There are certain risks associated with trading on the financial markets.
Learn how to manage them with our range of tools and resources.
CFDs carry risk in the same way that any financial product carries risk – if the market moves against you, you lose money. However, the risks associated with CFDs can be greater because they are leveraged products.
Leverage enables you to gain a large exposure to a financial market while only tying up a relatively small amount of your capital.
When you invest in a leveraged product, the provider will ask you to put up a sum representing just a fraction of the total value of your position. Effectively, the provider is lending you the balance.
Even though you only put up a relatively small amount of capital to open a position (initial margin), your profit or loss is based on the full value of the position.
So the amount you gain or lose might seem very high in relation to the sum you’ve invested. However, it should always be kept in mind that leverage not only magnifies your potential profits but also your potential losses. It is possible to lose much more than your initial margin if the market turns sharply against you.
It is also vital to remember that you could be called upon to put down more margin and cover your losses if the market goes in the wrong direction for you.
Yes. There are several ways that you can monitor your exposure to risk, as well as a range of risk management tools available on our platform.
Develop a trading plan, and stick to it
A trading plan can help you clearly define and achieve your overall financial trading goals.
Start slowly, and build your skills and expertise
If you’re new to leveraged products, you can get used to how leverage works by dealing in small sizes while you develop your understanding.
New clients can deal at reduced minimum deal sizes for two weeks and reduced commissions for six weeks with our introduction programme.
Understand the markets you want to deal on
Ensure you understand the factors that influence different markets so you can base your trading strategies on the most relevant information.
Our experts provide regular data and commentaries in news and analysis.
Monitor your open positions
Ideally you’d be able to constantly monitor your open positions and react to market movements. Practically, however, this is often difficult.
Our platform is available via our free app, so you can monitor trades on your mobile or tablet. You can also set up price alerts to notify you when specific prices are reached.
Use stops and limits to protect against sudden market movements
Sudden market movements can cost you if you aren’t able to react immediately. Automated risk management tools can save you time and money.
Our risk management tools protect you from sudden market movements and let you lock in profits when the market moves in your favour.
We offer a range of risk management tools to help you manage your exposure, including:
If you choose to open an account you can find out more about risk management in our free education programme, designed to help you develop your trading skills.
Open a free demo account today to practise with € 30,000 virtual funds.