It is important to note that contracts-for-difference (“CFDs”) are leveraged products and your losses could exceed the amount of your investment. The most significant risks are:
- Market risk: CFD transactions differ from standard trades and you should not engage in CFD trading unless you understand (i) derivatives, (ii) the nature of the business you are entering into and the true extent of your exposure to the risk of loss. The amount you may gain or lose will vary according to the extent of the fluctuations in the price of the index, or other markets on which the trade is based instead of a sum pre-determinable when a normal trade is placed.
- Leverage: Depending on the level of gearing or leverage applicable to your transaction, a small movement in the underlying market can have a dramatic effect on your trade. If the underlying movement is in your favour, you may make a good profit, but if not – your losses could exceed your initial deposit.
- Margin: You may be called upon to deposit a substantial additional margin, at short notice, to maintain your trade position. If you do not provide such additional funds within the time required, your trade position may be closed at a loss and you will be liable for any resulting deficit.
- Over-the-counter: CFD trading does not occur on a recognised or designated investment exchange and, may consequently expose you to greater risks than exchange transactions. The trade structure and trade rules will be established solely by GT.
The list of risks outlined above is not an exhaustive list. You should consider all of the risks associated with trading CFDs with GT247.
For many members of the public, these CFD transactions are not suitable; you should, therefore, consider carefully whether they are suitable for you in light of your circumstances and financial resources.
This FAQ is a high-level summary of the significant risks applicable to CFD transactions, for more information on the risks associated with CFD transactions, please find additional information here (hyperlink).