What is a Deficit?

Deficit Definition. A Deficit is a term used to describe an excess of liabilities over assets, of losses over profits, or of expenditures over income. In economics, it is commonly used to denote a negative balance of trade or payments. A Federal budget that spends more than it takes in is referred to as a Deficit budget. Conversely, if income exceeds payouts, then a surplus is the result. “Running a deficit” is sometimes proposed when a short term economic stimulus in the form of increased government spending is necessary to keep the economy stable until market growth returns. A Deficit is not to be confused with Debt. An annual deficit is the amount that will necessitate an increase the total amount of debt.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.