Trading CFDs involves significant risk of loss


Vs 3.0 30 July 2018

In consideration of Stocks Forex AF Limited who is the Broker agreeing to enter into over-the-counter (“ OTC”) contracts for differences (“ CFDs”) and foreign exchange contracts (“ FX Contracts”) with the undersigned (hereinafter referred to as the “ Customer”, “ you”, “ your”), Customer acknowledges, understands and agrees that:

Following the implementation of the Markets in Financial Instruments Directive (MiFID) and the Investment Services and Activities and Regulated Markets Law of 2017 (Law 87(I)/2017), Stocks Forex AF Limited provides this statement with information about the risks associated when clients are trading financial instruments. This statement cannot and does not disclose or explain all of the risks and other significant aspects associated with trading CFDs.

Trading is very Speculative and Risky

Trading CFDs and FX Contracts is highly speculative, involves a significant risk of loss and is not suitable for all investors but only for those customers who:

(a) understand and are willing to assume the economic, legal and other risks involved;

(b) are experienced and knowledgeable about trading in derivatives and in underlying asset types; and

(c) are financially able to assume losses significantly in excess of margin or deposits because investors may lose the total value of the contract not just the margin or the deposit.


CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

83,08% of retail investor accounts lose money when trading CFDs with this provider.

You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.


Although complex instruments can be utilized for the management of investment risk, some of these products are not suitable for all investors. Different instruments involve different levels of exposure to risk and in deciding whether to trade in such instruments you should first make acquainted yourself with the risks associated with the investments. Independent financial advice is necessary if you are unsure whether such complex instruments are appropriate for you.

Neither CFDs nor FX Contracts are appropriate investments for retirement funds. CFD and FX transactions are among the riskiest types of investments and can result in large losses.

Customer represents, warrants and agrees that Customer understands these risks, is willing and able, financially and otherwise, to assume the risks of trading CFDs and FX Contracts and that the loss of Customer’s entire account balance will not change Customer’s lifestyle.

Risks related to long CFD positions (i.e.for Purchasers of CFDs)

Being long in CFD means you are buying the CFDs on the market by speculating that the market price of the underlying will rise between the time of the purchase and sale. As owner of a long position, you will generally make a profit if the market price of the underlying rises whilst your CFD long position is open. On the contrary, you will generally suffer a loss, if the market price of the underlying falls whilst your CFD long position is open. Your potential loss may therefore be bigger than the initial margin deposited. In addition, you might suffer a loss due to the closing of your position, in case you do not have enough liquidity for the margin on your account in order to maintain your position open.

Risks related to short CFD positions (i.e. for sellers of CFDs)

Being short in CFD means you are selling the CFDs on the market by speculating that the market price of the underlying will fall between the time of the purchase and sale. As owner of a short position, you will generally make a profit if the market price of the underlying falls whilst your CFD short position is open. On the contrary, you will generally suffer a loss, if the market price of the underlying rises whilst your CFD short position is open. Your potential loss may therefore be bigger than the initial margin deposited. In addition, you might suffer a loss due to the closing of your position, in case you do not have enough liquidity for the margin on your account in order to maintain your position open.

High Leverage and Low Margin call lead to quick losses

The high degree of “gearing” or “leverage” is a particular feature of both CFDs and FX Contracts. The effect of leverage makes investing in CFDs riskier than investing directly in the underlying asset. This stems from the margining system applicable to CFDs which generally involves a small deposit relative to the size of the transaction, so that a relatively small price movement in the underlying asset can have a disproportionately dramatic effect on your trade. This can be both advantageous and disadvantageous. A small price movement in your favour can provide a high return on the deposit, however, a small price movement against you may result in significant losses which could exceed the money placed on deposit. Such losses can occur quickly. However the losses will never exceed the balance of your account, which is balanced to zero, if the losses are higher than the amount deposited (Negative Balance Protection).

The greater the leverage, the greater the risk. The size of leverage therefore partly determines the result of your investment.

