HF Markets negative balance protection will limit clients' liabilities in the event of extreme losses.
HF Markets is a globally-operated forex and commodities broker that has been established since 2010. At the latest count, more than 3 million accounts have been opened at the company.
There are lots of reasons why people choose HF Markets, such as HF Markets' negative balance protection. What is "negative balance protection"? And how does it benefit traders?
Negative Balance Protection in Forex Trading
Negative balance protection is a specific term provided by forex brokers that limits clients' liabilities in the event of extreme losses. Here is how it works.
The use of leverage in forex and CFD trading may cause traders to lose more than the amount of funds they have deposited. In a normal market situation, stop outs and margin calls will work together to prevent a trader's account balance from going below zero. However, both measures may not work during extreme volatility, and the trader's account may go straight into negative territory. In such a terrible disaster, what will forex brokers do?
Several brokers may require their clients to shell out a hefty amount of money to close the gap because a negative account balance means we owe them. However, some other brokers have established "negative balance protection" to stop clients' drawdowns at zero dollars, or automatically adjust a negative account balance into zero.
In recent years, European financial market regulatory bodies have commanded all providers of leveraged financial products (including forex brokers) under their supervision to provide negative balance protection. This is regarded as the client's right, instead of an optional offering.
HF Markets' Negative Balance Protection
HF Markets is one of those legit online brokers with a negative balance protection clause attached to all of its trading accounts. The measure means HF Markets will never demand payment from any clients with a negative account balance, and their clients are not responsible to pay back the money.
To activate the feature, HF Markets clients only need to contact customer support via live chat or email. The procedure is done after the account balance turned into negative. So if a client contacts the broker to activate the negative balance protection, HF Markets would reset their account balance to zero. Clients are recommended to claim the protection before making any new deposits.
HF Markets offers their clients more than just fund safety through negative balance protection. HF Markets Group of companies has earned licenses from a number of authorities, including the UK Financial Conduct Authority (FCA) under firm reference number 801701, Dubai Financial Services Authority (DFSA) under license number F004885, and many others.
HF Markets is an award-winning forex and commodities broker. Established since 2010, the company provides trading services and facilities to both retail and institutional clients. For more than 9 years in business, HF Markets has around 1,500,000 live accounts opened and 200 employees globally.
Based on its services, HF Markets can be regarded as middle-class category. Clients do not need to prepare a big deposit for joining to trade with this broker. Also, there are various account types, trading software, and tools to facilitate individuals and institutional customers to trade forex and CFD online.
HF Markets is a registered brand name of HF Markets (Europe). Based on the location, the company is regulated by various financial regulators. Here are the details:
- HF Markets (SV) Ltd, registered in St. Vincent & the Grenadine as an International Business Company with the registration number 22747 IBC 2015.
- HF Markets (Europe), authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with Licence Number 183/12.
- HF Markets SA (PTY), is authorized and regulated as a Financial Service Provider (FSP) by the Financial Sector Conduct Authority (FSCA) in South Africa, under license number 46632.
- HF Markets (Seychelles), incorporated under the laws of the Republic of Seychelles with registration number 8419176-1, regulated by the Seychelles Financial Services Authority (FSA) under Securities Dealer Licence number SD015.
- HF Markets (DIFC) Ltd, authorized and regulated by the Dubai Financial Services Authority (DFSA) under license number F004885.
- HF Markets (UK) Ltd, authorized and regulated by the Financial Conduct Authority (FCA) under firm reference number 801701.
If traders have more experienced, knowledgeable, and sophisticated trading environment, they can join to become Professional Clients, who can manage and assess their own risks. For that reason, these kinds of clients are granted access to more favorable rates but afforded lesser regulatory protections than retail clients.
Trading with HF Markets can enable traders to access a variety of trading instruments like CFDs on Forex, Cryptocurrencies, spot metals (gold, silver, and others), energies (oil and gas), commodities (such as coffee, copper, and sugar), indices, bonds, and popular shares such as Google, Apple, and Facebook.
