Risks
What can go wrong with leveraged forex and CFDs, in plain terms.
Leverage works both ways
With leverage, a small deposit controls a much larger position. A move against you is measured on the whole position, so you can lose your deposit quickly. Regulators that publish the figures report that most retail accounts trading these products lose money.
Costs add up
Spreads, commissions and overnight funding (swap) are charged whether you win or lose. Advertised costs are the firm’s own figures and can differ on your account.
The firm itself can fail
If a broker goes out of business, what you get back depends on the company that holds your account and the scheme that covers it, if any. Many offshore licences come with no compensation scheme. Check the company named on your account agreement.
Clones and recovery scams
Clone firms copy a real firm’s name and licence number. Check the website, phone and email against the regulator’s register using our licence lookup. After a loss, beware of anyone offering to recover money for a fee.