Stocks Forex AF Limited applies the following Leverage limits for retail clients in accordance with the product intervention measures the European Securities and Markets Authority (ESMA). These measures may be updated from time to time based on ESMA announcements

Leverage limits on CFD positions for retail clients

  • 30:1 for major currency pairs; (the major currencies are currency pairs comprising any two of these currencies: USD, EUR, JPY, GBP, CAD and CHF)
  • 20:1 for non-major currency pairs, gold and major indices;(the major indices are any of these equity indices: FTSE 100; CAC 40; DAX30; DJIA; S&P 500; NASDAQ; NASDAQ 100; Nikkei 225; ASX 200; EURO STOXX 50)
  • 10:1 for commodities other than gold and non-major equity indices;
  • 5:1 for individual equities and other reference values;
  • 2:1 for cryptocurrencies

Margin Requirements

Customer must maintain the minimum margin requirement on their open positions at all times. It is Customer's responsibility to monitor his/her account balance. Customer may receive a margin call to deposit additional cash if the margin in the account concerned is too low.  Stocksforex AF has the right to liquidate any or all open positions whenever the minimum margin requirement is not maintained and this may result in Customer’s CFDs or FX Contracts being closed at a loss for which you will be liable.


The difference between our bid price and our ask price is “Our Spread”. Our Spreads are set in our absolute discretion, since we operate through our liquidity providers on CFD and FX contracts for end clients, and any changes are effective immediately. For further information, please visit our Product Trading Conditions pages.

Cash Settlement

Customer understands that CFD and FX Contracts can only be settled in cash and the difference between the buying and selling price partly determines the result of the investment.

OTC Transactions

When trading CFDs or FX Contracts with us, such transactions will not be executed on a recognized or designated investment exchange and are known as OTC transactions. All positions entered into with us must be closed with us and cannot be closed with any other entity. OTC transactions may involve greater risk than investing in on-exchange contracts because there is no exchange market on which to close out an open position. It may be impossible to liquidate an existing position, to assess the value of the position arising from an OTC transaction or to assess the exposure to risk. Bid prices and ask prices may not be quoted by us, based on best execution policies applicable in the market. There is no central clearing and no guarantee by any other party of  Stocksforex AF’s payment obligations to the Customer, thus Customer is exposed to credit risk with  Stocks Forex AF Limited. Customer must look only to Stocks Forex AF Limited for performance of all contracts in Customer’s account and for return of any margin or collateral.

Prices, Margin And Valuations Are Set By Stocks Forex AF Limited And May Be Different From Prices Reported Elsewhere

 Stocks Forex AF Limited will provide prices to be used in trading, valuation of Customer positions and determination of Margin requirements. The performance of your CFD or FX Contract will depend on the prices set by Stocks Forex AF Limited and market fluctuations in the underlying asset to which your contract relates. Each underlying asset therefore carries specific risks that affect the result of the CFD concerned.

Our prices for a given market are calculated by reference to the price of the relevant underlying asset which we obtain from third party external reference sources or exchanges. For our CFD and FX Contracts, we obtain price data from wholesale market participants. Although Stocks Forex AF Limited expects that these prices will be reasonably related to prices available in the market, StocksFrex AF’s prices may vary from prices available to banks and other market participants.  Stocks Forex AF  Limited has considerable discretion in setting and collecting margin.  Stocks Forex AF Limited is authorized to convert funds in Customer’s account for margin into and from such foreign currency at a rate of exchange determined by Stocks forex AF Limited in its sole discretion on the basis of then-prevailing money market rates.

Rights to Underlying Assets

You have no rights or obligations in respect of the underlying instruments or assets relating to your CFDs or FX Contracts. The Customer understands that CFDs can have different underlying assets, such as stocks, indices, currencies and commodities.

Currency Risk

Investing in FX Contracts and CFDs with an underlying asset listed in a currency other than your base currency entails a currency risk, due to the fact that when the CFD or FX Contract is settled in a currency other than your base currency, the value of your return may be affected by its conversion into the base currency.

About One Click Trading

 Stocksforex AF’s Online Trading System provides immediate transmission of Customer’s Order once Customer enters the notional amount and clicks “Buy/Sell.” This means that there is no opportunity to review the Order after clicking “Buy/Sell” and Market Orders cannot be cancelled or modified. This feature may be different from other trading systems you have used. Customer should utilize the Demo Trading System to become familiar with the Online Trading System before actually trading online with Stocksforex AF. Customer acknowledges and agrees that by using Stocksforex AF’s Online Trading System, Customer agrees to the one-click system and accepts the risk of this immediate transmission/execution feature.


