WARNING ABOUT THE RISKS INHERENT IN FOREIGN EXCHANGE AND DERIVATIVES TRANSACTIONS
This brief warning is an addendum to The purpose of this warning is not to enumerate all the risks and other important aspects of foreign exchange and derivatives transactions. Taking into account the risks, you should not enter into transactions with the aforementioned products if you do not know the nature of the contracts you are entering into, the legal aspects of such relationships in the context of these contracts or the extent of your exposure to risk. Foreign exchange and derivatives transactions involve a high degree of risk and may not be suitable for many people. You should carefully assess the degree of acceptability of such transactions for yourself, taking into account your experience, goals, financial resources and other important factors.
1. FOREIGN EXCHANGE AND DERIVATIVES TRANSACTIONS
1.1 Trading with leverage means an increase in potential profits, but it also means an increase in losses. The lower the amount of margin required, the higher the risks of potential losses in the event that the market moves in an unfavorable direction for you. In some cases, the amount of margin required may be as low as 0.5%. Please note that when trading using collateral (margin), your losses may exceed your initial payment, and there is the possibility of losing an amount much higher than what you originally invested. The amount of the initial margin may seem small compared to the value of foreign currency contracts or derivatives, as "leverage" or "amplification" effects are applied in the trading process. Relatively minor market movements will have a proportionately greater impact on the amounts deposited or due to be deposited by you. This circumstance can work both for you and against you. In maintaining a position, you may incur losses commensurate with the amount of your margin and any additional amounts that have been deposited into your account with the Company. If the market starts to move in the opposite direction of your position and/or if the margin required increases, you may be required to urgently deposit additional amounts of money to maintain the position. Failure to comply with the requirement to deposit additional monies may result in the closure of your position(s) by the Company and you will be liable for any resulting losses or shortages of funds.
1.2 Orders and Risk
Mitigating Strategies Placing certain orders (e.g., stop-loss orders, if permitted by local law, or stop-limit orders) that limit the maximum amount of losses may not be effective if market conditions make it impossible to execute such orders (e.g., when there is no liquidity in the market). Strategies that use combinations of positions, such as "spread" and "straddle", may be as risky as regular "long" and "short" positions.
2. ADDITIONAL RISKS INHERENT IN FOREIGN EXCHANGE AND DERIVATIVES TRANSACTIONS
2.1 Terms and Conditions You
should check with your broker for details of the terms and conditions of the contracts and obtain information about the obligations associated with them (e.g. the circumstances under which you may be required to take delivery of an asset under a futures contract or, in the case of an option, information about the expiry dates and restrictions on the time of exercise of the option). Under certain circumstances, an exchange or clearing house may change the requirements for outstanding contracts (including the exercise price of an option) in order to reflect changes in the market for the asset in question.
2.2 Suspension or Restriction of Trading. Price correlation
Certain market situations (e.g., lack of liquidity) and/or the regulations of certain markets (e.g., suspension of trading in respect of any contracts or months of contracts due to exceeding price change limits) may increase the risk of loss as transactions or closing/offsetting positions become difficult or impossible. If you sell options, this can increase the risk of loss.There is not always a reasonable relationship between the price of an asset and the price of a derivative for that asset. The absence of an asset's underlying price may make it difficult to estimate its "fair value".
2.3 Deposited Funds and Property
You should familiarize yourself with the protections under the Collateral deposited by you in the form of cash or other assets for domestic and international transactions, in particular in the case of insolvency or bankruptcy of a dealing firm. The extent to which you may recover your funds and other assets is subject to the laws and local regulations of the country in which the Counterparty operates.
2.4 Commissions
and Other Charges Before bidding, you should obtain a clear explanation of all commissions, fees and other charges you pay. These expenses will affect your final financial result (profit or loss).
2.5 Transactions in Other Jurisdictions
Transactions in markets in other jurisdictions, including markets formally connected to your home market, may involve additional risk for you. The regulation of these markets may differ from your degree of investor protection (including for the worse). Your local regulator will not be able to enforce rules set by regulators or markets in other jurisdictions in which you transact.
