Trading CFDs and leveraged products carries a high level of risk. This page explains the main risks you should understand before trading, and the tools you can use to manage exposure responsibly.
CFDs (Contracts for Difference) allow you to speculate on price movement without owning the underlying asset. This can offer flexibility — but also introduces risks that are higher than non-leveraged investing.
Understand these risks before you place any trade. This is not an exhaustive list — but it covers the most common reasons traders lose money quickly.
Leverage can magnify gains, but it magnifies losses the same way. A small move against your position can lead to rapid drawdown.
If your equity falls, you may receive a margin call, and positions can be closed automatically to protect your account from deeper losses.
Economic news can cause sharp moves, widening spreads, and fast price gaps. This can trigger stops and increase slippage.
Your order may fill at a different price than expected when markets move quickly or liquidity is low.
Holding positions overnight may incur swap/financing charges. Costs differ by instrument and direction.
Crypto markets can be extremely volatile and may experience rapid gaps and liquidity changes, especially outside traditional hours.
Use this as a quick checklist before entering any trade. If you can’t explain these items in your own words, you should stay on demo until you can.
| Risk | What it means | Severity |
|---|---|---|
| Leverage | Small price moves can create large profit/loss due to amplified exposure. | High |
| Margin Call / Stop-Out | Positions may be closed automatically if equity drops below required margin. | High |
| Volatility | Rapid market movement can widen spreads and increase slippage. | High |
| Slippage | Orders can fill at a worse or better price than requested, especially in fast markets. | Medium |
| Overnight Fees (Swap) | Holding trades overnight may generate financing costs or credits. | Medium |
| Liquidity / Gaps | Low liquidity periods can cause gaps, spread widening, and unpredictable fills. | High |
| Platform / Connectivity | Execution can be impacted by device, network, or power issues on your side. | Medium |
| Behavioural Risk | Overtrading, revenge trading, and poor discipline often cause the biggest losses. | High |
Use these tools to trade with structure. The best traders focus on protecting capital first.
Clear answers to common questions about risk, leverage, and how to trade more safely.
