.
ThinkMarkets generally has some of the most competitive spreads on the market. ThinkMarkets advertise that their average spread for Forex pairs on the ThinkZero account is 0.1 pips, which is some of the best on the market. With this account, a commission fee of $3.5 per side for each standard lot is applied for each trader.
Traders with a preference for not paying commissions can choose the Standard Account. In place of commissions, spreads are around 1 pip wider, but this varies for each currency pair.
As Standard and ThinkZero account holders receive a swap fee (i.e. overnight financing fee) for positions held open longer than a day, these accounts do not comply with Sharia law. To solve this, ThinkMarkets offers an Islamic account that uses an administration fee in place of an interest fee. Administration fees for major currency pairs are $5 and applied for every 7 days you hold your position open.
ThinkMarkets is an STP broker with ECN pricing makes their inclusion of guarantee negative balance protection unusual as most brokers that offer this feature in the Australian brokerage market are market makers or dealing desk brokers.
As a no dealing desk broker, ThinkMarkets is able to offer the tightest spreads as they directly connect you with liquidity providers, thus removing the ‘middle man’ from the execution process, thus saving on trading costs.
Below we list the average spreads (or typical spreads) according to the broker’s website for EURUSD currency pairs are
*Note: Admiral Markets only list typical spreads
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The online broker offers standard account holders a choice between MetaTrader 4 (MT4), MetaTrader 5 (MT5) and its proprietary trading platform ThinkTrader, while ThinkZero customers are required to use MT4 or MT5.
ThinkTrader is an easy-to-use, well-designed trading platform available as a desktop, tablet or mobile trading app for standard account holders, with a good collection of charting tools accessible on the trading platform. MT4 and MT5, on the other hand, are available to both Standard and ThinkZero account holders as a desktop, webtrader or mobile trading platform. MT4 and MT5 platforms are well-known for their automated trading tools, with the ability to write Expert Advisors (trading bots) with the MQL4 and MQL5 programming languages. Users can efficiently test and develop algorithmic trading strategies, with MT5 offering multi-currency testing, an upgrade from MT4’s single currency backtesting.
ThinkMarkets is a Straight-Through-Processing (STP) broker with no dealing desk (NDD) execution. With Equinix servers in London, New York and Hong Kong, customers enjoy ultra-fast order execution within milliseconds. The online broker’s low spreads are possible due to its top-tier liquidity providers and low latency network.
As shown below, broker’s such as easyMarkets only have one server based in Amsterdam, meaning orders are not executed as swiftly for traders based in distant locations such as Australia. ThinkMarkets trading servers are based in both London and Hong Kong to facilitate ThinkMarkets low-latency network. The Equinix servers in Hong Kong ensure fast execution for customers based in the Asia-Pacific region, as traders are in closer proximity to liquidity pools. Regardless of whether you are trading from Australia, the UK or Hong Kong, ThinkMarkets partnership with Equinix allows traders to access the best prices available with orders being executed within milliseconds.
Although not required by law in Australia, ThinkMarkets AU provides negative balance protection to all customers, meaning traders cannot lose more than they have deposited into their trading account. Negative balance protection means if a trading account balances move into a negative balance because prices have moved in an unfavourable direction, ThinkMarkets will close all of a trader’s open positions, ensuring customers do not end up in debt to the broker.
When trading forex with ThinkMarkets maximum leverage ranges from 20:1 to 30:1 depending on the currency pair.
When trading with leverage, a stop out is applied when equity levels fall below 50% of the used margin. ThinkMarkets call this stop out level, their margin call. The broker does not have a set call margin level for alerts as they consider this the responsibility of the trader.
If you qualify as a professional trader then leverage can be as high as 500:1.
As Forex and CFD trading with leverage is a high-risk investment activity, ThinkMarkets customers can utilise different pending order types on MetaTrader 4, MetaTrader 5 and ThinkTrader. Although premium order types such as guaranteed stop-loss orders (GSLO) are not offered by ThinkMarkets, customers can maximise potential profits by placing a stop loss, trailing stop, limit and take profit orders.
