Our service is "execution only", meaning we will only carry out your trading instructions. We do not provide you with any investment advice "CFDs" are highly risky due to the speculative and volatile markets in these products and the leverage margin involved. Trading these products may result in loss of the entire funds you deposited in the account.
We are required by law to notify retail clients about the percentage of Retail Clients who have lost money trading CFDs with us during the last 12 months. This disclosure will be made available on our website: www. You must carefully consider your financial circumstances and risk tolerance before trading CFDs.
CFD trading is an activity that carries a high risk to your capital. You should only consider trading in CFDs if: you have extensive experience of trading in volatile markets, you fully understand how they operate, including all the risks and costs involved, you are aware that the greater the leverage, the greater the risk, you understand that your position can be closed whether or not you agree with our decision to close your position, you have high risk tolerance and the capability to absorb losses if they occur, you have sufficient time to manage your investment on an active basis.
As such, the owner of a share participates in the fortune of the company. If the company does well, the shares are likely to rise in price, but if the company does badly, the share price is likely to fall. Holders of ordinary shares are the last to be paid in the event of a company becoming insolvent. However, ordinary shareholders also have the potential for returns, in the form of dividends or share price appreciation, provided the company does well and is perceived to be continuing to do well.
In extreme cases a company can become insolvent and you may lose all the value of your investment. If in general, market sentiment is pessimistic about a company and their future prospects, the share price will likely fall and therefore, if you sell at that point or if price does not recover, you get back less than you put in. They are often unsecured, meaning that they are not backed up by collateral since they do not hold the underlying asset.
ETNs are considered high risk for lenders, as it is unsure whether the borrower will repay the full amount. ETNs can be held to maturity or bought or sold at will. This type of debt instrument has a volatile price and unlike bonds, it does not pay interest payments. By investing in ETNs, you can lose the full amount invested, including the incurred transaction costs.
There is also a risk that the issuer becomes insolvent and is not able to pay out the value of the ETN. The ETN may also not be profitable and unable to pay its transaction costs. Another associated risk is the inability to sell the position in the market at any preferred point in time. An ETC is a debt instrument, which follows individual or multiple commodities and it can offer investors the possibility to invest in commodities like gold, oil, metals, energy and livestock.
Additional broker fees may also apply. An ETC follows the price of a commodity or commodity index and it does not represent ownership. As such, ETC investors may lose the full invested amount including the incurred transaction costs. Execution only We shall not offer you any advice or recommendation regarding the suitability of any investments with us, and nothing we send or tell you should be interpreted as such.
We do not provide investment, tax or trading advice. Our service is "execution only", meaning we will not advise you on any transaction, nor will we monitor your trading decisions to determine if they are appropriate for you or to help you avoid losses. You should obtain your own financial, legal, taxation and other professional advice as to whether CFDs or Shares are an appropriate investment for you.
We may provide you with factual information in relation to our products, their potential risks, or about the financial markets in general; in doing so we shall not have assessed your individual circumstances. Leverage Our products offer various levels of leverage. Before trading, we shall ask you to make an initial deposit. Each product we offer has a margin requirement. Based on this requirement and your initial deposit, you shall be able to trade a contract value in excess of your funds.
Fluctuations in asset prices will therefore be magnified many times. This can work for or against you as a small price movement against you may result in a larger profit or loss respectively. Using leverage or margin means that you may lose the entire funds you have actually deposited in your account if the price of the CFD moves significantly against you.
Settlement In many market places for example shares traded on the London Stock Exchange settlement takes place by the counterparties simultaneously matching shares traded with cash being given. In other market places for example those where CFDs are traded , you, on making an initial investment, put up a sum of cash the margin which represents a percentage of the value of the investment.
If the price of the investment subsequently fluctuates, you may be called upon to put up extra cash a margin call. Margin Rates We reserve the right to adjust margin requirements for each of our products and have the right to change or increase its Margin Requirements at any time: In order to protect the firm and all of our clients, we may modify Margin Requirements for any or all clients for any open or new positions at any time, in our sole discretion.
If we increase our margin requirements, it may prevent you from adding positions or hedging existing positions if you have insufficient equity. If margin requirements increase on your existing CFDs, you will have to deposit additional equity in advance or your positions may be liquidated. This may result in your margin requirement increasing. You may therefore be required to deposit additional funds to maintain existing positions.
Having said the above it is of crucial importance that clients always monitor their positions with the Company. Position Monitoring It is your responsibility to monitor your account. We have the right to liquidate your positions without notice in the event of a margin deficiency stop-out.
