Transactions in derivatives based on foreign exchange rates or the prices of precious metals, commodities or equity indices products carry a high degree of risk. Any transaction involving these products is exposed to, among other things, changes in a country's economic condition or political climate as well as acts of nature or terrorism - each of which may substantially affect the price or availability of the these derivatives.
Speculative trading in derivate products is a challenging prospect with a high level of risk. You must therefore carefully consider your investment objectives, level of experience and appetite for such risk prior to trading these products. Most importantly, do not invest money that you are not in a position to lose. It is advisable to never invest borrowed funds.
Risks include, without limitation, the following: (i) it is possible to incur a loss if, after your acquisition of an investment, exchange rates change to your detriment, even if the price of the underlying currency to which the Trade relates remains unchanged; and (ii) you may sustain a total loss of the Margin Requirement in respect of your Account that you deposit with or pay to us to establish or maintain a position and, if the market moves against you, you may be required to pay substantial additional funds at short notice but if you fail to do so within the required time, your investment position may be liquidated at a loss to you and you will be liable for any remaining deficit in your Account.
In addition, trading on a margin basis means that any market movement will have a magnified effect on your deposited funds. This can work against you as well as for you. To limit your losses OANDA encourages you to employ such risk-reducing strategies as 'Stop Loss', 'Stop Order', or 'Trailing Stop', but you should be aware that market conditions may make it impossible to close out your order at the level specified.
There are also risks associated with using an Internet-based trade execution software application including, but not limited to, the failure of hardware and software. OANDA maintains ‘back up’ systems and contingency plans to minimise the possibility of system failure.
OANDA and the bank holding your client money pay levies to the UK Financial Services Compensation Scheme (FSCS). In the event of OANDA’s default you may be entitled to compensation up to £50,000, and in the event of the bank's default you may be entitled to compensation up to £75,000, in both cases subject to your eligibility. You can find more information about the FSCS (including eligibility to claim) on their website, www.fscs.org.uk or by calling 0800 678 1100.
Please be sure to read our complete Risk Disclosure Statement and contact us if you have any questions or concerns.