Risk Disclaimer

Trading in Contracts For Difference (“CFDs) is very speculative and highly risky by their nature and they are not suitable for everyone, but only for those investors who:

• have the knowledge to understand CFDs trading and the Underlying assets and Markets;
• understand and are willing to undertake the economic, legal and other risks involved;
• taking into account their personal financial circumstances, financial resources, life style and obligations.

The Company shall and will not provide the Client with any advice in relation to the Markets, the Underlying Assets, CFDs and/or make and/or provide any investment recommendations of any kind. Where the Client is not able to understand and comprehend the risks involved, he/she should seek advice and consultation from an independent financial advisor. In case where the Client still does not understand the risks involved in trading in CFDs, he/she should not trade at all.

Decoding CFDs’ definition
CFDs are derivative financial instruments deriving their value from the prices of the underlying assets/markets in which they refer to (for example currency, equity indices, stocks, metals, indices futures, forwards etc.).

It is important before the commencement of any trading, that the Client understands the risks associated with trading in the relevant underlying asset/ market, because fluctuations in the price of the underlying asset/ market will affect the profitability of his trade.

Further, any information and data of previous performance of a Financial Instrument does not guarantee its current and/or further performance. Use of historical data is not a binding or safe forecast as to the corresponding future performance of the Financial Instruments to which the said information refers.

Leverage and Gearing

Transactions in foreign exchange and derivative Financial Instruments carry a high degree of risk. The amount of initial margin may be small relative to the value of the foreign exchange or derivatives contract so that transactions are “Leveraged” or “Geared“.

In short “Leverage” is a loan provided to an investor by a broker, enabling him to trade in amounts higher than the original capital deposited on his account.

Although by using Leverage, the Client’s possibility to earn significant profits is substantially higher than trading based purely on the investor’s capital, Leverage can also work against him. For example, where the price of the underlying instrument of an investor’s position moves in the opposite direction of what he/she originally anticipated, Leverage will amplify the potential losses of the particular position. Thus, Leverage has the effect of amplifying both gains and losses.

The high degree of “Gearing” or “Leverage” is a particular feature that applies to CFDs. The effect of Leverage makes investing in CFDs riskier than investing directly in the underlying asset. The Client can gain exposure to the markets by depositing just a percentage of the full value of the trade that he/she wishes to place.

However, this means that a relatively small market movement will have a proportionately larger impact on the Client’s deposited or will have to deposit funds. It is a fact that this may have dual effect on the Client; it may work in the benefit of the Client, or against the Client. It should also be noted that, if the market moves against the Client’s position and/or Margin requirements are increased, the Client may be called upon to deposit additional funds on short notice, if he/she wishes to maintain the position opened.

To explain the above a bit further, while the Client could make a potential profit if the market moves in his/her favor, he/she could potentially just as easily sustain a total loss of the initial deposited funds and any additional funds deposited with the Company to maintain his/her position.

For example:

Consider that a Client places a CFD trade worth EUR 10,000 and the Leverage for the particular instrument is 1:10. He/She only needs to deposit 10% of the total value of the position (in this case EUR 1000).

If the price of the specific instrument moves against him by 10%, he/she will lose EUR 1000, i.e. the whole amount of his initial investment in the CFD trade. This is because his/her risk exposure to the market is the same as if he/she had actually purchased EUR 10,000 worth of the physical shares.

On the other hand, if the price of the instrument moves in his/her favor by 10%, he/she will gain EUR 1000, i.e. he/she will double his/her initial investment in the CFD trade. Therefore, any move in the market will have a greater effect on the Client’s capital than if he/she had purchased the same value of shares without using any Leverage.

Risk-reducing Orders or Strategies
The placing of certain Orders, which are intended to limit losses to certain amounts, may not be adequate given that markets conditions make it impossible to execute such Orders, e.g. due to illiquidity in the market. Examples of such orders are “stop-loss” orders, where permitted under local law, or “stop-limit” Orders.

Strategies using combinations of positions, such as “spread” and “straddle”‘ positions may be as risky as taking simple “long” or “short” positions; thus Stop Limit and Stop Loss Orders cannot guarantee the limit of loss.
Trailing Stop and Expert Advisor cannot guarantee the limit of loss.

Some Derivative Financial Instruments trade within wide intraday ranges with volatile price movements. Therefore, the Client must carefully consider that there is a high risk of losses as well as profits. The price of Derivative Financial Instruments is derived from the price of the Underlying Asset in which the Derivative Financial Instruments refer to. Derivative Financial Instruments and related Underlying Markets can be highly volatile. The prices of Derivative Financial Instruments and the Underlying Asset may fluctuate rapidly and over wide ranges and may reflect unforeseeable events or changes in conditions, none of which can be controlled by the Client or the Company.
Under certain market conditions it may be impossible for a Client’s order to be executed at declared prices leading to losses. The prices of Derivative Financial Instruments and the Underlying Asset will be influenced, inter alia by the changing in supply and demand relationships, governmental, agricultural, commercial and trade programs and policies, national and international political and economic events and the prevailing psychological characteristics of the relevant market place.

The Client acknowledges and accepts that, regardless of any information which may be offered by the Company, the value of Derivative Financial Instruments may fluctuate downwards or upwards and it is even probable that the investment may become of no value.

This is owed to the margining system applicable to such trades, which generally involves a comparatively modest deposit or margin in terms of the overall contract value, so that a relatively small movement in the Underlying Market can have a disproportionately dramatic effect on the Client’s trade.
Should the Underlying Market movement is in the Client’s favor, the Client may achieve a good profit, but, the same applies in case of an adverse market movement, where not only could quickly result in the loss of the Clients’ entire deposit, but may also expose the Client to a large additional loss.

Some of the Underlying Assets may not become immediately liquid as a result of reduced demand for the Underlying Asset and Client may not be able to obtain the information on the value of these or the extent of the associated risks.

Contracts for Differences
The CFDs available for trading with the Company are non-deliverable spot transactions giving an opportunity to make profit on changes in the Underlying Asset (cash indices, index futures, bond futures, commodity futures, spot crude oil, spot gold, spot silver, single stocks, currencies or any other asset according to the Company’s discretion from time to time). If the Underlying Asset movement is in the Client’s favour, the Client may achieve a good profit, but an equally small adverse market movement can not only quickly result in the loss of the Clients’ entire deposit but also any additional commissions and other expenses incurred.

Investing in a Contract for Differences, carries the same risks as investing in a future or an option and the Client should be aware of these as set out above. Transactions in Contracts for Differences may also have a contingent liability and the Client should be aware of the implications of this as set out below under “Contingent Liability Investment Transactions”.
For more details in relation to the risks when trading in CFDs may be found in the full Risk Disclosure & Warnings Notice of the Company available on the website.

The Client must not enter into CFDs unless he/she is willing to undertake the risks of losing entirely all the money which he/she has invested and also any additional commissions and other expenses incurred.

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