In margin trading, brokerage firm essentially loan capital to traders so they may purchase more than they otherwise be able to purchase. This is referred to as
leverage. But should the market turn significantly against the trader, and they find themselves unable to liquidate their position before it turns significantly against them, the trader can be left with a debit balance. In other words, the trader is left with the outstanding debt that must be repaid to their broker.
Debit Balances in FX
Thus, most leverage traders will turn to a market maker large enough to ensure they can trust a no-debit-balance policy.