HF Markets offers some of the tightest spreads in the market, starting from 0 pips in Zero Account. This broker quote major foreign exchange currency pairs to five decimal places. Therefore, traders have the opportunity to get more accurate pricing and the best possible spreads.
HF Markets receives numerous highly prestigious titles, including the huge honor of being ed to join the ranks of the World Finance Top 100 Global Companies. Others are Best Client Funds Security Global by Global Brands Magazine, Best Global Forex Copy Trading Platform by Global Forex Awards 2019, Fastest Growing Forex Broker Mena 2019 by International Business Magazine, and many more.
After opening an account in HF Markets, traders will obtain various forex trading platforms to accommodate all of their trading demands. Whether traders like to trade on desktop or prefer to trade on-the-go, they can use MetaTrader 4 on desktop (terminal, multi-terminal, and web terminal) and phone (iPhone, iPad, and Android).
Clients' funds are held in segregated accounts. Only major banks are used by Markets because they believe that successful traders have to give their full attention to their trading rather than worrying about the safety of their funds.
Traders do not need to worry about transaction fees when depositing and withdrawing. Transaction fees are not charged, and diversity of payment methods enable them to choose between Wire Transfer, Bank Card, and online payments (Neteller, iDeal, Sofort Banking, and Skrill). HF Markets ensures that traders make fast transactions 24/5 during the standard hours.
Traders can earn extra income by joining the affiliate program offered by Markets. Clients who join this program will get some advantages, such as 60% of Net Spreads based on the volume traded by sub-clients, up to $15 per a lot of net revenue, and many more. More information about HF Markets can be obtained on their official website which is supported in 27 languages.
From the review above, it can be concluded that HF Markets is one of the award-winning forex and commodities brokers. There are various account types traders can choose in HF Markets, and the broker itself becomes a favorite among traders for its low spreads. This condition is very suitable for traders with limited funds and a desire to get more opportunities to gain maximum profit.
Even so, traders have to note that negative balance protection and all those licenses will not prevent normal losses. For instance, if you trade against the ongoing trend and suffer huge floating losses, you may trigger stop outs and margin calls that cause your account balance to drop significantly.
You still have to do your homework in order to avoid losing money during forex trading. Before going live in HF Markets, use a demo account to create proven trading strategies and practice proper money management. Maintain a trading journal and limit your use of leverage. When in doubt, do not use leverage higher than 1:100.
HF Markets offers free demo trading accounts in MetaTrader4 and MetaTrader5 to both new and experienced traders. You can use it for as long as you want in order to get used to your chosen leverage because the broker will only cancel it if you are inactive for more than 29 days.
HF Markets is a global Forex and Commodities broker that facilitates both retail and institutional clients. Previously known as HotForex in the brokerage industry, HFM has positioned itself as the forex broker of choice for traders worldwide through their various account types and trading tools. Furthermore, HF Markets allow scalpers and traders use Expert Advisors unrestricted.
27 Comments
Jan 18 2023
What if the broker doesn't offer negative balance protection? Negative balance protection is like a margin call, right? I think it's very unnecessary as you don't actually take a loss unless the trade entry is closed. Why a broker needs this feature when you can wait as long as possible for the price to move the profitable direction. Margin calls and loss cuts sometimes may protect us, but instead of protecting us they bring us losses more and many traders, myself included, are skeptical of this. I quit forex for this reason. This means that as long as you don't close your position, you won't incur any losses. Why bother us with such terms?
Jan 18 2023
Kevin:
Negative balance protection actually protects your money from negative balances. This means you never lose all your funds for trading. Negative balance protection, in my opinion, is annoying for smaller traders and beginners as it limits trading. However, for traders with larger funds, negative balance protection has proven to save money: if you deposit $100, no margin calls are allowed below 60% of his. For a trader from a large bank, the total loss amounted to $40. Deposit $10,000 and save almost $6,000!!!
