RiskDisclosure.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Trade only with money you can afford to lose.
Introduction and purpose
This notice explains the main risks of our products, including CFDs on forex, shares, indices, commodities and cryptocurrencies. It cannot cover every risk and should be read with our Terms and Conditions. CFDs carry a high risk of rapid losses because of leverage.
Suitability and appropriateness
Leveraged trading is not suitable for everyone. We assess your knowledge and experience before opening an account, but this is not a judgement on whether trading fits your personal finances. Trade only with money you can afford to lose, never with borrowed funds or essential savings, and seek independent advice if unsure.
The nature of CFDs
A CFD is an agreement to exchange the difference in an asset's value between opening and closing a position. You do not own the underlying asset, so share CFDs carry no voting rights. CFDs trade over the counter: xtbsolution is your counterparty and positions can only be closed with us. Quoted prices may differ from the underlying market.
Leverage and margin
You deposit only a fraction of a position's value as margin, and leverage magnifies both gains and losses. At 1:100, a 1% adverse move wipes out a $1,000 margin on a $100,000 position. At the margin call level we may notify you but are not obliged to; at the stop-out level positions may be closed automatically without notice. Leverage limits vary by instrument, jurisdiction and client type.
Market volatility and price gaps
Markets can move quickly on economic data, central bank decisions, political events and other news. Prices can gap between levels, often at market reopenings or after major news, so orders may fill at much worse prices and losses may exceed your intended risk.
Liquidity risk
In low-liquidity periods (outside main hours, on holidays or in market stress) spreads can widen and positions may be hard or impossible to open or close at your desired price.
Order types and execution risk
Stop-loss and take-profit orders are not guaranteed. A triggered stop-loss becomes a market order and may fill at a worse price (slippage), though slippage can also be positive. Execution can be affected by market conditions, connectivity and order volume. Advertised spreads are minimums under normal conditions.
Foreign exchange risk
Currency prices are driven by interest rate differences, economic performance, central bank intervention and geopolitical events. Exotic pairs can experience sudden, severe moves, thin liquidity and wide spreads.
Cryptocurrency CFDs
Among the most volatile products we offer: prices can move 20% or more in a day. Cryptocurrencies are not legal tender or government-backed, regulation is evolving, and prices depend on third-party exchanges that may fail, be hacked or be manipulated. Forks and protocol changes can cause extreme moves or suspensions. We apply lower leverage and wider spreads here; allocate only a small share of risk capital.
Share and index CFDs
Prices reflect company results, corporate actions, sector trends and the wider economy. Trading generally follows the underlying exchange's hours, so positions held across closes face gap risk. Dividends, splits, rights issues and mergers can adjust positions or balances, and we may be unable to price or close a position during a suspension of the underlying share.
Commodity CFDs
Prices depend on supply and demand, weather, geopolitics, production, inventories and currency moves. Futures-based CFDs may roll over at contract expiry, which can adjust open positions.
Counterparty and insolvency risk
Because we are your counterparty, you are exposed if we cannot meet our obligations. Client money is held in segregated accounts at reputable banks, but segregation may not fully protect you, for example if a holding bank becomes insolvent. Compensation scheme availability depends on your registered entity and jurisdiction.
Costs and overnight financing
Costs include spreads, some commissions, overnight swap charges and currency conversion fees. They reduce profits, add to losses and can build up over long holding periods. Full details are on our website and platforms.
Account currency risk
Profits and losses on instruments in a currency other than your base currency are converted into your base currency, so exchange rate changes can affect results even when the underlying price hasn't moved.
Technology and platform risk
Hardware, software, internet and third-party failures can prevent placing, modifying or closing orders, or cause execution differences. Automated systems such as Expert Advisors add risks like coding errors and connectivity dependence, and you are responsible for any system you use. Keep your login credentials secure: we are not liable for losses from unauthorised access caused by failing to do so.
Negative balance protection
Where our Terms apply it, losses are limited to the funds in your trading account; if extreme moves make your balance negative, we reset it to zero. This does not apply in cases of abusive trading, fraud or breach of terms.
Taxation
Tax depends on your individual circumstances and may change. You are responsible for any taxes or duties arising from your trading. We do not give tax advice; consult a qualified adviser if unsure.
No investment advice; past performance
We provide execution-only services and give no personal investment advice or recommendations. Commentary and research are general information only. Past, simulated and forecast performance are not reliable indicators of future results, and demo results do not reflect live conditions such as slippage or emotional pressure.
Acknowledgement
By opening an account you confirm that you have read and understood this notice, accept the risks of leveraged trading and can financially bear potential losses. Send any questions to [email protected] before you trade.
Questions before you trade?
Talk to us first. We'd rather explain than see you surprised.