Risks Related to Trading CFDs in Cryptocurrencies

When trading in CFDs where the underlying asset is a Cryptocurrency, you should be aware that

i.          there is no specific EU regulatory framework governing the trading in such products,

ii.         Trading in such products is not covered by MiFID and therefore falls outside the scope of the CIFs’ MiFID regulated activities,

iii.        A number of risks is associated with these products such as

1.         Cryptocurrencies are traded on non-regulated decentralized digital exchanges. Accordingly, price formation and price movements of the Cryptocurrencies depend solely on the internal rules of the particular digital exchange, which may be subject to change at any point in time and without notice.

2.         The Cryptocurrencies market is immature, limited in terms of liquidity and extremely volatile at all times, which may be substantially higher compared to Financial Instruments recognized under the MiFID.

3.         You should be aware that the pricing of cryptocurrency CFDs is derived from specific cryptocurrency exchanges, which means that the market depth is limited to what is available in the order books of such exchanges and may be changed at the relevant digital exchange’s discretion at any time. These exchanges are not subject to any regulatory supervision and do not provide the protections afforded by financial regulation. Similarly, such digital exchanges may introduce trading suspensions or take other actions that may result in suspension or cessation of trading on such exchanges or the price and market data feed becoming unavailable to us through our liquidity provider.

4.         Under certain market conditions, you may find it difficult or impossible to liquidate a position or withdraw any funds related to such position until the trading on the relevant digital exchange resumes (if at all). This can occur, for example, when the market reaches a daily price fluctuation limit, if there is insufficient liquidity in the market or a temporary or permanent disruption to or cessation of trading occurs on any digital exchange from which our liquidity provider derives our price feeds for the relevant Cryptocurrency. Placing contingent orders, such as “stop-loss” or “stop-limit” orders, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. that where trading resumes again at either the relevant initial digital exchange or on any successor exchange thereof, there may be significant price differential (price gapping) which may impact the value of your CFD positions in the relevant Cryptocurrencies and result in significant gains or losses. Where trading does not resume your entire investment will potentially be lost altogether.

iv.        Such products are complex and high risk and as such come with a high risk of losing all the invested capital, due to market volatility, execution issues and industry-specific disruptive events, such as hard forks, regulatory bans, the activities of hackers, mining cartels and other malicious actors within cryptocurrency ecosystems;

v.         virtual currencies values can widely fluctuate (high volatility) and may result in significant loss over a short period of time;

vi.        Virtual currencies are not appropriate for all investors and therefore, you should not trade in such products unless you understand their nature and the extent of your exposure to risk; you should always be fully aware and understand the specific characteristics and risks related to these products; you should always have detailed and updated knowledge of related block chain technologies;

vii.       Trading in such products does not entitle you to any protection under the Investors Compensation Fund,

viii.      You have no rights to report to the Cyprus Financial Ombudsman in case of a dispute with the Company.

 StocksForex AF Limited is Not An Adviser Or A Fiduciary

Where Stocks Forex AF Limited provides generic market recommendations, such generic recommendations do not constitute a personal recommendation or investment advice and have not considered any of your personal circumstances or your investment objectives, nor is it an offer to buy or sell, or the solicitation of an offer to buy or sell, any Foreign Exchange Contracts or Cross Currency Contracts. Each decision by Customer to enter into a CFD or FX Contract with Stocks Forex AF Limited and each decision as to whether a transaction is appropriate or proper for Customer, is an independent decision made by the Customer.  Stocks Forex AF Limited is not acting as an advisor or serving as a fiduciary to Customer. Customer agrees that Stocks Forex AF Limited has no fiduciary duty to Customer and no liability in connection with and is not responsible for any liabilities, claims, damages, costs and expenses, including attorneys’ fees, incurred in connection with Customer following Stocks Forex AF’s generic trading commentaries or taking or not taking any action based upon any generic recommendation or information provided by Stocks Forex AF Limited.

Market Commentaries Are Not Guaranteed

The generic market recommendations provided by Stocks Forex AF Limited are based solely on the judgment of Stocks Forex AF’s personnel and should be considered as such. Customer acknowledges that Customer enters into any Transactions relying on Customer’s own judgment. Any market recommendations provided are generic only and may or may not be consistent with the market positions or intentions of Stocks Forex AF Limited and/or its affiliates. The generic market recommendations of Stocks Forex AF are based upon information believed to be reliable, but Stocks Forex AF Limited cannot and does not guarantee the accuracy or completeness thereof or represent that following such generic recommendations will reduce or eliminate the risk inherent in trading CFDs and/or FX Contracts.

