RISK DISCLOSURE FOR FOREIGN EXCHANGE AND DERIVATIVE TRANSACTIONS
This brief warning, in addition to the General Terms and Conditions, does not aim to cover all risks and other important aspects of foreign currency and derivative transactions. Given the risks, if you are not familiar with the nature of the contracts you enter, the legal aspects of the relationships involved in these contracts, or your exposure to risk, you should not engage in transactions with such products. Foreign currency and derivative transactions carry high risks and are not suitable for everyone. You should carefully assess whether such transactions are appropriate for you based on your experience, objectives, financial resources, and other important factors.
1. FOREIGN CURRENCY AND DERIVATIVE TRANSACTIONS
1.1 Margin trading means that potential profits are magnified, but it also means that potential losses are increased. The lower the margin requirement, the higher the potential loss risk if the market moves against you. Sometimes, margin requirements can be as low as 0.5%. When trading on margin, remember that your losses can exceed your initial deposit and you can lose more than your original investment. The initial margin amount may appear small in comparison to the value of currency or derivative contracts, as "leverage" or "gearing" is used during the trading process. Even minor market movements can have a disproportionately larger effect on the amounts you have invested. This can work in your favor or against you. While supporting your position, you may lose the initial margin and the amount you deposited with the Company. If the market moves against your position and/or the required margin increases, the Company may request you to deposit additional funds immediately to support your position. Failure to meet the margin requirement may result in the closing of your position(s) by the Company, and you will be responsible for any losses or shortfalls associated with this.
1.2 Risk Reducing Orders and Strategies
If allowed by local laws, placing certain orders (such as "stop-stop" orders) or "stop-limit" orders that limit the maximum loss amount may not be effective in certain market conditions, making it impossible to implement these orders (e.g., when the market is illiquid). Any strategy using combinations of positions, such as "spread" or "straddle," may not necessarily be less risky than positions that are "long" or "short" in nature.
2. ADDITIONAL SPECIFIC RISKS FOR FOREIGN EXCHANGE AND DERIVATIVE TRANSACTIONS
2.1 Entry Conditions for Contracts
You need to obtain detailed information from your broker about the conditions for entering contracts and the obligations associated with them (for example, if the contract involves delivery or acceptance of any asset under certain terms, expiration dates for futures or options contracts, and any time limitations for exercising options). Under some circumstances, an exchange or clearing house may change the terms of unfulfilled contracts (including strike prices) to reflect changes in the market for the relevant asset.
2.2 Suspension or Limitation of Trading. Price Correlation
Some market conditions (e.g., liquidity) and/or certain market rules (e.g., suspension of trading in contracts for months due to price changes or excessive limits) may increase the risk of performing transactions or making adjustments to open positions, making it difficult or impossible to execute. If you sell options, your losses could increase. A well-grounded correlation between an asset's price and the price of its derivative may not always exist. The absence of a reference price for an asset makes it difficult to estimate its "fair value".
2.3 Deposited Funds and Assets
When operating in your country or abroad, especially if the company you are trading with goes bankrupt or faces insolvency, you should be aware of the protective measures in place for your deposited funds in the form of cash or other assets. The extent to which you may recover your funds will be determined according to the regulations in the jurisdiction where the counterparty operates.
2.4 Commission Fees and Other Costs
Before participating in any trade, you must obtain clear information about all commission fees, payments, and other costs you may be required to pay. These expenses will affect your net financial outcome (profit or loss).
2.5 Transactions in Other Jurisdictions
Transactions in markets outside your home country, including those linked to your local market, may expose you to additional risks. The regulation of these markets may differ in terms of investor protection (including lower protection than in your jurisdiction). Your local regulatory authorities may not be able to enforce compliance with the rules set by the regulatory authorities in other jurisdictions where you conduct your trades.
2.6 Currency Risk
Transactions involving contracts denominated in a currency different from your account's currency will be affected by exchange rate fluctuations when converting profits and losses from the contract's currency to your account currency.
2.7 Liquidity Risk
Liquidity risk affects your ability to execute trades. There is a risk that the CFD or asset you want to trade may not be available at the time you wish to trade (to prevent a loss or to lock in a profit). Additionally, the margin you are required to deposit with your CFD provider will be recalculated daily based on changes in the value of the underlying assets. If this recalculation (revaluation) results in a decrease in value compared to the previous day, you may be required to make an immediate cash payment to the CFD provider to restore the margin. If you fail to make the payment, the CFD provider may close your position(s), and you will be responsible for covering any resulting loss. If you do not have the required margin, your CFD positions may be liquidated by the provider, even if they are currently showing a profit.
2.8 "Stop Loss" Limits
To limit losses, many CFD providers offer you the opportunity to set "stop-loss" limits, which automatically close your position when a chosen price limit is reached. However, in situations involving rapid price movements or market closures, these stop-loss limits may not be effective. "Stop-loss" limits cannot always protect you from losses.
2.9 Execution Risk
Execution risk is related to the possibility that transactions may not be immediately executed. For example, there may be a delay between placing your order and its execution, during which the market may have moved against you, resulting in a difference between the expected and actual execution price. Some CFD providers allow trading even when the market is closed, but the prices of these trades may be significantly different from the closing price of the underlying asset. In many cases, spreads may also be wider than during normal market hours.
2.10 Counterparty Risk
Counterparty risk refers to the risk that the CFD provider (the counterparty) may default on its obligations and fail to meet its financial commitments. If your funds are not properly segregated from the CFD provider’s funds, and the provider faces financial difficulties, you may not be able to recover your funds.
2.11 Trading Systems
Most standard "voice" and electronic trading systems rely on computer devices to route orders, match trades, register transactions, and cancel them. As with other electronic devices and systems, these are subject to temporary failures and malfunctions. Any chance of recovering certain damages may depend on the liability limits set by the trading system provider, exchanges, clearing houses, and/or the executing firms. These limits may vary, and you should obtain detailed information from your broker about this matter.
2.12 Electronic Trading
Trading conducted via any Electronic Communication Network (ECN) may differ from regular "open market" trading and from trading in other systems. If you trade via an ECN, you accept the risks specific to that system, including the risk of hardware or software failure. System failure may result in situations such as: your order not being executed according to the instructions, no execution of an order, or an inability to obtain real-time information about your positions or meet margin requirements.
2.13 Over-the-Counter (OTC) Transactions
In some jurisdictions, firms are permitted to engage in over-the-counter transactions. Your broker may act as the counterparty to these transactions. The characteristic of these transactions is that closing positions, valuing them, or determining reasonable prices or exposure may be difficult or impossible. For the reasons mentioned above, these transactions may carry additional risks. The regulation governing OTC transactions may be less strict or may provide a different regulatory framework. Before engaging in such transactions, you must familiarize yourself with the rules and risks associated with them.
