Risk Statement
Kindly review the following information attentively as it discloses and elucidates the risks associated with trading.
Risk Warning Notice
40% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to risk losing your money. Please ensure you fully understand the risks involved.
CFDs (Contracts for Difference) are financial derivatives that enable traders to speculate on the price movements of underlying assets, such as stocks, commodities, currencies, and indices, without actual ownership of the underlying asset.
One of the principal risks associated with trading CFDs is the potential for significant financial loss. This risk primarily arises due to leverage, which allows traders to control a larger position than they would if trading the underlying asset directly.
Leverage is a trading technique that amplifies potential returns using borrowed funds. In other words, leverage permits traders to control a more substantial market position with a smaller capital amount.
Leverage can enhance potential profits, magnifying gains on the larger position. However, it also escalates potential losses, as losses are similarly magnified.
It's crucial to note that leverage is not free, and keyway pro typically charges interest on borrowed funds. Additionally, traders may be required to maintain a specific level of collateral in their trading account to cover potential losses, and they may be subject to margin calls if the market moves against their position.
While leverage can be a powerful tool for traders, it should be used with caution and a comprehensive understanding of the associated risks.
When trading CFDs, traders usually only need to put up a fraction of the underlying asset's value as collateral. Simultaneously, keyway pro provides the rest of the capital through leverage. While this can magnify potential gains, it can also magnify losses, meaning traders can lose more money than their initial investment.
CFDs are typically traded on margin, requiring traders to deposit additional funds if the market moves against their position. This can lead to substantial losses if traders cannot meet these margin calls.
CFDs also entail counterparty risk, meaning traders depend on keyway pro to fulfil its obligations. Traders may incur losses if keyway pro becomes insolvent or cannot meet its commitments.
The risks of trading CFDs are significant and can result in substantial financial losses. Traders should carefully consider their risk tolerance and ensure they have a solid understanding of the market and the mechanics of CFD trading before getting involved.
Key Risks of Trading
Explore the key risks of trading outlined below, emphasising the inherent uncertainties and potential challenges involved in the trading process.
- Market Risk: Market risk entails the potential for losses resulting from adverse market movements, such as a decline in the price of an asset. It is an inherent risk in all types of trading and cannot be eliminated.
- Liquidity Risk: Liquidity risk involves the possibility that a trader may be unable to exit a position at the desired price due to insufficient market liquidity or heightened volatility. This risk is particularly pertinent for traders operating in less liquid markets or holding positions for extended periods.
- Credit Risk: Credit risk is the potential for a counterparty to default on its obligations, for example, a broker failing to meet its financial commitments. Mitigating this risk involves choosing reputable brokers and counterparties.
- Operational Risk: Operational risk refers to potential losses from errors or malfunctions in trading systems or processes. Implementing robust risk management and compliance procedures can help reduce operational risk.
- Regulatory Risk: Regulatory risk involves potential losses due to changes in regulatory requirements or compliance issues. Traders must stay informed about regulatory changes and adhere to relevant regulations to avoid penalties and legal consequences.
- Leverage Risk: As mentioned earlier, leverage can amplify potential profits but also magnify potential losses. High leverage levels can result in significant losses, emphasising the need for traders to manage their leverage levels carefully.
- Behavioural Risk: Behavioural risk is the danger that traders' emotions or biases may influence their trading decisions, leading to unfavourable outcomes. Traders must develop disciplined trading strategies and manage their emotions to mitigate behavioural risks.
Margin and Leverage
Starting leveraged CFD trading or asset trading with keyway pro involves depositing funds, referred to as margin.
Understanding Margin: Margin represents the capital or collateral a trader commits to initiate and sustain a position in the financial markets.
Typically, the margin constitutes a modest percentage of the total contract value. This implies that even a slight movement in the underlying asset's price can substantially impact the trade's value. This aspect can be advantageous, amplifying gains or posing risks, resulting in significant losses.
It's crucial to recognize the potential loss of the initial deposit and the possible need for additional margin to uphold the position. Failure to meet margin requirements can lead to position liquidation, with the trader being accountable for losses.
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Website Accuracy
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General Guidance Information
keyway pro provides the information available on its website for your general guidance. While we take great care to ensure the accuracy of the content, we assume no responsibility in this regard. Knowing that the content is subject to change without prior notice is crucial.
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