You must monitor your account so that at all times the account contains sufficient equity to meet our Margin Requirements. We do not have to notify you of any failure to meet Margin Requirements prior to us exercising its rights under its Agreement with you, including but not limited to its right to liquidate positions in your account s. This should not however be taken as a guarantee, and it is your responsibility to ensure that sufficient funds are on your account at all times. Market Risk CFD trading relies on the price movement of underlying financial products.
You are therefore exposed to similar, but magnified, risks to holding the underlying assets. The prices of CFDs and their Underlying Products shares or indices may fluctuate rapidly and over wide ranges. The prices of CFDs will be influenced by, among other things, the market price of the underlying product of the CFD, the earnings and performance of the company or companies whose shares comprise the underlying product or a related index, the performance of the economy as a whole, the changing supply and demand relationships for the underlying product or related instruments and indices, governmental, commercial and trade programs and policies, interest rates, national and international political and economic events and the prevailing psychological characteristics of the relevant marketplace.
There may not always be an opportunity for you to place an order or for our platform to execute an order at the price level which you have selected. One of the effects of this may be that stop loss orders are executed at unfavourable prices, either higher or lower than you may have anticipated, depending on the direction of your trade. Trading CFDs on bitcoin and other cryptocurrencies can be subject to extreme volatility, much more than traditional currencies and when trading bitcoin and other cryptocurrencies, it is possible to lose or gain substantial amounts in short periods of time.
Trading CFDs on cryptocurrencies can result in loss of your entire deposits. Please bear in mind the above-outlined considerations apply also with respect to ETNs and ETCs with underlying cryptocurrencies. Trading in such instruments entails high risk. You should only invest in financial products that are suitable to your knowledge and experience.
Currency risk Where you are trading a product denominated in a currency different from that in which you hold your account, fluctuations in the exchange rate affect your profit and loss. When you deal in a CFD or Shares that are denominated in a currency other than the base currency or currency you have on deposit in your Account, all margins, profits, losses and financing credits and debits in relation to that CFD are calculated using the currency in which the CFD is denominated.
Thus, your profits or losses will be further affected by fluctuations in the exchange rates between the account currency and the currency in which the CFD is denominated. We apply a margin "haircut" to reflect this risk, and so the Margin Requirement on the CFD will effectively increase.
Interest Rate Fluctuation Risk Interest rates fluctuate, which will affect the financing charges or rebates you will pay or may receive on your long or short CFD positions. This will also affect your total profits or losses. Regulatory and Taxation Changes Risk Changes in taxation and other laws, government, fiscal, monetary and regulatory policies may have an adverse effect on the value of your CFDs or Shares, the tax you pay on your CFDs or Shares, and the total return on the products.
Liquidity Risk Under certain circumstances, it may not be possible to close a part of or a whole position at the current price or at all. We are not obligated to provide quotes for any CFD at any time, and we do not guarantee the continuous availability of quotations or trading for any CFD.
None of our CFD products are listed on an exchange, nor can any rights, benefits or obligations be transferred to anyone else. While we undertake our obligation to provide you with best execution and to act reasonably and in accordance with our published terms and conditions, CFDs opened on your account with us must be closed with us, based on our prices and conditions.
CFDs are contracts with us as your counterparty, and are not traded on a regulated exchange and are not cleared on a central clearinghouse. Thus, exchange and clearinghouse rules and protections do not apply to trading CFDs with us. That is, in the unlikely event that we were to become insolvent, we may be unable to meet our obligations to you. For example, instead of buying or selling physical gold, a trader can simply speculate on whether the price of gold will go up or down.
Essentially, investors can use CFDs to make bets about whether or not the price of the underlying asset or security will rise or fall. Traders can bet on either upward or downward movement. If the trader that has purchased a CFD sees the asset's price increase, they will offer their holding for sale.
The net difference between the purchase price and the sale price are netted together. The net difference representing the gain from the trades is settled through the investor's brokerage account. On the other hand, if the trader believes that the asset's value will decline, an opening sell position can be placed. In order to close the position, the trader must purchase an offsetting trade. Then, the net difference of the loss is cash-settled through their account.
The U. Fast Fact CFD trading is surging in A key feature of CFDs is that they allow you to trade on markets that are heading downwards, in addition to those that are heading up—allowing them to deliver profit even when the market is in turmoil. The Costs of CFDs The costs of trading CFDs include a commission in some cases , a financing cost in certain situations , and the spread—the difference between the bid price purchase price and the offer price at the time you trade.
