CFDs are complex instruments and due to the use of leverage, there is a possibility of losing money. You should consider whether your level of trading experience is appropriate for these instruments. You should not invest more than you can afford to lose and if you do not fully understand the instruments or the risks involved in trading, you should seek independent financial advice.
This page explains those risks in plain language. It does not replace the Customer Agreement with Xellion Ltd, whose section 9 (Risk Acknowledgement and Limitation of Liability) applies to your account.
Leverage magnifies losses as well as gains
With leverage you control a large position with a small deposit (margin). A small price move against you is a large loss compared with your margin. At 1:100, a 1% move against your position equals your whole margin for that trade.
Margin calls and closed positions
If your losses reduce your equity below the margin needed to keep positions open, you may receive a margin call and your positions may be closed automatically, at the market price available at the time, which can lock in a loss.
Prices can gap
Markets can jump from one price to another without trading in between, for example over weekends, at market open or after news. Stop-loss orders are then filled at the next available price, which can be worse than the level you set.
Costs and changing conditions
Spreads, commissions and overnight swaps reduce your result, and spreads widen in fast or thin markets. Spreads, leverage, margin requirements, trading hours and available instruments can change, as the Customer Agreement explains.
Some markets are especially volatile
Cryptocurrency, energy and single-share CFDs can move sharply within minutes. Weekend crypto trading can also move while other markets are closed.
No advice
Content on this website, including market analysis, tools and lessons, is general information. It is not investment advice or a recommendation to buy or sell anything. Past performance does not guarantee future results.
Before you trade
- Only trade with money you can afford to lose.
- Practise on a demo account first.
- Use stop-loss orders and size positions so one loss cannot wipe out your account.
- Read the Customer Agreement and any bonus terms before you accept them.