ThinkMarkets is seen as a trusted online broker with subsidiaries regulated by the Financial Conduct Authority (FCA) in the UK, the Australian Securities and Investments Commission (ASIC) in Australia and the Financial Sector Conduct Authority (FSCA) in South Africa.
Financial regulation set by the FCA and European Securities and Markets Authority (ESMA) requires regulated brokers to provide investor protection through financial compensation schemes (i.e. the Financial Services Compensation Scheme (FSCS) where retail investor accounts can claim up to £85,000 if their broker becomes insolvent). Although ASIC does not require Australian brokers to provide this kind of insurance, ThinkMarkets protects traders’ funds for up to $1 million, regardless of the subsidiary they are signed up to.
While ASIC regulated brokers are not required to provide financial compensation schemes such as those seen in Cyprus Securities and Exchange Commission (CySEC) or FCA regulated jurisdictions, segregated client funds are enforced by the Australian financial authority. Australian brokers must hold client funds in segregated accounts, ensuring client funds are not used as operational capital.
View ThinkMarkets Review >>Visit ThinkMarkets >>
Plus500 is an established CFD provider with an excellent range of financial instruments to trade. As well as access to thousands of financial markets, Plus500 offers premium order types and negative balance protection to mitigate the high risk of trading CFDs.
Plus500 offers a simple pricing structure that does not require traders to calculate account and commission fees. Plus500 a market maker broker that matches traders’ orders internally (rather than externally as with NDD brokers), and therefore only offers retail clients one account type. When trading forex, spreads are commission-free with the CFD provider charging no account management fees for deposits or rolling open positions.
On top of basic order types such as stop limits, stop losses and trailing stop losses, Plus500 allows customers to place guaranteed stop-loss orders (GSLOs) for a fee. When using a free stop-loss order, traders can protect profits by specifying a price to automatically close a position. As a risk of basic stop-loss orders is the trade not being closed at the price set by the customer, the premium paid for the order guarantees trades will be closed at the specified price, regardless of gapping.
Similarly to ThinkMarkets, the Plus500 provides negative balance protection and enforces margin calls to ensure retail clients do not end up with a negative trading accounts balances when markets are volatile. If a trader does not meet a margin call within the required time period, all positions will be closed at the current market price. When trading forex with Plus500 an initial margin between 33-50% is required.
Plus500 offers a vast range of CFDs to trade derived from seven asset classes. With over 2,000 financial instruments in total, customers can easily develop trading strategies using the following CFDs:
As well as commonly traded CFDs, Plus500 offers market access to emerging industries such as Cannabis in addition to share markets throughout 23 countries.
To start trading with Plus500, prospective retail clients can sign up for a demo account with no time limits or restrictions on virtual funds. To access Plus500’s wide product offering traders are limited to the CFD provider’s proprietary trading platform, available as a desktop, WebTrader, Android, Windows or iOS trading app.
*Your capital is at risk ‘76.4% of retail CFD accounts lose money’
View Plus500 Review >>Visit Plus500 >>
AvaTrade is a regulated forex broker that provides negative balance protection and a great selection of copy trading tools.
Whether you are a beginner lacking confidence or an expert wanting to save time researching financial markets, the account mirroring services offered by AvaTrade allows you to fully automate trading while sharing knowledge and strategies with a large forex community.
AvaTrade’s risk management policies make them an ideal choice for social trading, not only does one get negative balance protection but AvaTrade uses a 100% margin call and 30% stop out for their MT4 and MT5 trade accounts (standard accounts) and 50% margin call for their MT4 and MT5 Zero accounts. These provide extra protection should one have the misfortune to have poor performing traders signals.
Three of the best social-copy trading systems are offered by the broker to automate Forex and CFD trading. You can choose between MetaTrader Signals, ZuluTrade or DupliTrade, depending on the trading platform you want to use and whether you prefer direct or indirect copy trading tools.
MetaQuotes proprietary copy trading service available on MT4 and MT5. The automated trading tool allows you to copy the trades made by successful investors known as signal providers. The MetaTrader Signals community consists of millions of users, with both free and paid trading signals available to copy.
