Contracts for Difference (CFDs) are a complex financial product and are not suitable for all investors. This notice outlines many of the risks related to trading these products. However, there are risks and other product characteristics which it cannot disclose. If you have any doubt whether or not these products are appropriate for you, you should seek professional advice before trading. If you are unsure of the risks or of whether you have sufficient financial resources or experience to trade these products, you should not begin trading with us.
CFD trading is an activity that carries a high risk to your capital. 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.trading212.com. You must carefully consider your financial circumstances and risk tolerance before trading CFDs. Don’t use money you can’t afford to lose.
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 the provider’s decision to close your position,
- you have sufficient time to manage your investment on an active basis.
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 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.
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. For example, a margin requirement of 5% would enable you to trade contracts 20 times as large as your deposit.
Fluctuations in asset prices will therefore be magnified many times. A small price movement against you may result in a larger loss.
Initial margin percentages by type of underlying for retail customers
- 3,33% of the notional value of the CFD when the underlying currency pair is composed of any two of the following currencies: US dollar, Euro, Japanese yen, Pound sterling, Canadian dollar or Swiss franc;
- 5% of the notional value of the CFD when the underlying index, currency pair or commodity is:
- any of the following equity indices: Financial Times Stock Exchange 100 (FTSE 100); Cotation Assistée en Continu 40 (CAC 40); Deutsche Bourse AG German Stock Index 30 (DAX30); Dow Jones Industrial Average (DJIA); Standard & Poors 500 (S&P 500); NASDAQ Composite Index (NASDAQ), NASDAQ 100 Index (NASDAQ 100); Nikkei Index (Nikkei 225); Standard & Poors / Australian Securities Exchange 200 (ASX 200); EURO STOXX 50 Index (EURO STOXX 50);
- a currency pair composed of at least one currency that is not listed in point (a) above; or
- 10% of the notional value of the CFD when the underlying commodity or equity index is a commodity or any equity index other than those listed in point (b) above;
- 50% of the notional value of the CFD when the underlying is a cryptocurrency; or
- 20% of the notional value of the CFD when the underlying is:
- a share; or
- not otherwise listed above.
The above-mentioned margin percentages are applicable for retail clients only.
Professional clients benefit from lower initial margin terms which are available on our website: www.trading212.com.
We reserve the right to adjust margin requirements for each of our products. This may result in your margin requirement increasing. You may therefore be required to deposit additional funds to maintain existing positions.
It is your responsibility to monitor your account. Should the net value of the account (cash plus running profits minus running losses) fall below 50% of the margin required, we may close some or all of your positions at the current market price. 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.
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. Some of these risks may be defined as:
Volatility - sharp, unexpected movements in the underlying product’s price, resulting in a magnified profit or loss to you. Markets may not move in a smooth fashion, and price ‘gaps’ may occur with consecutive quotations far apart. 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.
Currency - where you are trading a product denominated in a currency different to that in which you hold your account, fluctuations in the exchange rate affect your profit and loss.
Liquidity - 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 counterparty to all your trades. None of our 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 condition seriously, CFDs opened on your account with us must be closed with us, based on our prices and conditions.
You are also exposed to the risk of our default. Trading 212 Ltd.’s clients funds are covered by the Investors Compensation Fund and in the unlikely event of default, you may have recourse to this fund. Details of this fund may be found on the website www.sfund-bg.com.
In accordance with the FSC (Trading 212 Ltd.) regulations, all our client funds are held in segregated trust accounts. While we monitor the creditworthiness of our banks closely and select them on the basis of robustness and solidity, using only major international banks, this does not mean that they are risk-free. We can provide you with details of which banks we use, on request.