Risk Disclosure: Leveraged Forex and CFD Trading
What you are exposed to when you trade forex and CFDs with borrowed funds, explained plainly for readers of this independent editorial site.
Platforms of the sponsorBefore You Read Any Review
If you have arrived here while comparing brokers, you are already past the point where most people think about risk. You are probably weighing account features, spreads, and platforms, and deciding whether leveraged forex and CFD trading suits you. This page exists to put the risk side of that decision in front of you first, before any product comparison.
This site is an independent editorial resource. It reviews brokers, including Exinity, for readers in India. It is not the broker, it is not affiliated with the broker, and it does not provide financial services, trading accounts, deposit facilities, or advice of any kind. Nothing on this site is a recommendation to trade, to open an account, or to place funds with any firm.
What follows applies to leveraged forex and CFD trading generally. Read it as background that stays relevant whichever firm you eventually choose, not as a comment on any particular company's conduct.
Leverage Cuts Both Ways
Leverage lets you control a position larger than the money you put up. A small deposit can support a much larger trade. That is the whole appeal, and it is also the whole problem. The same multiplier that enlarges your result when the market moves in your favour enlarges your loss when it moves against you.
When a position moves against you, the loss is calculated on the full size of the position, not on the margin you posted. A move of a few percent against a heavily leveraged position can wipe out most or all of the money in the account. That can happen within minutes during volatile periods, such as around major economic announcements or when markets open after a weekend. Leverage does not improve your chances of being right about direction. It only changes how much a given move costs or pays.
Because the risk is measured against your balance rather than your deposit, losses can grow faster than most new traders expect. You should assume that you can lose the entire amount you commit to a trading account, and treat every rupee placed there as money you can afford to lose completely.
Most Retail Accounts Lose Money
Firms that offer contracts for difference to retail clients in regulated markets are generally required to publish the proportion of retail accounts that lost money over a stated period. The figures disclosed across the industry are consistently high. In many cases the majority of retail accounts lose money, and often well over half do so.
These figures matter because they describe the ordinary experience of ordinary clients, not an unlucky minority. They are not proof that every individual will lose, and they are not a forecast about you. They are simply the most reliable public evidence available about how leveraged retail trading tends to end for most participants.
Treat any past performance figure, whether an industry loss statistic or a broker's own history, as historical information only. Past results tell you very little about what will happen next, because markets change, and because a strategy that worked in one period can fail in the next.
Margins, Closures, and Protection Gaps
Leveraged positions must be supported by margin. If losses reduce your account equity below the level your broker requires, you will face a margin call, and the firm may close your positions automatically, without asking you first, to limit its own exposure. Automatic closure can happen at the worst possible moment, and it can turn a temporary adverse move into a realised loss. You should not rely on being able to add funds in time.
Protection arrangements also differ by jurisdiction and by legal entity. Client money safeguards, compensation schemes, and dispute procedures depend on where the firm is incorporated and which entity holds your account. A scheme available in one country may not cover a client in another, and the entity you sign with may not be the one you assumed. Before depositing, check which legal entity your account sits with, where it is based, and what protection, if any, applies to you as a client in India.
For any question about this site, use the contact form on this site. We cannot open accounts, accept deposits, or advise on trades, and nothing here should be read as doing so.
