Leverage and CFD Risk Disclosure
What every reader of this independent review site should understand before risking money on leveraged forex and CFD trading.
Have a look at our partnerWhat happens if a trade moves against me?
Suppose you open a position worth 200,000 rupees using 10,000 rupees of your own money. The broker supplies the other 190,000 through leverage. A one percent move against you wipes out 2,000 rupees, which is a fifth of your capital, and a five percent move against you takes the entire 10,000. At that point the position is no longer covered by your money.
When the value of your account falls near the margin your broker requires, you face a margin call: you must add funds quickly or reduce the position. If you do neither, the broker can close positions automatically, at whatever price the market offers at that moment. Automatic closure protects the broker against your losses growing beyond your deposit; it does not protect you from the price at which the closure happens. In fast markets, the amount recovered on closure may be less than you expected, and you may end up with far less than you started with, or with nothing.
Leverage is not a tool that multiplies gains only. It multiplies movement in both directions, and the same mechanism that turns a small favourable move into a large percentage gain turns a small adverse move into a large percentage loss. Nothing about a leveraged position is symmetrical in outcome once your capital is finite.
Can the market move past my stop or my expectations?
Prices do not always trade continuously. Markets gap between the close and the next open, and they can jump sharply around scheduled news releases, central bank decisions, and unexpected events. A stop order placed at a chosen level is not a guarantee of that level; it becomes a market order once triggered and fills at the next available price, which may be worse.
Slippage works the same way. During thin liquidity or high volatility, the price you receive on entry or exit can differ from the price you saw on screen. In leveraged trading, these small differences are applied to a large notional position, so they can matter a great deal to your account balance.
News-driven volatility deserves particular caution. A currency pair or index can move several percent within minutes, and a position that looked comfortably funded can become a candidate for automatic closure before you have a chance to react. Anyone trading leveraged products should assume that the market can move against them faster than they can manage the position.
Does a good past performance tell me anything?
No. Past results, whether of a strategy, a trading period, or an individual trader, describe what happened under conditions that will not repeat exactly. They say nothing reliable about future outcomes. A run of profitable months can coexist with a single loss that erases all of it, especially when leverage is involved.
Markets change regime: volatility shifts, liquidity moves, and correlations that held for years can break. A method that worked in one environment can fail in another without any warning. Treat any historical record, including your own, as a description of the past and not as evidence about what comes next.
What does trading cost me while I hold a position?
Leveraged products carry running costs that accumulate whether or not the trade is winning. The spread, the difference between the buy and sell price, is charged on entry and effectively on exit. Overnight financing is charged on the borrowed portion of a position held past the daily cut-off, and it accrues day after day. Some instruments also carry commissions or account fees described in the broker's own documentation.
These costs are small per trade and large over time. A strategy that looks marginally profitable before costs can be losing after them, and frequent trading multiplies the effect. Readers should read the broker's fee schedule carefully and calculate what a typical holding period actually costs them.
This site does not provide financial services, accounts, deposits or advice. It is an independent editorial resource that reviews a broker for readers in India and is not affiliated with it. Any decision to trade is yours, and it should be made only with money you can afford to lose.
How many retail traders actually lose money?
Regulated brokers in several markets are required to publish the proportion of retail accounts that lose money when trading contracts for difference. Those published figures have consistently shown that a majority of retail accounts lose money, often a substantial majority. The exact percentage varies by broker and by period, and the figure for any particular firm should be checked in that firm's own disclosure documents.
The pattern is not surprising. Leverage amplifies losses, costs erode returns, and volatility punishes positions that are too large for the account. A retail trader considering these products should begin from the assumption that the odds are against them and should size positions accordingly.
If you have questions about this page, use the contact form on this site. We cannot open accounts, accept deposits, or give personal advice, and nothing here should be read as a recommendation to trade.
