Negative Balance Protection (NBP) is a risk management feature provided by some brokers that prevents trading accounts from going into negative balance, limiting client losses to their deposited capital. This protection ensures that clients cannot lose more money than they have invested, even during extreme market conditions or when leveraged positions move significantly against them.

NBP is particularly important for retail traders using high leverage in volatile markets like forex and CFDs, where rapid price movements can cause losses exceeding account equity. Regulatory requirements in many jurisdictions mandate NBP for retail clients, while professional traders may operate without this protection in exchange for potentially higher leverage limits.

Real-world example: During the Swiss Franc spike in 2015, retail traders with Negative Balance Protection were limited to losing their deposited funds, while those without protection faced additional liabilities when EUR/CHF crashed beyond their account equity.