General risk recommendations
Highly trained investors have significant opportunities to gain a great profit in the CFD market. Customers should however understand high profit most of the time means high risk, and CFD trading may imply a high enough one. Taking into account your experience, financial status, resources and objectives, as well as the amount of risk you are prepared to take, and other circumstances, you should thoroughly analyze whether such transactions are for you.
Because CFD trading is highly speculative, it is only suited for a certain type of Customer. The traders should meet two main conditions: (a) to understand and be willing to assume the economic, legal and other risks involved, and (b) to be financially able to assume losses.
CFD trading is not to be used as investment for retirement funds. You warrant and agree you understand these risks; that you are willing and able, financially and otherwise, to assume the risks of CFD trading and that loss of your entire Account Balance. Your potential losses, which depend on movements in the price of the underlying instrument, can exceed any deposit, margin or other amount you have paid to the Company.
This short statement does not contain descriptions of all risks related to foreign currency trading. This Risk Disclosure Statement cannot and does not disclose all of the risks of Transactions in CFDs. The goal of this Risk Disclosure Statement is to describe the main risks of trading spot CFDs.
The potential for profit or loss from transactions on foreign markets or in foreign currency is influenced by fluctuations in foreign exchange rates.
CFD Transactions with foreign currencies, including indices, commodities, options and other trading instruments, can present risks not included when dealing with investments in your country’s currency.
The high risks are (but not exclusively) the risks of political or economic policy changes in a foreign nation. These changes could substantially affect the conditions, terms, marketability or price of a foreign currency, for an unforeseeable period of time or maybe even permanently.
Whether they are traded in your own jurisdiction or not, the profit or loss in transactions in foreign currency-denominated contracts will also be affected by fluctuations in currency rates, because of the need to convert from the currency the contract was made with to another currency.
The high risks are (but not exclusively) the risks of political or economic policy changes in a foreign nation. These changes could substantially affect the conditions, terms, marketability or price of a foreign currency, for an unforeseeable period of time or maybe even permanently. Whether they are traded in your own jurisdiction or not, the profit or loss in transactions in foreign currency-denominated contracts will also be affected by fluctuations in currency rates, because of the need to convert from the currency the contract was made with to another currency.
Notice: The market recommendations we provide are not an offer to buy or sell, or the request for an offer to buy or sell any CFD. Each decision you make to enter into a contract or other transaction with us and each decision whether a certain transaction is appropriate for you is your own independent decision.
We are not either your advisor, nor fiduciary, and you agree we have no fiduciary duty to you, and no liability whatsoever in connection with any liabilities, claims, damages, costs and expenses, including attorneys’ fees, occurred in connection with you following our trading recommendations or taking or not taking certain actions based upon any recommendation or Information we provided.
The market recommendations we provide are based upon Information we believe is reliable, but we cannot guarantee its accuracy or completeness, nor do we state that following our recommendations will reduce or eliminate the risk that comes with CFD trading.
When engaging in spot CFD trading with us, you are placing an order related to price movements we set. When compared to prices that we may receive or expect to receive, for example in the eventuality we would cover your transactions with, let’s say, a trade in the Interbank market, prices quoted to you by us will include a spread, mark-up, or mark-down.
Risks inherent in CFD transactions, which are usually high, get substantially higher when a high degree of leverage, securitized by a warranty deposit, is used. This action may produce profit,, but it can as well result in loss. If you do not fully understand the nature of the transactions, including the risks involved, you should not engage in CFD trading. All prospective Customers are encouraged to download the demo trading system and practice with it, and do not engage in real trading until they are certain they have studied the platform well enough, and understood all terms and conditions of CFD trading.
One of the things you need to understand is that the amount of the initial warranty contribution is quite low compared to the amount of positions you open; this is why the term “leverage” is used. You may lose the entire sum you placed as a warranty deposit at the account opening. More so, if market movements are contrary to your position, you may have to deposit more funds to keep the detained position; if not, it can be automatically liquidated.
Because of CFDs price modifications, the high leverage and low Margin associated with trading can determine important losses. Our Margin policies could require the provision of additional funds to properly Margin Customer’s Account; said Customer should meet such Margin requirements on the spot. If the required Margin Balance is not maintained, the liquidation of any Open Positions may result, the outcome being a loss for the Customer. Increasing leverage increases risk.
All your losses, as well as other sums due under the Customer Agreement, will have to be paid to the Company. This risk is to be accepted, if you choose to perform CFD trading. Information concerning fees, expenses and other necessary payments should be acquired before you start to trade. Take into account such payments may reduce any profit you might have or increase your loss.
Depending on the account type and operating conditions, we act as the market maker or as the broker. In all CFD transactions you perform with us, the Company is the principal. We are not obliged to keep on making markets in any instrument, nor are we forced to accept any order in.
The markets and prices the Company offers are derived from underlying prices quoted in the relevant markets. The Company cannot control the evolution of underlying prices, which could be volatile and unpredictable. The underlying movements will influence the Company’s prices, the possibility to open and close a position and the price at which this can be done.
In situations of market volatility, which may be prolonged, you might find it difficult or impossible to liquidate an existing position, to assess the value of open positions, to determine a fair price or to appropriately assess the risk. You have here only some of the reasons why CFD Transactions involve high risks.