There is usually no commission for trading forex pairs and commodities. However, brokers typically charge a commission for stocks. The opening and closing trades constitute two separate trades, and thus you are charged a commission for each trade. A financing charge may apply if you take a long position; this is because overnight positions for a product are considered an investment and the provider has lent the trader money to buy the asset.
Traders are usually charged an interest charge on each of the days they hold the position. The bid-offer spread is The trader will pay a 0. For a long position, the trader will be charged a financing charge overnight normally the LIBOR interest rate plus 2. Suppose that interest charges are 7. When the position is closed, the trader must pay another 0.
The trader's net profit is equal to profits minus charges: Standard leverage in the CFD market is subject to regulation. Lower margin requirements mean less capital outlay for the trader and greater potential returns. However, increased leverage can also magnify a trader's losses. Investors can trade CFDs on a wide range of worldwide markets.
No Shorting Rules or Borrowing Stock Certain markets have rules that prohibit shorting , require the trader to borrow the instrument before selling short, or have different margin requirements for short and long positions. CFD instruments can be shorted at any time without borrowing costs because the trader doesn't own the underlying asset.
Professional Execution With No Fees CFD brokers offer many of the same order types as traditional brokers including stops, limits, and contingent orders , such as "one cancels the other" and "if done. Brokers make money when the trader pays the spread. Occasionally, they charge commissions or fees. To buy, a trader must pay the ask price, and to sell or short, the trader must pay the bid price. This spread may be small or large depending on the volatility of the underlying asset; fixed spreads are often available.
No Day Trading Requirements Certain markets require minimum amounts of capital to day trade or place limits on the number of day trades that can be made within certain accounts. The CFD market is not bound by these restrictions, and all account holders can day trade if they wish.
Variety of Trading Opportunities Brokers currently offer stock, index, treasury, currency, sector, and commodity CFDs. This enables speculators interested in diverse financial vehicles to trade CFDs as an alternative to exchanges. For one, having to pay the spread on entries and exits eliminates the potential to profit from small moves. The spread also decreases winning trades by a small amount compared to the underlying security and will increase losses by a small amount. So, while traditional markets expose the trader to fees, regulations, commissions, and higher capital requirements , CFDs trim traders' profits through spread costs.
A CFD broker's credibility is based on reputation, longevity, and financial position rather than government standing or liquidity. There are excellent CFD brokers, but it's important to investigate a broker's background before opening an account. Risks CFD trading is fast-moving and requires close monitoring. As a result, traders should be aware of the significant risks when trading CFDs.
LAURA GO BETTING
These rules usually include important customer safeguards such as: Segregating customer trading funds in separate accounts Submitting regular audits to regulators and Maintaining adequate capitalization. The FCSA oversees businesses that fall under the categories of financial intermediaries, payment providers, banks, insurers, and several other financial service providers in South Africa.
Capital gains tax in South Africa is applicable to instances where an asset is disposed of for a greater value than what it was acquired for. The Australian Securities and Investments Commission ASIC is an independently commissioned organization by the Australian government to oversee financial services providers and protect their clients.
This includes brokers that offer CFDs and other derivatives products in Australia. Australian traders are subject to taxes when trading CFDs. The Australian Taxation Office ATO differentiates spread betting as products with differing cash flow and wider spreads. However, losses from CFDs can also be claimed as tax deductibles, provided that any potential gains from the CFD contract would have been assessed as tax-eligible under section of the ITAA The CSA and the IIROC are presently working together to create regulatory guidelines to address reporting and auditing of cryptocurrency transactions on the Canadian financial market.
The official CRA website does not mention taxes on CFDs per se, though states that traders are subject to taxes on certain eligible dividends , all foreign interest and dividends, and other securities like treasury bills and domestic savings bonds.
Any business that operates as a transaction medium or direct buyer and seller of securities is classed as a broker-dealer and falls under the regulatory guidelines of the Securities and Exchange Commission SEC. Taxes also apply to profits from interest, with the exception of profits from interest on bonds.
When US traders profit via mutual funds, exchange-traded funds, taxes are still applicable under Capital Gains Tax measures. The most up-to-date tax requirements for US traders are provided by the IRS as well as tax advisors who specialize in US investment taxes. The FCA oversees over 50, UK business operations with the aim to regulate financial services in the interest of consumers and clients.
