Risk Warning
Last updated
Trading foreign exchange (forex) and contracts for difference (CFDs) on margin carries a high level of risk and is not suitable for everyone.
Leverage magnifies losses
Leverage lets you control a large position with a small deposit. It magnifies losses as much as gains: a small price move against you can wipe out your deposit, and depending on your broker and jurisdiction you may lose more than you deposited.
Most retail traders lose money
Brokers regulated in the European Union and the United Kingdom must publish the percentage of their retail client accounts that lose money trading CFDs. These disclosed figures are consistently high. Consider whether you understand how these products work and whether you can afford the high risk of losing your money.
Other risks
- Market risk: exchange rates can move sharply, especially around economic news, and prices can gap past your stop loss.
- Liquidity risk: spreads can widen and orders can be filled at worse prices than expected.
- Counterparty risk: your funds depend on your broker’s financial health and regulation.
- Technology risk: platform outages and connection problems can prevent you from managing positions.
Not investment advice
Everything on FX Handbook is general educational information. It does not take into account your objectives, financial situation or needs, and it is not a recommendation to buy or sell any financial instrument. Past performance is not a reliable indicator of future results. If you are unsure, seek advice from an independent, appropriately licensed financial adviser.
Check the rules where you live
Forex and CFD trading is restricted or prohibited in some countries, and rules on leverage and client protection vary. It is your responsibility to check that trading is lawful for you and that your broker is authorised to serve residents of your country.