And there is one very important thing to know. If you close your listing with a negative balance, you owe the broker money. Imagine if you just want to trade but you end up owing money to a broker because there is no negative balance protection! So as a broker that owes you money, it is better to protect your money. Negative balance If you say protection bothers you, you should learn to manage your money first. You can read this article: Optimizing Money management.
Jan 18 2023
Kevin:
Before trading, we recommend using a demo account to avoid margin calls. Negative balance protection is now mandatory for European brokers. I don't know about other regulators around the world...but there were a few cases before negative balance protection was created, the famous one being the aforementioned Black Thursday. The sudden removal of its CHF peg from the euro by the SNB has caused extreme market volatility in the forex industry, resulting in hundreds of millions of dollars in losses and the closure of numerous forex brokers.
As a result, many traders are indebted to their brokers, and many brokers go bankrupt because their money also affected and make the brokers do not function well. Therefore, negative balance protection is created to avoid these things.
(for more thing about negative balance protection , you can read : Negative Balance Protection in Forex Trading)
You
Jan 18 2023
Hello mister, what is the difference between margin call and cut loss i have read some broker trading condition and found some Forex term. There is a term called margin call and stop out., what does stop out mean? I mean, everyone is afraid of margin calls, but sometimes traders, like my aunt, say the stop out even the awful things. In my opinion, these two terms have a negative balance protection relationship, right? I am new to forex. Please correct me if I have the wrong idea about the concept of Forex and some terms at Forex. Thank You!
Jan 18 2023
Alejandro: It's very easy to distinguish between a margin call and a cut loss. Here's my explanation:
But, in the other hand
Some brokers have Margin Call and Stop Out rules. One of the rules that may apply is Margin Call Level = Stop Out Level. So if you hit Margin Call, you will automatically hit Stop Out as well. For this reason, a margin call is sometimes said to mean bankruptcy or the forced closure of all losing positions.
If you are still confused, please refer to the following article: Forex Margin call vs Stop Out
Feb 13 2023
First, I want to say thank you to the author. I mean, I never notice about the negative balance protection (NBP) in HF needs to be activated. Damn, if I open an account without knowing the feature if NBP need to be activated, I will not watch my trade since I think the feature of NBP is activated, but actually no.
Second, NBP is all about margin call and stop out mechanism, right? what is the margin call level and stop out level that set by HF Markets?
Feb 14 2023
Lionel: You should review the trading terms and conditions before dealing directly with brokers. Be careful and read any agreement carefully. Accepting the terms and conditions means that you agree to all the rules therein and also accept the negative balance protection policy. I mean you have to know, sometimes traders don't want to use this feature because they think it will limit their trading and most of them are risk takers. Because of that, some brokers may deactivate the Negative Balance Protection, and those who want the Negative Balance Protection's feature need to activate himself.
Negative balance protections are Margin Call and Stop Out. Margin call and Stop Out levels on HF Market are different for each account:
Feb 14 2023
Lionel: For additional information, the article talked about negative balance protection if margin calls and stop trades don't work due to very volatile markets. I would say that the negative balance protection offered by HF Market is an added feature. So the usual functionality including margin calls and stop orders is also automatically included in the trade (I mean most regulated brokers, especially in Australia and Europe, must have a mechanism margin calls and stop orders).
And the Negative Balance Protection in HF Markets add-on takes your balance from negative to zero (meaning HF Markets will write off your debt).
And I think that's a really cool feature, because not many brokers will do that.
Feb 14 2023
bro, it seems the whole comment above is focused on margin call and stop levels. I, as a well-read reader, know that this article is about Negative Balance Protection, which actually brought our equity from negative to zero by HF Markets.
I mean, I'm really surprised by this feature, but I still think having a negative balance is too risky. So, I think it is more useful to keep track of Margin Call Level and Stop Level. But I need to know how can we know we will get margin call before getting margin call? And to avoid margin requirements, how many trades limit can I open in one trade if my deposit is at the minimum deposit level offered by HF Market, such as Premium account?