ZuluTrade is a social-copy trading provider for MT4 that provides account mirroring services plus a large social network of forex traders. Users can simplify trading by copying the strategies of experienced investors, saving time placing orders and conducting lengthy technical and fundamental analysis.
The social trading service also provides useful risk management tools such as ZuluGuard. ZuluGuard, an account monitoring feature, will close positions if it detects changes to a trader’s performance of which you are copying.
To open a ZuluTrade social-copy trading account with AvaTrade, an initial minimum deposit of $500 is required. Alternatively, traders can explore the third party provider using a demo account funded with a virtual account balance of $100,000.
Compared to ZuluTrade a significantly higher minimum deposit of $2,000 is required to sign up to DupliTrade. The MT4 add-on allows you to search and copy expert strategy providers that match your preferred asset classes, timeframes, and risk levels.
To see if DupliTrade is the right account mirroring service for you, MT4 traders can sign up for a 30-day demo account.
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Compared to other brokers, easyMarkets offers a wealth of risk management tools. On top of negative balance protection, the ASIC regulated broker offers free guaranteed stop-loss orders, dealCancellation and Freeze Rates through their proprietary web trading platform and mobile trading apps and MetaTrader 4 (MT4).
easyMarkets fixed spreads can be wider than other top forex brokers. For instance, Pepperstone offers standard account holders average spreads of 1.0 pip on the EUR/USD forex pair, and Razor account holders 0.0 pips. easyMarkets on the other hand offer minimum spreads starting from 1.2 pips on their proprietary platform and 0.9 pips when using MT4.
When trading with easyMarkets it is free to place a Guaranteed Stop Loss Order (GSLO). Many competing brokers such as Plus500 offer these GSLO order types but charge significant fees. The risk management feature ensures orders are executed at the exact price set by the trader with no chance of slippage.
dealCancellation is a unique risk management tool offered by easyMarkets allowing traders to cancel orders after they have been executed. For a small fee, customers can reverse trades within a one, three or six-hour window, significantly reducing the high risk of forex trading. The premium feature allows clients to take advantage of volatile markets, as the order can be cancelled within the time limit chosen.
Fees are based on recent market volatility and whether you have chosen a 1, 3 or 6 expiration period. Please note, you are not able to add dealCancellation to open trades, you must select the feature when first placing an order. dealCancellation is only available on day trading products such as oil, silver, gold and forex pairs.
As well as cancelling orders, easyMarkets offers a Freeze Rate feature to customers. As CFD and forex markets are highly volatile, the Freeze Rate tool allows you to lock in the current market price you see, while providing a few seconds to press buy or sell.
To learn about different risk management techniques, trading strategies and technical analysis, traders can utilise easyMarkets range of educational tools. Whether you are just learning how to trade forex and wanting to figure out how CFDs work or requiring advanced resources, there are plenty of resources freely available on the broker’s website, including webinars, a glossary and articles on how to start trading as well as outlining technical and fundamental analysis techniques.
Opening a forex trading account with easyMarkets provides you access to their proprietary trading platform as well as MetaTrader 4 (MT4). While the easyMarkets platform offers extensive risk management tools explained above, MT4 allows users to perform sophisticated technical analysis plus develop automated trading strategies using Expert Advisors. Another key difference between the two platforms is market access. MT4 offers forex pairs, commodities, indices, metals and cryptocurrency, while those using the proprietary platform can also trade options.
Both the easyMarkets and MT4 platforms are offered as a web trader, mobile or tablet app, with a PC desktop option also available with MT4.
View easyMarkets Review >>Visit easyMarkets>>
XM is a global broker with unique risk management features that complement the broker’s negative balance protection provision. While trading accounts are protected from entering negative balances, features such as low minimum deposits and flexible leverage allow traders to efficiently manage their exposure to large losses.
XM customers can choose either MetaTrader 4 and MetaTrader 5 as their trading platform. Traders wanting to focus on foreign exchange markets may prefer MT4 as it is predominately a forex platform, while those looking to develop trading strategies that include Share CFDs are required to use MT5.
