Risk Disclosure for Leveraged Forex and CFD Trading
This disclosure explains the material risks of leveraged forex and CFD trading and the limits of this site’s editorial role.
Costs at our featured brokerWhat This Document Covers
This document explains the main risks that come with leveraged foreign exchange and contracts for difference trading. It is written for readers in India who use this site to read independent editorial reviews of the broker FXTM. It is meant to help you understand what leveraged products can do to your money before you decide whether to trade at all.
This site is an editorial resource only. It is not the broker, it is not affiliated with the broker, and it does not provide financial services, trading accounts, deposit handling or personal advice. Nothing here is a recommendation to open an account, to trade, or to use any particular product. The broker’s own legal documents, client agreement and risk warnings govern any actual trading relationship, and you should read those directly.
This document does not describe the broker’s full terms, fees or protections in detail, does not compare providers, and does not assess whether trading suits you. It cannot cover every risk that may arise in fast markets. Treat it as a general explanation of leveraged trading risk, not as a substitute for the broker’s disclosures or for independent professional advice.
Leverage Cuts Both Ways
Leverage lets you control a position larger than the money you set aside as margin. That magnifies the effect of every price move on your account balance. A small move in your favour can produce a large gain relative to your margin, and a small move against you can produce a large loss relative to the same margin.
Because the position is larger than your deposit, losses are not capped at the amount you put up for that trade. In practice, a short adverse move can wipe out a substantial part of your account, and in some cases more than the margin allocated to the position. Gains and losses are symmetrical in mechanism, even though they rarely feel that way when a position moves against you.
Higher leverage does not improve the quality of a trade idea. It only changes how much a given price move matters to your balance. Many traders underestimate how quickly a normal-sized position can consume margin when volatility rises.
Margin Calls and Automatic Closure
When your account equity falls below the margin required to keep your open positions, the broker may issue a margin call. A margin call is a warning that you need to reduce exposure or add funds. It is not a guarantee that you will have time to act.
If equity continues to fall and reaches the broker’s stop-out level, the broker can close positions automatically, without asking you first. Automatic closure may happen at the worst possible moment, during fast moves or thin liquidity, and it may close positions you intended to keep. The price at which positions are closed may be worse than the level you expected.
Margin requirements can change, including at short notice around major news or holidays. The broker’s client agreement sets out how margin calls and stop-out work, and those terms can differ by entity and account type. You should not assume that a margin call protects you from further loss.
Running Costs and Spreads
Every position carries running costs. The spread is the difference between the buy and sell price, and it is charged on entry and effectively on exit. Spreads are not fixed: they can widen sharply around news, at market open, at rollover and in thin conditions, which raises the cost of entering and leaving a trade.
Overnight financing is charged on positions held past the daily rollover, and it can be positive or negative depending on the instrument, direction and prevailing rates. Small daily charges accumulate over weeks and months, and they can turn a flat price outcome into a net loss. Other charges may include commissions on certain account types and currency conversion costs when your account currency differs from the instrument’s.
Costs matter more when leverage is high, because they are applied to the notional size of the position rather than to your margin. A strategy that looks profitable before costs may be unprofitable after spreads and financing are included. The broker’s fee schedule and client agreement are the authoritative source for these charges.
Gaps, Slippage and News
Leveraged products can gap. A market may close at one price and reopen at a materially different one after a weekend, a holiday or a major announcement. Stops placed inside the gap may not be filled at the level you set, and the resulting loss can be larger than planned.
Slippage occurs when your order is filled at a different price from the one requested, typically during fast markets or when liquidity is thin. News-driven volatility can produce wide spreads, rapid price swings and delayed execution. In these conditions, the broker’s ability to execute at a given price is limited, and so is yours.
These events are not rare edge cases. They are a normal feature of leveraged markets and should be part of your planning. No risk management tool removes gap risk entirely, and stops are not a guarantee of a maximum loss.
Protection Varies by Jurisdiction
Investor protection depends on the legal entity you contract with and the jurisdiction that regulates it. Compensation schemes, dispute resolution routes, leverage caps and negative balance protection differ from one entity to another, and the entity serving you may not be the one you assume.
A scheme available in one jurisdiction may not apply to clients of an entity registered elsewhere. Negative balance protection, where offered, may be conditional and may not cover every scenario. You should confirm which entity holds your account, which regulator supervises it, and what protection, if any, applies to you before depositing funds.
Past results say little about future outcomes. Historical performance, backtests and reviews describe what happened under past conditions, not what will happen next. Markets change, costs change and execution conditions change. Trade only with money you can afford to lose entirely, and treat any capital committed to leveraged products as at risk.