Feb 14 2023
Willian:Dude, you can tell if you have a margin requirement by looking at the margin level. And your margin level must be above 50% in HFM premium account and 30% or above if you want to avoid Stop Out. See picture below:
And if you talk about how minimum trade in HF Account Premium to avoid margin call level, with $100. First, you need to know your leverage and minimum lot you can trade, after that the prices of the bid/ask currency pair. And you can find the margin that needed to open one trade position. As I know, the leverage in HFM Premium Account is 1:500 and minimum 0.01 lot trading with bid EUR/USD
Just simply 1.07528 x 1000 unit (0.01 lot = 1000 standard unit) : 500 = $2.150
After that, you are ready to find margin level with $100-$2.150 : $2.150 = 45.51 x 100% = 4551 %. In other word, if you trade 30 times at the same entry, you will get 55% (Just multiply the margin with 30, and count with same procedure). SO, to get really safe, it is better to open up to 12 trades (without Risk Management) since floating loss also affect your margin level
Feb 14 2023
Tango: Wow man thanks for the info. I think it would be better if we know about the risk management you mentioned. And I think I am safe enough to trade $100 with position 5-6 and it is a very safe trade.
I mean with this small deposit you will get more trades because your leverage is higher on HFM premum account. I mean premium seems very friendly for new users like me. Thanks again man!
Feb 19 2023
I think this feature is really needed for beginner, so I'll digging further. Is negative balance protection available to all traders and investors, or are there specific eligibility requirements to get it on HF Markets? And how does negative balance protection differ from other forms of investor protection, such as deposit insurance or bankruptcy protection?
Mar 25 2023
Cassandra Amelie:Great question! Negative balance protection is an important feature for beginner traders, and HF Markets does offer this feature to its clients. The broker's negative balance protection policy ensures that traders will never lose more than the amount they have deposited in their account, even in the event of significant market volatility or unexpected losses. It's worth noting that negative balance protection is available to all traders and investors on the HF Markets platform, regardless of account type or investment amount. This means that even if a trader's account balance goes into negative territory, they will not be required to pay back any losses beyond the amount they have deposited into their account. In terms of how negative balance protection differs from other forms of investor protection, such as deposit insurance or bankruptcy protection, the main difference is that negative balance protection specifically protects against losses incurred during trading activity, rather than losses incurred due to external factors such as insolvency or fraud. Deposit insurance and bankruptcy protection, on the other hand, typically protect investors against losses resulting from events outside of their control, such as the bankruptcy of a financial institution or the failure of a government-insured deposit scheme. Overall, negative balance protection is an important feature for beginner traders to look for when choosing a broker, as it provides an added layer of security and helps to ensure that trading losses are limited to the amount of capital invested.
Mar 25 2023
Certainly! Can you explain in more detail how HF Markets' negative balance protection works, and what measures are in place to prevent traders from incurring losses that exceed their account balance? Additionally, are there any specific conditions or limitations that traders should be aware of when using this feature, such as maximum leverage levels or margin requirements?
Jun 5 2023
By the way, what is negative balance protection, and why is it so important? Every broker I know of today has this feature. A floating loss means the position is still open and you don't need to lose if you don't close it, right? And one thing, I don't understand is why in forex we got margin call meanwhile in the stock market we don't have that and as long we opened a position, we don't close it, we actually don't suffer the loss.
Jun 6 2023
Hello @Phil Khun
A floating loss means the position is still open and you don`t need to lose if you don't close it, right?" I agree with your statement but you have to be careful with the floating loss that can affect your free margin because when the free margin decreases you will get a margin call. A cut loss or margin call occurs automatically when the floating loss approaches equity. Stock markets also have margin calls, but this rarely occurs as stock market volatility is still lower than forex and equity market liquidity is limited.