2.6 Currency Risks
Profits and losses on transactions in contracts denominated in a foreign currency other than the currency of your account will be subject to fluctuations in exchange rates in the event that it is necessary to convert the currency of the contract into the currency of the account.
2.7 Liquidity risks
Liquidity risks can affect your ability to trade. The risk is that your contract for difference (CFD) or asset cannot be traded at the time you want (to prevent losses or make a profit). In addition, the margin you need to maintain a deposit with a CFD provider is recalculated daily in accordance with the change in the value of the CFD asset you hold. If this recalculation (revaluation) reveals a decrease in value compared to the previous day, you will need to pay the CFD provider immediately to restore the margin for the position and cover the loss. If you are unable to make a payment, the CFD provider may close your position despite your agreement or disagreement with this action. You will need to make up for the loss, even if the price of this asset subsequently increases. There are CFD providers that will liquidate all your CFD positions if you do not have sufficient margin, even if one of these positions shows a profit for you at this stage. In order to keep your positions open, you need to allow the CFD provider to accept additional payments (usually from your credit card) at their discretion when necessary to maintain collateral (margin). In a fast-paced, volatile market, you can quickly end up with a lot of credit card debt.
2.8 Stop Loss Restrictions
In order to limit losses, many CFD providers offer the option to select "Stop Loss" limits. At the same time, your positions are closed automatically when the price reaches the limit you set. In some cases, "Stop Loss" is ineffective, for example, when the price changes are sharp or when the market closes. Stop Loss restrictions may not always protect you from losses.
2.9 Performance Risks
The risks associated with execution arise from the fact that trades may not be executed instantly. For example, there may be a time gap from the time an order is placed to the time it is executed. During this period, the market price may change against you. If this happens, then the order may be executed at a price that does not meet your expectations. Some CFD providers allow you to trade even when the market is closed. Please be aware that the prices shown for these trades may differ significantly from the final closing prices for this instrument. In many cases, the spread may be wider than the spread during market hours.
2.10 Counterparty Risks
The risks associated with counterparties are that the provider issuing contracts for difference (CFDs), i.e. your counterparty, will not be able to meet its financial obligations. If your funds are not properly segregated from the funds of a CFD provider and the CFD provider is experiencing financial difficulties, there is a risk that you will not receive the funds that the provider owes you.
2.11 Trading Systems
Most conventional "voice" and electronic trading systems use computer devices for order routing, balancing, recording and clearing trades. Like any other devices and systems, they are prone to temporary failures and malfunctions. Your ability to recover certain losses may depend on the liability limits set by the trading system providers, markets, clearing houses and/or dealing firms. Such limits may vary: you need to consult your broker in detail on this issue.
2.12 Electronic Trading
Trading using an electronic communication system may differ not only from trading in an open-out market, but also from trading in other electronic trading systems. If you transact on an electronic communications system, you bear the risks inherent in that system, including the risk of hardware and software failures.
System failures may result in your order not being executed in accordance with your instructions, your order being not executed as a whole, and you may not be able to continuously obtain information about your positions and meet margin requirements.
2.13 Over-the-counter transactions
In a number of jurisdictions, firms are allowed to carry out over-the-counter transactions. Your broker can act as a counterparty to such transactions. The peculiarity of such operations is the difficulty or impossibility of closing positions, assessing the value and determining a fair price or exposure to risk. For these reasons, these operations may be associated with increased risks. Regulation of over-the-counter transactions may be less stringent or provide for a separate regulatory regime. Before carrying out such transactions, you should familiarize yourself with their rules and the risks associated with them.
3. Limitation of Liability
The Company, its employees or representatives cannot promise to make a profit or guarantee that there will be no losses. The Client should be fully aware of the level of risk when opening an account for margin trading in the financial markets in accordance with the provisions
