High Risk of Loss
CFD trading involves a high risk of losing money rapidly due to leverage. Between 60% and 80% of retail investor accounts lose money when trading CFDs with most providers. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Key Risks You Should Understand
Leverage Risk
Leverage allows you to control a large position with a small deposit. While this can amplify profits, it also amplifies losses. A small adverse price movement can result in losing your entire deposit or more.
Market Volatility
Financial markets can be extremely volatile. Prices can move rapidly against your position, causing significant losses in a short period. This is especially true during economic announcements, geopolitical events, and market openings.
Counterparty Risk
When you trade CFDs, you are entering a contract with your broker. If the broker becomes insolvent, you may lose your funds. This is why choosing a regulated broker is critical.
Liquidity Risk
In fast-moving markets, you may not be able to close your position at your desired price. Slippage can occur, meaning your trade is executed at a worse price than expected.
Overnight / Swap Costs
Holding positions overnight incurs swap fees. These can accumulate over time and erode your trading capital, especially on leveraged positions.
Psychological Risk
Trading can be emotionally stressful. Losses can lead to impulsive decisions, revenge trading, and further losses. Never trade with money you cannot afford to lose.
Not Investment Advice
All content on Rankly is for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or an invitation to trade.
We do not provide personalized investment advice. The information on this site should not be relied upon as a substitute for independent professional advice. Before making any trading or investment decision, you should consult a licensed financial advisor.
Past performance is not indicative of future results. The value of your investments can go down as well as up. You may not get back the amount you invested.
Regulatory Protections
Different regulators offer different levels of investor protection. Make sure you understand what protections apply to you:
Negative Balance Protection
Some regulators require brokers to ensure you cannot lose more than your account balance. Not all jurisdictions offer this.
Segregated Funds
Regulated brokers must keep client funds in separate bank accounts. This protects your money if the broker faces financial difficulties.
Investor Compensation
Some schemes (like FSCS in the UK) provide compensation if a regulated firm fails. Coverage limits vary by jurisdiction.
Leverage Limits
ESMA and other regulators impose leverage caps for retail traders. Offshore regulators may allow much higher leverage — which increases risk.
Your Responsibility
- Only trade with money you can afford to lose.
- Never use borrowed money or essential savings for trading.
- Understand the products you are trading before opening a position.
- Use risk management tools such as stop-loss orders.
- Start with a demo account to practice before trading with real money.
- Verify the broker's regulatory status before depositing any funds.
- Read the broker's full terms and conditions before signing up.
- Be aware of the tax implications in your country.