Risk Disclosure: Leveraged Forex and CFD Trading
An independent editorial resource for readers in the United Arab Emirates - not a broker, not affiliated with any broker, and not a provider of financial services or advice.
Details of our partnerA Concrete Example
Imagine you open a position of 10,000 euros against the US dollar with 200 euros of your own money. Your broker supplies the rest as leverage. If the euro moves one percent in your favour, you gain about 100 euros on a 200 euro stake - a fifty percent return. If it moves one percent against you, you lose the same 100 euros - half your money gone on a single, unremarkable price move.
That example is not a worst case. It is an ordinary Tuesday in the currency markets. Leverage is the mechanism that makes such swings possible, and it is the reason regulators across Europe and elsewhere require brokers to warn clients that most retail accounts lose money. This page explains the risks that come with leveraged forex and contract-for-difference (CFD) trading, in plain terms, for readers of this site.
This site is an independent editorial resource that reviews one broker for readers in the United Arab Emirates. It is not the broker, is not affiliated with the broker, and does not provide financial services, accounts, deposits or advice. Nothing on this site is a recommendation to trade.
The Losing Majority
In several regulated markets, brokers are required to publish the share of their retail clients whose accounts lost money over a given period. The figures commonly quoted sit between 65 and 80 percent, and for some products they are higher. That means that for every ten retail traders, six to eight end the period with less money than they started. The remaining minority is not necessarily profitable over the long run; a single winning quarter says little about the next one.
The reasons are not mysterious. Trading costs erode small accounts, leverage magnifies mistakes, and most retail participants trade without an edge that survives transaction costs. The published loss statistics are a starting point for expectations, not a marketing detail.
Running Costs
Every position carries costs that are easy to overlook when you are watching the price chart. The spread - the gap between the buy and sell price - is paid on entry and again on exit. On major pairs it can be a fraction of a pip; on exotic pairs and during volatile moments it can widen sharply, and your position is marked to the worse side of that gap.
Positions held overnight are typically charged financing, calculated on the full notional value of the position, not on the margin you posted. When you use leverage, the notional value can be many times your deposit, so the financing charge can accumulate quickly against a small account. Some instruments also carry commissions or account fees. These costs exist whether the trade wins or loses, and they compound over time.
Readers should check the broker's published fee schedule before trading and treat costs as a material part of any strategy.
Past Performance and Margins
Historical price patterns and backtested results describe what happened under past conditions, with past spreads and past liquidity. They do not predict the future. Market regimes change, spreads widen in stress, and a strategy that looked robust in quiet markets can fail quickly when volatility rises. No chart, indicator or past return guarantees anything.
Margin trading adds a second layer of risk. When the equity in your account falls below the required margin level, the broker may issue a margin call and, if the shortfall continues, close positions automatically - often at the worst possible moment and without asking you first. Automatic closure can crystallise losses you might have preferred to wait out. In fast markets, slippage can mean positions close at prices worse than the level you expected.
Because of this, trade only with money you can afford to lose entirely. Money needed for rent, school fees, debt repayments or emergencies does not belong in a leveraged account.
Leverage in Both Directions
Leverage is symmetric. It multiplies gains and losses by the same factor. A move that doubles your money on a small stake can, with the same ease and on the same day, wipe out the entire margin behind a position. The larger the leverage, the smaller the adverse move required to trigger a margin call or closure.
This site does not provide advice and does not recommend trading. It is an independent editorial resource only. If you wish to contact us, use the contact form on this site. Before opening any account, read the broker's own risk disclosures, fee schedule and client agreement, and consider whether leveraged trading is suitable for your circumstances.
