This notice is provided to you by FxNews, an educational platform. It is intended to explain, in a non-technical manner, the nature and risks of trading Contracts for Difference (CFDs). However, it does not disclose or explain all of the risks and other significant aspects involved in dealing in CFDs. We outline these risks below and urge you to seek professional advice before deciding to trade in CFDs.
1. Understanding CFDs
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The value of a CFD can fall as well as rise, which could mean getting back less than you originally put in.
2. Leverage Risk
Trading CFDs on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade CFDs, you should carefully consider your investment objectives, level of experience, and risk appetite.
3. Market Volatility
CFD prices are influenced by many factors including market volatility, size and type of order, market events, relevant economic indicators, and liquidity. These factors may lead to wider spreads, or “gapping” in prices, thus increasing the risk of an order being filled at a different price than expected.
4. Counterparty Risk
This is the risk that your CFD provider, or the provider’s provider, will not fulfill its obligations to you under the contract. For example, during volatile market conditions, our liquidity providers might not provide us with reliable prices. These are risks over which we have no control.
5. FxNews Role
FxNews is an educational platform and does not engage in any trading, brokerage services, or relevant trading services. The content provided on FxNews is purely for informational purposes and should not be construed as financial advice. Always consult with a licensed financial advisor before deciding to trade in CFDs.
You should not engage in CFD trading unless you understand the nature of the transaction you are entering into and the true extent of your exposure to the risk of loss. If you are in any doubt about whether CFD trading is suitable for you, please seek independent advice.