Safety Tips

here are the following safety tips you need to follow to ensure a risk free trading style

This risk management guide’s purpose is to alert and explain the main risks trading online may pose to new traders over the course of their trading career. Even if you have experience in trading leveraged products, we strongly suggest that you carefully read this guide. The goal of this guide is to ensure traders are supplied with a sound foundation of trading information in order to understand the importance of building a robust Risk Management Plan as a fundamental prerequisite of a successful trading career. This applies to all traders, both new and experienced.

  1. I. The Basic Principles of CFD Trading A solid grasp of the fundamental principles of CFD trading is crucial for managing your risk. The next section of this guide will present you with a variety of different forms of risk that should serve as the basis for every trader’s risk management plan.

    Contracts For Difference

    A contract for difference (CFD) is a derivative financial instrument with an underlying asset, meaning you do not physically own the underlying asset. A CFD is an agreement between the buyer and seller to exchange the difference in the current value of the underlying asset, such as a share, currency, commodity, or index and its value at the end of the contract.

    As derivatives, the price levels of CFDs are directly related to those of their underlying assets, and are thus affected by market volatility in the underlying instrument market. Please refer to the below section on Market Volatility for more information. Leverage and Margin

    CFDs are a leveraged product, which means that you only need to deposit a small percentage of the full value of the trade in order to open a position. You are able to leverage your investment by opening positions of a larger size than the funds you have in your account. This is called “trading on margin” (or margin requirement).4 With leverage you are investing a fraction of the trade’s value, but your position will return profits and losses as if you had invested the full value of the CFD position. It is crucial that you understand that leverage will inflate both your profits and losses. For an example of how leverage affects profits and losses, please see the section below on Losses. Leverage is expressed as a ratio of X:1 where X is the leverage. Most currencies have a leverage of 400:1, so we can say that the leverage is 400. Stocks usually have a lower leverage of 20:1 so the leverage is 20.

    The margin requirement is directly related to leverage. It is the expression in percentage of the leverage ratio. A leverage of 20 means a margin requirement of 5% (20:1 = 1/20 = (1/20 × 100) % = 100/20 % = 5 %)

Forex trading is risky

we strongly advice that you should know how to trade before jumping in on the forex market

your funds are at risk