What is MT4 Negative Balance

by Sep 26, 2022Forex Trading Platform

MT4 negative balance means when your account balance goes into negativeless than zero, with trades open or closed. That means you can close trade and have negative account balance or your open trades during trading can become negative and decrease your account balance.

MT4 negative balance can be solved by using negative account balance protection broker or having enough money to cover the bad trades.

Read more: Not Enough Money Error

You should pay attention to negative balance to be on a safe side with your broker. And in this article you will see what means MT4 negative balance means, how it happens and what are the ways to avoid being in loss.

MT4 account balance

How do I Read My MetaTrader 4 Balance?

Account balance is equal to Equity + current open trade profit/loss. That means your balance will change only when you close your open trades.

So, the MT4 balance can change in plus or minus depending on the trade that is currently open.

If your trade closes with loss your balance will reduce for the amount of trade loss.

An example:

  • Current balance = $10 000
  • Current open trade = -$1000

Equity = Balance – trade profit/loss = $10 000 – $1000

If you close that one trade with $1000 loss your balance will change to:

Balance = $9 000

Can I Lose All My Money in Forex?

When you start trading with your own money or virtual money on a demo account, you can lose all what you have on the account.

You can lose all what you have invested in the real trading account. So it is important to know how to protect your account. And that is to minimize the risk to lose as much as possible on bad trades.

In this article we talk about losing more than you have invested. More than you have on your trading account, which means losing more and being in debt.

Can I Lose More Than My Deposit in Forex?

Usually, you cannot lose more than you have invested or what you have on your trading account.

If you are not using leverage where you borrow money then you cannot lose more than you have invested.

There is a safety measure from a broker he is using when providing you access to the Forex market. And that is a margin he uses to allow you trading with leverage.

Read more: What is Margin

If you open a trade and you have $1000 on your account. If the market turns against you, that one trade can wipe the whole account balance.

Before you lose all $1000 you have on your trading account, the broker will limit trading before you reach $0. And that means he will warn you with a message, usually over email, that your account will close due to margin call.

Read more: What is Margin Call

If you do not react and lower your position, meaning you do not lower the lot size and do not close partially of your trade open, you will get stopped out.

That means the broker will close that trade with the loss to prevent wiping your account totally.

But, sometimes it can happen that you are trading a highly volatile market and some news impacts the market.

The impact can be so huge that your trade becomes so bad that your equity goes into negative.

Let me show you what I mean.

Can You Go Negative on MT4?

If news impacts the market it can happen that you lose a large amount of pips. And by that I mean your trade goes more than $10 000 into loss.

If that happens, because the market impact is so strong, the broker cannot let you know that your trade will stop out, but it happens that your trading equity goes into negative.

If you have $10 012.95 on your account. Your balance is $10 012.95.

MT4 equity negative

How Negative Balance in Forex Trading Happens

Equity is equal to $10 012.95 at the start. But, if the market turns against you the equity start to decline.

And if the equity goes to -$10 020 then you will have this:

  • Balance= $10 012.95
  • Equity = -$10 020

If you close that trade or if the broker closes that trade your account balance will be negative.

Balance = $10 012.95 – $10 020 = -$7.05

MT4 balance negative

What Does a Negative Balance Mean in Forex?

Negative balance means that you have lost more money than you had on your trading account. That can happen if you trade with large volume or lot size on a highly volatile market during a news release.

Negative balance usually does not affect you in any way and that means you do not owe any money to your broker.

What Happens if You Have a Negative Balance on MT4?

If you have a negative balance on MT4 you can simply deposit more money if you are trading a live account.

The deposit you put on the trading account will not be used to cover the negative balance.

If you deposit $1000 on your account where current balance is negative -$7.05 then you will have $1000 on your account.

You will not lose -$7.05 and have $992.95 just to cover the negative balance. The broker will give you all what you have invested so you do not need to worry about that.

Before depositing any funds on negative balance account wait until your broker reset account balance to zero.

Can I Trade With a Negative Balance?

You cannot trade with negative balance because that means you do not have money on your trading account.

Negative balance happens when you lose all your money from your trading account. So that means you need to deposit more money to continue trading.

Can I Make a Deposit if my Current Balance is Negative?

Yes, you can deposit money if the current balance is negative. In order to continue trading you should deposit more money to have money for trading.

But, before depositing new funds on a negative balance account you should wait until your broker reset account balance to zero. So you start with a zero balance account.

If you deposit money in a negative balance account you will have less money reduced by the negative amount.

What Can I Do if the Negative Balance Funds Have Been Deducted From My Deposit?

If it happens that you invest money in a negative balance account and funds are deducted to cover the negative balance you should contact broker support.

The negative balance should first reset to zero and then you should deposit new funds to continue trading. That way you will not lose funds by covering negative balance.

If you do not want to wait until the negative balance account resets to zero you can open a new trading account and deposit your funds for trading.

What is Negative Balance Protection?

When you start trading on the Forex market you will ask yourself could you lose more money than you have invested.

And that is a normal question because if you invest money and start trading you do not want to lose more than you have invested. And you do not want to lose more and then be in debt.

To cover that problem brokers offer negative balance protection where you are protected from going into negative on your trading account.

If markets turn against you the broker offers you a margin call option where you will be stopped out if your trades increase the loss on your trading account.

When loss exceeds allowed loss you will be stopped out and that means the broker will close your trade to avoid going into negative.

The Benefits of Negative Balance Protection

Benefits of negative balance protection are:

  • no debt if you lose all what you have invested
  • protection from going into negative

What May Happen With Negative Balance Protection

With negative balance protection it can happen you are stopped out by margin call if your trades are bad ones.

It can happen that negative balance protection does not allow you to trade with a small margin available on your account. To protect you from losing all money.

Why Should You Care About Negative Balance Protection?

Negative balance protection gives you confidence in trading that you will not lose more than you have invested. You can be sure that you will not make any dent towards your broker.

If the broker offers you negative balance protection and you verify that by trading and having any debt with that broker then you know the broker is trustworthy and you can be sure to have a reliable broker. It is a one way to verify the broker, but not the only one.

Brokers With Negative Balance Protection

Here are brokers you can use that have negative balance protection:

“Disclosure: Some of the links in this post are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. This does not cost you anything extra on the usual cost of the product, and may sometimes cost less as I have some affiliate discounts in place I can offer you”

Frano Grgić

Frano Grgić

A Forex trader since 2009. I like to share my knowledge and I like to analyze the markets. My goal is to have a website which will be the first choice for traders and beginners. Market analysis is featured by Forex Factory next to large publications like DailyFX, Bloomberg... GetKnowTrading is becoming recognized among traders as a website with simple and effective market analysis.

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