While many top brokers offer fixed leverage, traders can utilise XM’s flexible leverage feature in conjunction with negative balance protection to manage the high risk of trading. Customers can choose their desired leverage on a scale from 2:1 to 30:1 depending on the volume they are trading with the ability to request changes to their preset leverage level at any time.
To start trading with XM, clients can choose from three account types with different base currencies, lot sizes, spreads and minimum deposits. All account types are commission-free and receive negative balance protection.
The ability to make low minimum deposits and open smaller trades with XM means that if negative balance protection is triggered and all open positions are closed, meaning a trader avoids losing deposits with losses is minimised.
XM mostly charges no fees to deposit or withdraw funds from a trading account with a wide range of payment methods available. As well as bank transfer, debit card and credit card (Visa and Mastercard), traders can use the following e-wallet options: Neteller, Skrill, MuchBetter Wallet and Trustly.
When trading forex and CFDs with XM, the majority of funding methods are fee-free. Yet, if you withdraw less than $200 via bank transfer, you will incur a $15 withdrawal fee.
View XM Review >>Visit XM >>
Admiral Markets is an ASIC regulated broker offering negative balance protection, a choice of account types and trading platforms plus excellent education and customer support.
To help reduce the high risk of trading, Admiral Markets provides all account types with negative balance protection when trading CFDs and forex pairs.
Although not an Australian regulatory requirement… Negative balance policies help ensure they have the best possible trading experience – Jens Chrzanowski, easyMarkets Board Member
When trading with Admiral Markets, customers can choose between the following account types:
‘Trade’ account types offer commission-free spreads starting from 0.5 pips, while ‘Zero’ accounts holders pay a flat rate commission fee of USD $1.8-3 per lot, yet trade spreads as low as 0.0 pips.
Admiral Markets offers an Islamic account for traders following Sharia Law, although swap-free accounts are only available when using an MT5. Trade account type.
While Trade account holders cannot access spreads as narrow as Zero accounts, they can trade a wider range of asset classes. As shown below, MT4.Zero and MT5.Zero account types can only trade four different asset classes, while MT4.Trade gain access to 8 and MT5.Trade 11.
Although negative balance protection reduces the high risk of CFD trading, traders’ should develop their understanding of forex markets while following risk warnings. To avoid trading recklessly, customers can utilise the broker’s wide range of beginner to advanced educational materials to help reduce your reliance on negative balance protection. Admiral Markets educational resources include:
In addition to educational resources, good customer support helps traders expand their knowledge of forex trading. The broker’s customer service team can be contacted via live chat, email, phone or social media platforms, all providing quick and efficient responses. For clients experiencing technical issues, Admiral Markets provides remote support through guided assistance and screen sharing.
View Admiral Markets Review >>Visit Admiral Markets >>
Negative balance protection is a risk management feature that ensures traders do not lose more money than they have deposited into their trading account. If market prices move in an unfavourable direction resulting in a negative account balance, brokers providing negative balance protection will automatically close a customer’s open positions while resetting their account balance to zero.
Although certain jurisdictions around the world (such as the FCA, UK and ESMA, Europe) require all licensed brokers to provide negative balance protection, it is not a legal requirement for ASIC regulated brokers in Australia. Rather, certain broker’s choose to provide the risk management tool to assist traders with reducing the high risk of forex trading.
All broker’s listed above provide guaranteed negative balance protection. If negative balance protection is not guaranteed, slippage and negative trading account balances may still occur with the potential for traders to end up in debt to their broker.
Justin Grossbard has been investing for the past 20 years and writing for the past 10. He co-founded Compare Forex Brokers in 2014 after working with the foreign exchange trading industry for several years. He also founded a number of FinTech and digital startups including Innovate Online and SMS Comparison. Justin holds a Masters Degree and an Honours in Commerce from Monash University. He and his wife Paula live in Melbourne, Australia with his son and Siberian cat. In his spare time, he watches Australian Rules Football and invests on global markets.