Risk Disclaimer

1. General Risk Warning

Trading foreign exchange (forex) and contracts for difference (CFDs) on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose some or all of your initial investment. You should not invest money that you cannot afford to lose.

Before deciding to trade forex or CFDs, you should carefully consider your investment objectives, level of experience, and risk appetite. No trading system or methodology has ever been developed that can guarantee profits or ensure freedom from losses. No representation or implication is being made that using any trading approach described on this website will generate profits or be free from losses.

The high degree of leverage available in forex and CFD trading can work both for and against you. Leverage can lead to large losses as well as large gains.

2. Retail Investor Loss Statistics

Regulated brokers in the European Union and other jurisdictions are required to disclose the percentage of retail investor accounts that lose money when trading CFDs. These figures are significant:

These statistics are reported by brokers themselves to regulatory authorities and represent actual client outcomes. The exact percentage varies by broker and is typically disclosed on the broker's website and in their legal documentation. These figures highlight the reality that the majority of people who trade CFDs lose money.

When we review brokers, we include their specific loss percentages where available to help you make an informed decision.

3. Leverage Risk

Leverage allows you to control a large position with a relatively small amount of capital. While leverage can amplify profits, it equally amplifies losses. A small market movement against your position can result in a loss that is substantially larger than your initial margin deposit.

For example, if you trade with 1:30 leverage (the maximum allowed for retail clients in the EU), a 3.33% adverse movement in the underlying asset would wipe out your entire margin. With higher leverage ratios available to professional clients or in less regulated jurisdictions, the risk is even greater.

Key points about leverage:

• Leverage magnifies both gains and losses proportionally
• You can lose more than your initial deposit (depending on the broker's negative balance protection policy)
• Margin calls may require you to deposit additional funds at short notice
• Positions may be automatically closed if you fail to meet margin requirements
• Higher leverage does not increase the probability of profit — it increases the speed and magnitude of both gains and losses

4. Market Risk

Financial markets are inherently volatile and unpredictable. Several types of market risk can affect your trading:

Volatility

Prices can move sharply and unpredictably, especially during economic announcements, geopolitical events, or periods of low liquidity. Volatile markets can trigger stop-loss orders at unfavorable prices or result in rapid account depletion.

Price Gaps

Markets can "gap" — meaning the price jumps from one level to another without trading at levels in between. This often occurs over weekends or around major news events. Gap risk means that stop-loss orders may not execute at your specified price, potentially resulting in larger losses than expected.

Slippage

Slippage occurs when your order is executed at a different price than expected. In fast-moving or illiquid markets, the price at which your order fills may be significantly worse than the price you intended. This applies to both entries and exits.

Liquidity Risk

Some instruments or markets may have limited liquidity at certain times. This can make it difficult to open or close positions at desired prices, especially during off-market hours, holidays, or periods of market stress.

5. Past Performance

Past performance is not indicative of future results.

This applies to any performance data, trading strategies, signals, or historical results discussed on our website or by any broker we review. Market conditions change, and what worked in the past may not work in the future. Any examples of past performance are provided for illustration purposes only and should not be interpreted as a guarantee or promise of future results.

6. No Financial Advice

The Broker Report is an independent broker review and comparison website. We are not a broker, dealer, financial advisor, or investment firm. We do not hold any financial services licenses and do not provide personalized financial advice.

Specifically:

• Our broker reviews, ratings, and comparisons are editorial opinions based on our testing and research
• Nothing on our website constitutes a recommendation to open a trading account, make a trade, or invest in any financial product
• Our content does not take into account your personal financial situation, objectives, or risk tolerance
• Broker ratings reflect our assessment of broker quality, not the suitability of trading for any individual

You are solely responsible for evaluating the merits and risks of any trading decision.

7. Regulatory Considerations

Financial regulations vary significantly by country and jurisdiction. Important considerations include:

• EU/EEA: Retail CFD trading is restricted under ESMA regulations, including maximum leverage limits (1:30 for major forex pairs), mandatory negative balance protection, and standardized risk warnings
• United Kingdom: The FCA regulates CFD trading with rules similar to ESMA, including a ban on cryptocurrency CFDs for retail clients
• United States: CFD trading is generally not available to US residents due to regulatory restrictions
• Australia: ASIC imposes leverage limits and product intervention orders for retail CFD trading
• Other jurisdictions: Regulations vary widely. Some jurisdictions have limited or no regulation of CFD trading, which may expose you to additional risks

It is your responsibility to ensure that trading with a particular broker is legal in your jurisdiction and that you comply with all applicable local laws and regulations.

8. Who Should Not Trade

Forex and CFD trading is not appropriate for everyone. You should not trade if:

• You cannot afford to lose the money you are investing
• You are using money needed for essential living expenses, debt repayment, or emergency funds
• You do not fully understand how leverage, margin, and CFDs work
• You are looking for a guaranteed or low-risk way to grow your money
• You are under 18 years of age (or the legal age of majority in your jurisdiction)
• You are trading with borrowed money
• You feel pressured or rushed into trading by any person or advertisement
• You are in financial difficulty

9. Our Recommendation

We strongly recommend that you:

• Seek independent financial advice from a qualified professional before trading forex or CFDs. An independent advisor can assess your personal financial situation and advise whether trading is suitable for you.
• Start with a demo account to familiarize yourself with the trading platform and market dynamics before risking real money.
• Only invest what you can afford to lose. Never trade with money that you need for rent, bills, food, or other essential expenses.
• Educate yourself thoroughly about the financial markets, trading strategies, and risk management before placing any trades.
• Understand the specific risks of each instrument you trade, including leverage ratios, margin requirements, and potential for losses beyond your initial deposit.
• Read the broker's terms and conditions carefully, including their risk disclosure documents, before opening an account.