Risk Disclosure: Leveraged Forex and CFD Trading
This page explains the main risks of leveraged forex and CFD trading for readers of this independent review site, which is not the broker and does not provide financial services.
Try the partner brokerA Concrete Example First
Suppose you open a position of one lot on a major currency pair with a small deposit and a leverage setting of 1:100. A move of a few dozen pips against you can erase a large part of your account, and a move of a few hundred pips can take it to zero. On a leveraged account, the distance between a normal day and a wiped-out balance is short.
That example is not unusual. It is the everyday arithmetic of leverage, and it applies to every retail trader who uses it, whether the position lasts minutes or months. The rest of this page sets out the specific risks that follow from that arithmetic.
Costs That Run Continuously
Every position carries a spread, which is the difference between the price at which you can buy and the price at which you can sell. The spread is charged on entry and again on exit in effect, and it is wider when markets are quiet or volatile, so the cost of opening and closing a trade is rarely fixed.
Positions held past the daily cut-off usually attract an overnight financing charge, calculated on the full size of the leveraged position rather than on your deposit. On a large position held for weeks, financing can quietly exceed the original spread many times over. Some accounts also carry commissions, inactivity fees or conversion charges when your account currency differs from the instrument's.
These running costs are deducted regardless of whether the trade is winning or losing. A strategy that looks profitable on paper can turn negative once spreads and financing are counted, and the longer a position stays open, the more this matters.
Most Retail Accounts Lose
Regulators in several markets require brokers to publish the share of retail client accounts that lose money on leveraged products. Those disclosures commonly show a majority of retail accounts losing, and in many cases the figure is well above half. The number is not a prediction about any one person, but it is the clearest available summary of how these products perform for ordinary retail participants.
The reason is structural rather than personal. Costs are paid on every trade, leverage magnifies mistakes, and the instruments are designed for short-term exposure while many people hold them for longer. A trader can be right about direction and still lose money after costs and a badly timed entry.
This site reports on the broker's published disclosures but does not verify them independently, and the figure for any particular account type may differ. Readers should treat the published loss rate as the baseline expectation, not as a worst case.
Leverage Cuts Both Ways
Leverage multiplies gains and losses in exactly the same proportion. If a one percent move in the underlying market produces a ten percent change in your account, that works in both directions with no asymmetry and no pause button. There is no mechanism that limits the downside to the size of the deposit once the position is open.
Losses can also arrive faster than expected. Prices gap over weekends, at market opens and around scheduled data releases, meaning the price at which your order executes may be materially different from the price you saw. Slippage on stop-loss orders is common in fast markets, and a stop does not guarantee an exit at the level you set.
News-driven volatility compounds this. Central bank decisions, inflation prints and political events can move major pairs by amounts that would take weeks in calm conditions, and spreads often widen sharply at those moments. Positions sized for a quiet market can become unsustainable within seconds.
Only Risk What You Can Lose
The practical rule that follows from all of the above is simple: trade only with money whose complete loss would not change your life. That means money outside emergency savings, rent, school fees, debt repayments and any funds you may need in the near future. Leveraged trading is not a savings product and should not be treated as one.
Past results say very little about future performance. A run of winning trades can reflect a favourable market rather than skill, and historical price patterns do not oblige the market to repeat them. Any performance figure you see, whether from the broker or from a third party, describes what already happened under conditions that will not return in the same form.
This site is an independent editorial resource. It is not the broker, it is not affiliated with the broker, and it does not open accounts, accept deposits or give financial advice. If you need to reach the site, use the contact form on this site. For any account, funding or complaint matter, deal with the broker directly through its own published channels.
