Trading foreign exchange (Forex) and contracts for difference (CFDs) involves substantial risk of loss and may not be suitable for all investors.
Understanding the Risks
Before engaging in trading foreign exchange or CFDs, you should carefully consider your investment
objectives, level of experience, and risk appetite. There is a substantial risk that you may lose
some or all of your initial investment.
Key Risk Factors:
Leverage Risk: High leverage can magnify both profits and losses
Market Volatility: Currency and asset prices can fluctuate rapidly
Liquidity Risk: Markets may become illiquid during certain periods
Counterparty Risk: Risk related to the financial stability of your broker
Leverage and Margin Trading
Leverage allows you to control a larger position with a smaller amount of capital. While this
can increase potential profits, it also significantly increases potential losses. You could
lose more than your initial deposit.
Potential Benefits
• Increased market exposure with less capital
• Potential for higher returns
• Ability to diversify positions
Significant Risks
• Magnified losses beyond initial deposit
• Margin calls and forced position closure
• Rapid loss of capital in volatile markets
Market-Specific Risks
Forex Trading Risks
Currency exchange rate fluctuations
Economic and political events affecting currencies
Interest rate changes and monetary policy
Market gaps and slippage
CFD Trading Risks
Underlying asset price movements
Overnight financing costs
Market closure risks and gaps
Corporate actions affecting underlying assets
Regulatory Environment
Different jurisdictions have varying levels of investor protection and regulatory oversight.
Ensure you understand the regulatory environment of your chosen broker and the protections
available to you.
Important Considerations:
• Broker regulation and licensing
• Investor compensation schemes
• Segregation of client funds
• Dispute resolution mechanisms
Risk Management
Effective risk management is crucial for trading success. Consider implementing the following strategies:
Essential Practices:
Use stop-loss orders
Diversify your portfolio
Never risk more than you can afford to lose
Keep detailed trading records
Position Management:
Limit position sizes
Monitor margin requirements
Set realistic profit targets
Regular portfolio review
Seek Professional Advice
If you are unsure about the risks involved or your suitability for trading, seek independent
financial advice from a qualified professional.
This risk disclosure was last updated on October 6, 2025. Trading conditions and risks may change over time.