Forex, on the other hand, is really volatile and highly liquid. This can lead to deeper pending losses and potentially more losses. In reality, margin calls are a broker's system that warns you to deposit more money. This is because when you add money, it means you have more options to handle pending losses. If you don't make a deposit, the broker will cut your losses
Jun 7 2023
I remember an incident that led to messy money management for many brokers and bankrupted many of them. So I don't know exactly in which year the negative balance policy still doesn't have foreign exchange. Some economic events have caused forex volatility to be very high at the moment and making negative balance sheets for many traders.
As a result, some traders cut their losses meanwhile their balance is negative to avoid deeper loss which is the worst. Their move to limit losses ultimately turns into debt to the broker. Because of this, it affects brokers to bankrupt. Why don't brokers go and collect the debt? their trader or I said their customers are all over the world.
It was impossible to collect the debts. And many debt traders opened another new account with another new broker, made a wrong move in forex, ended up with a negative balance, and ran into a cut loss... It ends up being a cycle of debt. To prevent this, financial regulators have issued new rules adding negative accounts to brokers. This allows brokers to cut losses on trading positions that are approaching margin calls.
Jun 19 2023
Really, in this day and age, negative balance protection is no longer exclusive to Oanda, so many other Forex Brokers (mostly from overseas, but who cares) have this policy too. It would be like a crime if there were any brokers out there to let their users go into debt because of this negative balance.
So my real question is, are there any limitations or drawbacks to HF Markets' negative balance protection policy that traders should be aware of, compared to many other run-of-the-mill brokers out there...
Jun 20 2023
As you know, the downside of HF Markets negative balance protection is that they can't protect you in extreme situations like crazy market volatility or force majeure events.
Also, it is always smart to consider a broker's overall reliability and reputation when it comes to honoring their negative balance protection. Sure, HF Markets is well represented in the industry, but if you are looking at other brokers, especially offshore brokers, do your homework and make sure they are trustworthy.
Don't forget, it's not just about negative balance protection. You should see the whole package. Compare the policies of different brokers, check if they are regulated, and think about their trading conditions, customer support, and the types of trading platforms they offer.
And hey, regardless of a broker's negative balance protection policy, it's always smart to manage your risk responsibly. Use proper position sizing, keep an eye on your trades, and don't let things get out of hand. That way, you'll be on top of your game no matter what.
Jun 21 2023
What is an inactivity fee? I mean, inactivity fees occur when you are not trading within a certain time limit and you know your broker will charge these fees. The same goes for your insurance policy. If you don't make a deposit for a while, your balance will be charged. If for some reason you didn't trade there you would be charged but I don't understand why they have to charge an inactivity fee. I mean, there are many factors that cause traders to stop trading for a while. It is not fair that inactivity fees are charged because the traders are not actually trading and there are no trading fees occured to the broker, right?
Jun 22 2023
Dude, an inactivity fee is basically a fee that some brokers charge to clients who have had no trades or account activity for a period of time.The duration varies by broker, but it's usually 6 months to a year . This means that traders who stop trading for six months to one year may lose focus on forex trading. You must admit that you will lose the ability to track and analyze the market.
The main reason brokers charge inactivity fees is because they cover their own expenses. Brokers have ongoing costs associated with maintaining client accounts, Customer Support, Account Management, and Regulatory Compliance. If a client does not generate income for the broker from their trading activity, the broker may charge an inactivity fee to cover these costs. This is because account maintenance is required and may incur costs.
Aug 4 2023
Hey, everyone! I believe this is an incredibly lucrative opportunity. The high commission offered as a strategy provider goes up to 50%, which is quite impressive. Being a trader for 6 years, I'm seriously considering taking the step to grow further by registering as a strategy provider with HF Markets. Isn't it cool? But before I do that, there are a few things I'd like to learn about the HFM copy trading platform.
I have some questions: How do I begin the process of opening an account as a social provider? What terms and conditions must I meet to qualify as a legitimate strategy provider? Could you also explain the advantages of becoming a strategy provider? Your assistance is greatly appreciated, guys.
