Risk Warning
Introduction
FXLRmarkets offers spread betting and/or contracts for difference (CFDs) which are known as 'Margined Trading'.
Margined Trading carries a higher risk of loss than more traditional financial instruments such as equities or fixed income securities.
These transactions are not suitable for many members of the public and you should not engage in Margined Trading unless you are aware of and fully understand how this type of trading works and the risks involved.
You must satisfy yourself that Margined Trading is suitable for your personal circumstances and financial resources.
The following points must be taken into account when considering whether to engage in Margined Trading.
Risk and Leverage
A high degree of 'gearing' or 'leverage' is used with Margined Trading. This means that a relatively modest deposit is made in comparison to the overall contract value of the Margined Trade.
Small Price movements in the value of the contract can generate a high level of profit or loss in relation to the margin deposit and losses can exceed the value of the deposit. Prices can change over a short period of time.
In order to maintain your Margined Trades, you may be required to deposit substantial additional margin, often at short notice. If you do not provide this additional capital in the timescale required your Margined Trades may be closed at a loss and you will be liable for that loss.
Nature of Margined Trades
Margined Trades can provide profits in both a rising and falling market.
A Margined Trade is a bet or trade on price movements. These prices are set by us and are shown on our website (please see our Trade and Order Execution Policy in our Terms and Conditions).
Your profits or losses are generated dependent upon the prices we set and the fluctuations in the underlying financial instrument ('Underlying') to which the margined trade relates.
Margined Trades can only be settled in cash.
Margined Trades are legally enforceable.
In certain circumstances your losses on a Margined Trade can be unlimited and will not be known until you end the Margined Trade. You must ensure you are aware of the degree of risk involved in any particular Margined Trade which you enter into and the potential consequences involved.
Margin Trades are not executed on any recognised investment exchange. If you open a Margined Trade with us you have to close it with us.
You will not acquire the Underlying nor any rights or delivery obligations relating to it.
Margined Trades may be settled in a currency other than your base currency and therefore you may be affected by exchange rate differences in the conversion of any profit or loss into your base currency.
Volatility
As already mentioned, any profit or loss you make is dependent upon the prices we set and fluctuations in the price of the Underlying to which your Margined Trade relates.
Neither yourself nor FXLRmarkets have any control over price movements in the Underlying and these movements can be both unpredictable and volatile.
On occasion, the price movement in the Underlying may make it difficult or even impossible to close a Margined Trade. An example of this is when the Underlying is suspended or restricted from trading on an exchange.
General
Unless we agree otherwise in a separate agreement with you, the Client Money Rules of the FSA will apply.
In the unlikely event that we were to face liquidation if you are deemed at the time of the liquidation to be an eligible claimant under the rules of the Financial Services Authority you will be covered by the Financial Services Compensation Scheme to a maximum of £48,000 (successful claimants would recover the first £30,000 in full plus 90% of the balance up to a total of £48,000).
If you need any further information, explanations or clarification or if there is anything you do not understand please contact our Customer Services department at info@fxlrmarkets.com.