Risk Warning
Trading forex and CFDs carries a high level of risk and is not suitable for everyone.
Leverage magnifies losses
CFDs and margin forex let you control a large position with a small deposit. A small price move against you can lead to a large loss relative to your deposit, and you can lose all of the money in your account. Where negative balance protection doesn’t apply, you could lose more than you deposited.
Most retail traders lose money
Brokers regulated in the UK, EU and Australia must publish the percentage of their retail accounts that lose money trading CFDs. These figures are commonly well above half of all retail accounts. Brokers regulated elsewhere often don’t publish this figure.
Other risks
- Counterparty risk: with market-maker brokers, the broker is the other side of your trade.
- Regulatory risk: protection varies greatly between regulators. Offshore regulators usually offer less protection, and most don’t have compensation schemes.
- Gaps and slippage: in fast markets or over weekends, prices can jump past your stop loss.
- Overnight costs: swaps or administration fees on positions held overnight can add up.
- Legal restrictions: trading with foreign brokers may be restricted or illegal where you live. Check your local rules.
Not financial advice
Content on VestNorth is general information only. It doesn’t take into account your objectives, financial situation or needs. Consider seeking independent advice, and only trade with money you can afford to lose.