Aug 5 2023
The HFM CopyTrading application provides an interesting way to share strategies for investors to copy and is equipped with various features. Any existing HFM client can start using the app with an existing account and can become both an investor and a strategy provider.
A Copy Trading App is not required for the strategy provider to trade, but a fully verified HFM account and trading account are required. Strategy providers need to set up strategies so that investors can replicate the trades they make with their trading accounts. Follow the steps indicated in this article as a guide. Visit the HFM homepage and fill in the registration fields under New Account, including your country of residence, your email address, and the password you set. Once you're welcomed to your Personal Area, select Copy Trading from the main menu. Don't forget that your account must be verified first. Please note that the trading account displays the error "trading is disabled" in the trading terminal if the trade was made before making the first qualifying deposit; complete a successful deposit to fix this error.
As a strategy provider, the potential for more profit when you trade normally is an attractive advantage. You can do all of this with the same award-winning support and infrastructure that HFM provides for everyone, and there are even two types of accounts to choose from, namely Pro, Cent, and Premium accounts. If you already have an HFM account, you can use your current login and password to register for Copy Trading as a strategy provider. Some other attractive benefits for strategy providers include:
Aug 29 2023
I've read that HF Market has a license with competent fund protection features, including the protection of negative balances and Segregated Accounts. I found the explanation for negative balance protection here, but I don't understand Segregated Accounts yet.
How important is this feature in trading? Indeed, when we trade through an intermediary broker, we do not automatically receive fund protection. I'm confused, could you please help me understand this further?
Aug 30 2023
All client funds are held in segregated accounts at top banks, and HFM undergoes frequent audits of its clients' operations and financial transactions. By storing funds in separate accounts, you can ensure that your funds are not commingled with the broker's funds or used for the broker's operational needs, making your funds safer. There's no reason to doubt this; if your trading account provides a segregated account, the capital you deposit will not flow into the broker's account but will go into a special separate account to accommodate all customer capital.
Another goal is to ensure the security and transparency of trader capital so that it won't be affected even if the business entity encounters financial issues. In general, segregated accounts are a form of protection provided by financial regulations to ensure the security of traders' funds.
You will also feel more confident investing capital with a broker that holds client funds in separate accounts because this demonstrates the broker's commitment to transparency and integrity.
It's important to note that not all brokers offer this feature, and the reason may be due to a lack of regulation, among other factors. Therefore, I suggest that if you plan to register for trading with a broker, you should first check whether it is regulated or not. Don't let your account and funds be misused by an account registered under offshore regulation. IT'S DANGEROUS, OK...
Read more: What is a Segregated Account in Forex Brokers?
Feb 17 2024
As per the article, it was mentioned that under regular market conditions, stop outs and margin calls collaborate to safeguard a trader's account balance from dipping below zero. However, during instances of extreme volatility, both precautions may fail, leading the trader's account to plunge into negative territory.
I'm curious about why stop outs and margin calls become ineffective amidst extreme volatility. What factors contribute to such potent volatility? Specifically, is it plausible for prices to fluctuate rapidly within a mere second?
Feb 21 2024
Let me explain to you! SO, during times of extreme volatility, stop outs and margin calls may fail to function effectively due to the rapid and erratic movements in the market. This volatility can be fueled by various factors such as sudden news announcements, economic data releases, geopolitical events, or unexpected shifts in investor sentiment. These factors can trigger intense buying or selling pressure, causing prices to swing dramatically within short periods.
In such highly volatile conditions, the price of financial instruments can indeed change rapidly, sometimes within seconds. This rapid price movement can overwhelm risk management mechanisms like stop outs and margin calls, as they may not be able to react quickly enough to prevent losses or maintain account balances above zero. Consequently, traders may find themselves exposed to significant risks and potential losses during these turbulent market periods. (read : What is High Volatility and How to Profit from It?)