Risk Disclosure: Leveraged Forex and CFD Trading

Scope of This Notice

This document sets out the risks that come with leveraged forex and contract for difference (CFD) trading. It is published by fcmabrokerng.com, an independent editorial resource that reviews a broker for readers in Nigeria. It describes risks in general terms so that readers can weigh them before acting on anything they read here.

This site is not the broker it reviews. It is not affiliated with that broker, does not hold client funds, does not open or operate trading accounts, does not accept deposits, and does not provide financial, investment, legal or tax advice. Nothing on this site is a personal recommendation or an offer to trade. If you need advice about your own circumstances, consult a qualified professional who is authorised to give it.

This notice cannot cover every risk. It also cannot tell you whether leveraged trading suits you. That judgement is yours, and it should be made only after you have read the broker's own legal documents and satisfied yourself that you understand them.

Losses Across Retail Accounts

Regulators in several markets require brokers to publish the share of retail investor accounts that lose money when trading CFDs. Those published figures are commonly high, and in many jurisdictions they show that a majority of retail accounts end up with a loss. The exact percentage varies by broker, by product and by the period measured, so you should look for the figure the broker itself is required to publish rather than rely on any general impression.

A high loss rate among retail accounts is not a temporary glitch or a sign of bad luck. It reflects the structure of leveraged products, where trading costs are charged continuously and where a small adverse move can wipe out a large part of the funds committed. You should assume, when you open an account, that you may be in the majority who lose.

Margin Calls and Automatic Closure

Leveraged trading requires you to post margin, which is a fraction of the position's value. If the market moves against your position, the equity in your account falls. When that equity approaches the margin requirement, the broker may issue a margin call, asking you to add funds or reduce positions.

If you do not act, or if the market moves quickly, the broker can close your positions automatically without further notice. Automatic closure can happen at prices you would not have chosen, and it can lock in a loss. In fast or illiquid markets, the price at which a position is closed may be materially worse than the level you were watching.

Some brokers also apply a negative balance policy, but the terms differ between entities and jurisdictions. You should not assume that your losses are capped at the funds in your account unless the broker's own terms, as applied to your jurisdiction and entity, say so clearly.

Running Costs and Financing

Leveraged positions carry costs that accumulate while the position stays open. The spread, which is the difference between the buy and sell price, is charged on entry and exit. Overnight financing is charged on positions held past the daily cut-off, and it can be positive or negative depending on the instrument and the direction of the trade. Commissions may apply on some account types.

These costs are easy to overlook because they are small relative to the size of the position, but leverage makes them large relative to the equity you have committed. A strategy that looks profitable before costs may lose money after them. Costs are charged whether or not the trade works, so frequent trading and long holding periods both increase the total drag on your account.

You should read the broker's schedule of fees and its financing terms before trading, and check how those terms apply to the specific entity that would hold your account.

Leverage in Both Directions

Leverage multiplies the effect of price movements on your account. If you control a large position with a small margin deposit, a small move in your favour produces a large gain relative to your deposit, and a small move against you produces a large loss. The same mechanism works in both directions, with no asymmetry in your favour.

The multiplier cuts both ways at speed. A move of a fraction of a percent in the underlying market can change your account equity by a much larger percentage. That is why leveraged trading can exhaust an account in a short period, and why the risk of losing more than you intended is real rather than theoretical.

Past results say little about what comes next. A record of gains, whether yours or anyone else's, does not indicate that future trades will produce the same outcome. Markets change, costs persist, and the sequence of returns matters as much as the average.

Funds, Protection and Jurisdiction

Trade only with money you can afford to lose entirely. Do not commit funds needed for rent, school fees, medical costs, debt repayment or emergencies, and do not borrow to trade. Treat any money placed in a trading account as at risk in full.

Investor protection schemes differ by jurisdiction and by the legal entity that holds your account. The same brand may operate through several entities, and the protections available to you depend on which entity you contract with, where it is established, and what local rules apply. Some jurisdictions offer compensation schemes with capped payouts; others offer none. Segregation of client funds, negative balance protection and dispute procedures also vary.

This site does not claim to be regulated, licensed or endorsed by any authority, and it cannot confirm what protection would apply to you. Before opening an account, check the broker's legal documents for the entity that would serve you, confirm the protections that entity offers in your jurisdiction, and direct any question through the contact form on this site if you need to reach the editors.

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