Risk Disclosure for Leveraged Forex and CFD Trading
This page explains the risks of leveraged forex and CFD trading for readers of axsibrokerae.com in the United Arab Emirates.
Our partner's pricingA Concrete Example
Suppose you open a position of 10,000 US dollars in a currency pair with a leverage of 1:100. You commit 100 dollars of your own money as margin. If the market moves one percent against you, the loss on the full position is 100 dollars, which equals your entire margin. The position is closed, and you have lost all the money you put in. If the market moves one percent in your favour, you double your margin. This example shows how leverage turns small price changes into large changes in your account balance.
From this single case, the general point follows: leveraged products can produce gains or losses many times larger than the amount you deposit. The same mechanism that makes a small deposit control a large position also makes a small adverse move wipe out that deposit. You should trade only with money you can afford to lose entirely, because losing the whole amount is a realistic outcome, not a remote one.
Nothing in this page is a recommendation to trade. It is an explanation of risk for readers who want to understand what leveraged forex and CFD trading involves. If you are unsure whether such trading suits you, seek independent advice from a qualified professional who knows your circumstances.
Protection Across Jurisdictions
Investor protection arrangements differ by country and by the legal entity through which an account is opened. A firm may operate through several entities, and the entity that holds your account may be subject to different rules from the one you first read about. Safeguards such as negative balance protection, segregated client funds, compensation schemes, and dispute resolution procedures can vary in scope and in availability.
Residents of the United Arab Emirates should check which entity would hold their account and which rules apply to that entity. Do not assume that a protection scheme available in one jurisdiction covers accounts opened in another. The terms and conditions of the account, not general statements on a website, determine what protection exists and how it works in practice.
Leverage in Both Directions
Leverage multiplies gains and losses with equal force. A position that is large relative to your deposit can move sharply against you after a small market change, and the loss can exceed the amount you expected to risk. In the opposite direction, the same leverage can produce a large gain, which is why leveraged products attract traders. The symmetry is exact: the mechanism does not favour either outcome.
Because losses can accumulate quickly, the size of each position relative to the funds in the account matters as much as the direction of the trade. Traders who focus only on the potential gain often understate how fast a losing position can grow.
The Limits of Past Results
Past results say little about future outcomes. A strategy that produced gains in one market condition may produce losses in another. Historical prices, backtests, and reported performance describe what happened, not what will happen. Market conditions change, and the same decisions made under different conditions can lead to very different results.
Margin Calls and Running Costs
When the equity in your account falls below the required margin, the firm may issue a margin call and require you to add funds. If you do not, or if the market continues to move against you, the firm may close your positions automatically, often without further notice and at a price you did not choose. Automatic closure can turn a temporary shortfall into a realised loss, and it can happen quickly in fast markets.
Beyond the direct result of price movement, running costs reduce your balance over time. Spreads are charged when you open and close positions, and overnight financing is applied to positions held past the daily cutoff. These costs accumulate, and in volatile or thinly traded conditions spreads may widen. They matter especially for positions held over longer periods, where financing can erode gains or deepen losses.
This site is an independent editorial resource. It is not the broker, is not affiliated with the broker, and does not provide financial services, accounts, deposits, or advice. If you have questions about this page, use the contact form on this site.