CFD trading with our Company is not conducted on a regulated exchange, and there is no clearing house or other central counterparty to guarantee our payment obligations to you under contracts that you enter into. So, CFD trading may expose you to substantially greater risks than other instruments which are traded. The Company’s insolvency or default could determine the loss of the value for all positions in your account and could cause you to suffer additional losses from open positions.
As a CFD market maker, we may access Information you cannot reach, and aren’t under any obligation to provide said Information to you, nor to alter or refrain from our own trading.
Technical and Other Risks
In case losses occur due to failure of communication caused by electronic or other system malfunction, the Customer shall be responsible for such loss.
These situations include:
(a) Customer’s or Company’s hardware or software failure, malfunction or misuse;
(b) poor Internet connection on either side, the Customer’s or ours, or both;
(c) the wrong settings in the Customer Terminal;
(d) delayed Customer Terminal updates;
(e) the Customer disregarding the applicable rules described in the Customer Terminal user guide.
In times of excessive deal flow, connecting over the phone with the dealer might prove difficult, a fact the Customer acknowledges. This might occur especially in a Fast Market (for instance, when key macroeconomic indicators are released). We cannot be held responsible for failure, disruption or malfunction of telephone lines.
In case a quoting error occurs because of mistyping a quote or a misquote given by telephone and/or electronic means (including responses to Customer requests), the Company has no liability for any subsequent errors in Account Balances and reserves the right to make necessary corrections or adjustments on said Account. Any dispute resulting from such quoting errors will be settled on the basis of the fair market value of the relevant currency at the time of the mishap, this value being determined solely by the Company. If prevailing market prices differ from those we have posted on our screen, we will do our best to execute trades on or close to the prevailing market prices. These prevailing market prices will be the ones reflected on the Customer Statements, which may or may not negatively affect Customer’s realized and potential profits and losses.
Abnormal Market Conditions
The Customer agrees that some Abnormal Market Conditions might cause the Instructions and Requests to be delayed in execution. In case a Force Majeure Event occurs, the Customer will accept the risk of financial losses.
The Customer understands only one Request or Instruction can be in the queue at one time, and that no further Requests or Instructions sent by the Customer are to be executed once the first one has been sent; the “Trade flow is busy” message will be readable until the first Request or Instruction is executed. If the Customer has not yet been sent the result of the execution of the previous Instruction and chooses to repeat it, he/she will accept the risk of making two Transactions instead of one.
If the Pending Order has already been executed but the Customer sends the Instruction to modify its level and the levels of If-Done Orders at the same time, the only Instruction to be executed remains the Instruction to modify Stop Loss and/or Take Profit levels on the position opened when the Pending Order triggered.
Prices, Margin and Valuations
The Company will provide prices to be used in trading, valuation of Customer positions and determination of Margin requirements. We expect these prices to be reasonably related to prices available in the Interbank market, but prices we report may still be different from prices in banks and other participants in the interbank market. We will exercise considerable discretion in setting and collecting Margin. We have authorization to convert funds in Customer’s Account for Margin into and from such Foreign Currency and Metal, the exchange rate being determined in our sole discretion, based on then-prevailing money market rates.
How to Lower Risks
Issuing some order types (such as Stop Loss orders), although it is supposed to limit loss, does not always work as intended. Market trends may make it impossible to execute such orders at prices designated. In some market conditions, liquidating positions at a certain level may be impossible to achieve. Keep in mind you can experience unexpectedly high losses, or a deficit of funds on your account. Stop and Limit orders imply the same type of risk.
Because of specific market conditions or other circumstances, the Company may be unable to close out Customer’s position at the specified level, and Customer agrees the Company will bear no liability for failure to do so.
Trading via the Company’s electronic trading system can be different than trading through free exchange auctions or over the phone, but also than operating any other electronic trading systems. Among other risks related with trading on the Internet, one must consider hardware breakdowns and software failures. Because of such a system failure, your order may be executed in a different way than your given instructions, or not executed at all.
The Company has no control over signal power, its reception or Internet routing, how the Customer’s equipment is connected to the network etc, by consequence the Company will not be held responsible for any claims, losses, damages, costs or expenses, attorneys’ fees included, caused in any way, while the Customer trades online, by no matter what failure of a transmission or communication system or computer facility or trading software, belonging to the Company, Customer, any market, or any settlement or clearing system.
Once the Customer punches in the notional amount and clicks “buy/sell”, the Company’s automated order entry system provides immediate transmission of that order. Transmission goes through with no “second look”, and Market Orders cannot be cancelled, which can differ from other trading systems. In order to familiarize themselves with the order entry process, Customers should utilize the Demo Trading Systems prior to trading online with us. By using the Company’s order-entry system, Customer agrees to the one-click system and accepts the risk of this immediate transmission feature.
Third Party Agents
In such situations when the Customer grants trading authority or control over Customer’s Account to another party (the “Trading Agent”), whether on a discretionary or non-discretionary basis, the Company will not be responsible for either making recommendations or reviewing the Customer’s choice of such Trading Agent. We make no representations nor give any warranties related to any Trading Agent; any loss caused by such agents will not be the Company’s responsibility; we are not in any way endorsing or supporting the activity of any Trading Agent. The Customer who relinquishes authority to exercise any of its rights over its Account to the Trading Agent does so at his/hers own risk.
Do you have any questions?
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