At Eurotrader, we offer tight and competitive spreads across a wide range of instruments, ensuring cost-effective trading conditions. 

If your order started with a negative balance, factors like spreads, leverage, or market volatility could be responsible. Here’s why this happens:

1. Spread impact on order execution

Explanation:
The spread is the difference between the bid (sell) and ask (buy) prices. Since trades execute at the ask price for buys and the bid price for sells, they start at a loss equal to the spread.

Key Impact:

• If the market doesn’t move in your favor quickly, the spread loss can increase.
• In volatile markets, the initial loss may worsen, potentially leading to a negative balance.

2. High leverage effects

Explanation:
Leverage amplifies both gains and losses. The higher the leverage, the greater the impact of small price movements on your account.

How It Happens:

• With 1:500 leverage, a 0.2% move against your position can cause significant losses.
• If losses exceed your margin, your account may go negative.

Example:
A trader using high leverage opens a large position. A small market movement wipes out their margin, pushing the account into negative territory.

3. Slippage and market gaps

Explanation:
Slippage occurs when the execution price differs from your intended price due to delays or volatility. Market gaps, often after weekends or major news events, can cause unexpected losses.

How It Happens:

• If slippage occurs, your order may be filled at a worse price than expected.
• A market gap can trigger stop-losses at much lower (or higher) levels than anticipated.

Example:
You set a stop-loss at $100, but due to a market gap, the trade closes at $95, causing a larger loss than expected—possibly leading to a negative balance.

To reduce risks, monitor market conditions, use appropriate leverage, and be cautious during high-volatility events.

Need more details? Our support team is always here to help.

Open an account with Eurotrader today!