Sound risk management
FinPros uses a range of automated risk management tools. These tools monitor clients’ accounts in real time and protect their balances from going below zero. Negative Balance Protection is a standard feature on all our account types at zero cost to our clients.
When combined with other risk management tools, it helps traders control their risks better.
What’s the big deal about it?
This means losses cannot exceed the invested capital. This is core, especially to rookie traders who are not alert to how fast volatile markets may move during certain market sessions. Most traders love high volatility because it breeds opportunities. Too much of it though may not be a good thing, especially if it moves the market against their positions. This is where NBP features kick in to ensure balances remain positive.
How does it work?
Two main security features keep trading accounts from going into negative balance.
Margin Call: If markets move against a trader’s positions and the margin level reaches 100%, we send out a margin call notification. This is an alert that trading positions are in danger due to low margin. That should prompt the trader to take decisions about the account. He may add more funds to keep the positions going. Or he can close, or partially close, the positions to avoid further losses.
Close-Out: If the market continues to move against open positions and the margin level drops to 30%, our trading platform will start closing the losing positions. This is to protect the account balance from becoming negative.
Can an account still go in negative balance?
Yes. This may happen in rare occasions. When trading leveraged financial products, highly volatile markets or sharp market movements can send an account into negative balance. And this can happen despite negative balance protection processes like margin close-out. So, what happens if an account balance goes negative? Read on to find out.
Negative Balance Correction
If an account balance ever ventures into sub-zero territory, FinPros will offset the negative amount. We will reset the balance to zero and the client will not be asked to cover the deficit from his pocket. This applies on each trading account individually, not on the aggregate balance of all the trading accounts the client holds with FinPros.
FinPros standard is not common standard
Not every broker gives Negative Balance Protection and Negative Balance Correction. In fact, many account conditions and features that we offer as standard, are not industry standard.