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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFD and forex: Risk warning

Leverage.... big gains and big losses

When working on margin, both the profits and losses are magnified.

Without a stop loss, it is easy to use up your margin very quickly. If you don't set a stop-loss you can suffer big losses, if your position turns on you.

So the best is to work with a guaranteed stop. We recommend to trade with a small percentage of your capital on every trade.

This way you can distribute the amount of risk in a few small trades instead of a big and unnecessarily risky one.

European regulated brokers like Fortrade and Plus500 automatically close your positions when your margin gets too low.

With European regulated brokers, it is impossible to loose more than the amount on your account, so you cannot run up debts.

Not suitable for long-term investments

CFDs are not suitable for long-term investors, who, for example, want to keep shares for a few years.

If you keep a CFD open for a period of more than 6 months, the financing costs (the premium) go up, and it would be better to buy the underlying assets directly.

When trading CFDs is advisable to consider short or medium term positions.

Not suitable as income

The value of CFDs fluctuates very quickly and therefore they are not suitable for an investor who wants to get a guaranteed income from his investments.

In financial speculation, you'll never be sure on how much you'll win, but you can have control on how much you'll lose by placing a stop-loss order and risking a small percentage of your capital on every single trade.

Do not trade with money you need

Never trade with money that you cannot do without.

Because of the leverage effect, small fluctuations adverse to your position can lead to big losses on your account.

It's not wise to use money from a mortgage, rent or tuitions.

Start small

Start trading with small amounts of money and do not use the leverage at the maximum!

Only use a small percentage of your account as margin.

If you trade with a high leverage and invest almost your entire account on margin, a badly estimated position can quickly turn on you.

A large part of your margin can vanish as frost under the morning sun.

Learn trading with a demo account

Before trading with real money, learn to trade with a free demo account.

You get a fictitious capital and become familiar with the trading platform. This way you also learn to work with the lever effect.

Practice for a period of time and when you achieve consistency in your performance change to a real account.

Financial supervision?

A CFD is a contract between you and your broker, so the counter party risk is with your broker.

It's important to work with a regulated broker. Make sure the broker you choose is regulated by CYSEC, FCA, ASIC or another trustworthy institution.

The brokers we've suggested are regulated by one or more of these agencies.

Among others, Fortrade and Plus500* are regulated by the Financial Conduct Authority (FCA) in England.

*Plus500 UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN 509909).
Plus500 CY LTD is authorised and regulated by the Cyprus Securities and Exchange Commission (License No. 250/14).
Plus500AU Pty Ltd, ACN 153 301 681, AFSL # 417727, issued by the Australian Securities and Investments Commission is authorized to issue these products to Australian residents. Derivatives issuer licence in New Zealand, FSP #. 486026 authorises Plus500 to issue these products to New Zealand residents. Plus500AU Pty Ltd, is also an authorized Financial Services Provider in South Africa, FSP 47546.


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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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