Traders who transact with FCA-regulated brokers are covered under the Financial Services Compensation Scheme in case a broker or financial services provider goes bankrupt. As of October , the FCA banned the sale of all crypto derivatives for retail customers , meaning retail traders in the UK can no longer trade crypto CFDs, or other crypto derivatives.
All you own is the contract between you and the CFD provider. Volatile: Just like their underlying assets, CFDs are affected by market conditions and can swing wildly back and forth without notice in volatile markets. Illiquid: Depending on the trading volume of the CFD, there may not be a buyer or seller available when you want to close out your position. Can I trade CFDs in overseas markets? And if a foreign provider did allow a US resident to open a CFD account, it would likely not be regulated in its home country, adding further risks to trading activity.
You can buy or sell these in a normal brokerage account without risking any more than you invest and without owning or being obligated to own the underlying asset. Leveraged ETFs are designed for short-term trades, not buy-and-hold investing.
Binary options A lesser-known cousin to regular options, binary options — like CFDs — are a derivative investment that never owns or has an obligation to own the underlying asset. You can also sell to close the binary option at the market price. Futures contracts Futures also involve lots of leverage, and you can lose more money than you invest.
Futures are regulated by the CFTC and traded in specialized brokerage accounts.
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At no point do the contract buyers own or have an obligation to own the underlying asset itself, nor are they trading the underlying asset. CFDs are considered unregulated over-the-counter products because they can be traded by any two willing parties on any marketplace that allows them. What are the risks? CFDs are extremely risky products for the following reasons: Leveraged: Traders are only required to contribute a small portion of the money involved in each trade and can borrow the rest from the trading platform — sometimes as much as 30 times the amount invested.
Borrowing money to invest is always a risky move. Unlimited: You can lose more money than you initially invest. Unlike most other investments, you can lose much more money than you started with, meaning you actually owe the CFD provider money. All you own is the contract between you and the CFD provider. Volatile: Just like their underlying assets, CFDs are affected by market conditions and can swing wildly back and forth without notice in volatile markets.
Illiquid: Depending on the trading volume of the CFD, there may not be a buyer or seller available when you want to close out your position. Can I trade CFDs in overseas markets? But if you are looking to hold longer-term positions, you will want a broker that has lower interest charges for positions that will last longer than a day.
Worth it? After Brexit, the UK is no longer the CFD haven it once was, and instead, traders have turned to Malta and Cyprus to continue trading CFDs because there is no other way for them to easily become involved in the American stock market. Another popular country is China, which allows foreign investors, but only if they meet certain qualifications. So whether or not you think trading CFDs is worth it, they are an important financial tool used around the world. But even if you do think they are worth it, there are several aspects you need to evaluate before considering an investment.
Because they are illegal in the United States, there is no tax regulation here specifying the amount of tax they are subject to. It is always worthwhile to check the taxes you can expect to pay in your country before you start CFD trading. These margins are much lower when it comes to CFD trading. So traders should only place trades that they can afford to cover if they have to. Or they will not allow you to short it without buying the commodity or stock before selling.
In CFD trading, this goes out the window as you never own the commodity anyway, meaning you can short your trade at any time you wish. This means that non-citizens are welcome to engage in CFD products. Because they are illegal in the U.
The problem with this is that it leaves plenty of room for scams as the only companies that will take Americans are companies that are not regulated. Therefore a trader could lose all their money if they pick the wrong offshore company. And unlike regulated exchanges, when you lose all your money offshore, the government will not investigate or prosecute. This is an all-new type of risk that many investors are not equipped to handle. This is why it is never advised for an American to attempt to trade CFDs through an unregulated and untested offshore broker.
Below are some steps to follow to get you started. This means you will only want to go through the top CFD brokers to be sure they are regulated and reliable. When choosing a brokerage platform, make sure to check their fee structure and find out if they are regulated. If you find that they are indeed regulated, next, you will want to check the fee structure.
Remember, you will want to go for different levels of fees depending on the type of trading you intend to do. Some platforms may not work for all investing styles. You will want to find this out before you sign up for an account. Two very popular companies for U. You will want to take a good look at the account options of the brokerage platform you chose and select the right account for you.
Certain accounts have higher fees, and some require minimum balances to be maintained. Be sure to contact customer support if you need help. Rather wait for the right opportunity to come to you. Once you do find a position you like, then you can continue to the next step.
Be sure that you research any positions you intend to open. You will also want to decide how much margin you will be comfortable trading on. This is also the time to select if you want a stop-loss or a stop-limit order. Remember that trading takes a certain mindset , so try not to let your heart lead you to close a position.
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