No Guarantees of Profit

There are no guarantees of profit nor of avoiding losses when trading CFDs and FX Contracts. Customer has received no such guarantees from Stocks Forex AF Limited or from any of its representatives. Customer is aware of the risks inherent in trading CFDs and FX Contracts and is financially able to bear such risks and withstand any losses incurred.

What happens when customer may not be able to close open positions

Due to market conditions which may cause any unusual and rapid market price fluctuations, or other circumstances, Stocks Forex AF Limited may be unable to close out Customer’s position at the price specified by Customer and the risk controls imposed by Stocks Forex AF Limited might not work and Customer agrees that Stocks Forex AF Limited will bear no liability for a failure to do so.

Internet / OnlineTrading

When Customer trades online (via the internet), Stocks Forex AF Limited shall not be liable for any claims, losses, damages, costs or expenses, caused, directly or indirectly, by any malfunction, disruption or failure of any transmission, communication system, computer facility or trading software, whether belonging to  Stocks Forex AF Limited, Customer, any exchange or any settlement or clearing system.

Quoting Errors

Should a quoting error occur (including responses to Customer requests), Stocks Forex AF Limited is not liable for any resulting errors in account balances and reserves the right to make necessary corrections or adjustments to the relevant Account. Any dispute arising from such quoting errors will be resolved on the basis of the fair market value, as determined by Stocks Forex AF Limited in its sole discretion and acting in good faith, of the relevant market at the time such an error occurred. In cases where the prevailing market represents prices different from the prices Stocks Forex AF Limited has posted on our screen, Stocks Forex AF Limited will attempt, on a best efforts basis, to execute Transactions on or close to the prevailing market prices. These prevailing market prices will be the prices, which are ultimately reflected on the Customer statements. This may or may not adversely affect the Customer’s realized and unrealized gains and losses.


The Company participates in the Investor Compensation Fund for clients of Investment Firms regulated in the Republic of Cyprus. Customers will be entitled to compensation under the Investor Compensation Fund where we are unable to meet our duties and obligations arising from your claim. Any compensation provided to you by the Investor Compensation Fund shall not exceed twenty thousand euro (EUR 20.000). This applies to your aggregate claims against us.

Third-Party Risk

When holding Client Money on behalf of a Retail Client, the Company makes adequate arrangements to safeguard the clients' rights and prevent the use of Client Money for its own account. For this purpose, the Company ensures to promptly place any Client money into one or more accounts, denoted as 'clients' accounts which are segregated from the Company’s own accounts and opened with any of the following:

(a) a credit institution within the European Economic Area ("EEA");

(b) a bank authorized and/or licensed in a third country and

(c) a payment provider that has been assessed based on specific criteria imposed by the Company and/or approved by the Company’s management.

The Company may pass money received from the Customer to a third party (e.g. a bank, a market, intermediate broker, OTC counterparty or clearing house) to hold or control in order to effect a Transaction through or with that person or to satisfy the Customer’s obligation to provide collateral (e.g. initial margin requirement) in respect of a Transaction. The Company has no responsibility for any acts or omissions of any third party to whom it will pass money received from the Customer.

The third party to whom the Company will pass money may hold it in an omnibus account and it may not be possible to separate it from the Customer’s money, or the third party’s money. In the event of the insolvency or any other analogous proceedings in relation to that third party, the Company may only have an unsecured claim against the third party on behalf of the Customer, and the Customer will be exposed to the risk that the money received by the Company from the third party is insufficient to satisfy the claims of the Customer with claims in respect of the relevant account. The Company does not accept any liability or responsibility for any resulting losses.

The Company may hold Customer money on the Customer’s behalf outside the EEA. The legal and regulatory regime applying to any such bank or person will be different from that of Cyprus and in the event of the insolvency or any other analogous proceedings in relation to that bank or person, the Customer money may be treated differently from the treatment which would apply if the money was held with a bank in an account in Cyprus. The Company will not be liable for the insolvency, acts or omissions of any third party referred to in this paragraph.

The Company may deposit Customer money with a depository who may have a security interest, lien or right of set-off in relation to that money.


I / We have read, understood and agree to the Risk Disclosure Statement and the trading policies and procedures set out above.