What are the risks involved in trading CFDs?

There are a number of risks involved in trading CFDs. These risks may lead to unfavourable financial outcomes for you. Monitoring of all risks associated with your trading is your responsibility.
You should not use our services unless you fully understand the financial products, and the benefits and risks associated with them. Some of the risks associated with using our CFD trading facilities include:

  • Market volatility
    Markets are subject to many influences which may result in rapid price fluctuations. Because of this market volatility, there is no CFD transaction available via our trading platform that can be considered “risk free”. Given the potential levels of volatility in markets, it is recommended that you closely monitor your transactions at all times. For example: the value of investments denominated in foreign currencies will be impacted by both changes in the rates of exchange and market movement.
  • Counterparty Risk
    Given that you are dealing with us as a counterparty to every transaction, you will have an exposure to us in relation to each transaction. In all cases, you are reliant on our ability to meet our obligations to you under the terms of each transaction. This risk is sometimes described as counterparty risk.
  • Leverage Risk
    Trading CFDs involves a high degree of leverage. You can outlay a relatively small initial margin which secures a significantly larger exposure to an underlying asset. The use of leverage magnifies the size of your trade, so your potential gain and your potential loss are equally magnified. You should closely monitor all of your open positions.

Please refer to the ‘Risk Disclosure’ document available on the Plus500 website for a detailed description of the risks involved in trading CFDs.

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