This notice is provided to you by TRUE TRADE LTD, trading as True Trade, which is authorised and regulated by the Financial Conduct Authority (FRN: 726463). TRUE TRADE LTD is a company incorporated in England and Wales (under number 09813565), whose registered office is at Mansion House, 33 Queen Street, London, EC4R 1BR.
Trading foreign exchange (FX) and/or contracts for difference (CFD) is high risk and not suitable for every investor. You should always carefully consider your needs, investment objectives, level of experience and risk appetite in addition to your financial situation before making a decision to trade. Rolling spot FX and a CFD are derivative products and are complex when traded. Most importantly, do not invest money you cannot afford to lose and always consider taking independent financial advice. Past performance should not be considered as a guarantee of future performance as the future performance of underlying markets or any derivative product is uncertain.
There is considerable exposure to risk in any off-exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of the markets that you are trading. The over-the counter (OTC) and speculative nature of the derivative products on offer from True Trade Limited are in certain ways similar to futures and options and are additional risk factors. Put simply, these products may expose you to greater risks than on-exchange transactions.
You should only trade FX and/or a CFD if you have sufficient relevant knowledge and experience of trading these products, you are fully accepting of the risks associated with such products, including any contingent liabilities, and can fully afford to lose your initial investment and possibly even the full leveraged sum (i.e. your entire investment). TRUE TRADE LTD is required to make an assessment of whether the products and/or services you have chose are appropriate for you, and to warn you, if on the basis of information you provide, any product or service is inappropriate. Any decision thereafter to open an account and trade is yours and at all times it is your responsibility to understand the risks involved.
With any trade you undertake with TRUE TRADE LTD you will have no right to underlying instruments or assets. So, for example, with a CFD trade you do not own a share. For the sake of completeness, you should also understand that in respect of FX your trading is taken to be speculative, not physical - so that your contract with TRUE TRADE LTD is not simply for delivery of currency at an agreed rate.
Any trading in FX and/or a CFD with TRUE TRADE LTD is non-transferable. This means you will enter into trades directly with TRUE TRADE LTD and those trades can only be closed with TRUE TRADE LTD. All trading is done on a matched-principal basis, TRUE TRADE LTD being your counterparty at all times, and you will not be able to transfer or sell your open positions to other brokers.
This risk warning explains many of the risks associated with trading FX and/or a CFD, but it cannot and does not explain all the risks. Nor does it disclose or explain all other significant aspects involved in dealing in such products.
To open a leveraged FX or CFD trade with True Trade you will need to deposit money as margin. This is typically a relatively small proportion of the overall contract value (i.e. the total value of the investment). For example, a contract trading on leverage of 100:1 will require margin of just 1% of the contract value. This means that a small price movement in the underlying instrument will result in large movement in the value of your trade – this can work in your favour, or result in substantial losses.
You may lose your initial deposit and be required to deposit additional margin in order to maintain your position. If you fail to meet any margin requirement your position will be liquidated and you will be responsible for any resulting losses. In other words, leverage magnifies your profit or loss on a position compared to the funds deposited as margin, and losses can exceed your deposit. You should therefore ensure you fully understand the risks involved when trading on margin and seek independent advice if necessary prior to entering into such transactions.
Leverage can work for or against you and in simple terms, the greater the leverage, the greater the risk involved. You should not therefore focus on the potential for profits rather than losses. For example, if the total value of your initial position in a CFD trade is £10,000 and the leverage ratio offered is 100:1, the initial margin requirement to the client would be set at 1% of £10,000, so you would deposit £100. A market movement of 0.5% against your position, originally valued at £10,000, would result in a 50% (£50) loss against your deposited margin.
If a trade is not margined, it may still carry an obligation to make further payments in certain circumstances over and above the amount paid when you entered the contract. Traded FX and/or a CFD should always be considered high risk.
Margined product can be utilised for the management of investment risk in relation to a portfolio of investments. However, it still may not be suitable for some investors. Whatever the circumstances, you should always be aware of the risk.
There are risks associated with both long and short positions in these derivative products - if you buy a position in the market with a view that the price will rise above the purchase price at the point of sale, and the market price falls whilst you hold the position, you may suffer a loss. Conversely, if you sell a position in the market with a view that the price will fall below the purchase price at the point of sale, carries with it the risk the market price rises whilst you hold the position and you suffer a loss.
The purpose of trading FX and/or a CFD is to secure a profit or avoid a loss by reference to fluctuations in the price of underlying position/instrument. The underlying market may be a single security and/or an exchange rate between two currencies as TRUE TRADE LTD may from time to time agree in writing.
It is important that you understand the risks associated with trading in the relevant underlying market as fluctuations in the price of the underlying market will affect the profitability of your trade (in other words it will affect both profit and loss). Some such risks include, but are not limited to:
TRUE TRADE LTD enables you to trade FX and/or a CFD around the clock and communicate via electronic means, including by mobile and tablet devices. Whereas electronic communications are normally reliable and safe, they are not 100% so. It is possible disruption, interference or delay occurs beyond the control of TRUE TRADE LTD and that this or any other operational failure adds to your overall risk exposure.
TRUE TRADE LTD is authorised to hold and control client money. This does not mean that it can be utilized as a loan or otherwise used to support the business activities of TRUE TRADE LTD. In accordance with FCA client money rules, all client money belonging to True Trade's retail clients is deposited into a segregated client money account with a third party approved bank for your protection. In the event that TRUE TRADE LTD was to become insolvent, all client money held in the third party bank account would be protected. This does not offer absolute and complete protection as in the event of an insolvency of the third party, your money is at risk. However, in the event that the third party was to become insolvent you may be entitled to compensation from a relevant national compensation scheme (where, for example, the third party bank is unable to meet their obligations). This will depend on the type of business you undertake, your client classification, the precise circumstances of the claim and the nature of the compensation scheme available. The client money rules do not apply to professional clients and they are not therefore affording the same protections as True Trade's retail clients. In the event of insolvency professional clients risk becoming an unsecured creditor of True Trade.
Should you deposit collateral as security with TRUE TRADE LTD, you should ascertain how your collateral will be dealt with so that you fully understand the risks involved.
All TRUE TRADE LTD costs and charges associated with trades in FX and/or a CFD have been fully disclosed to you and care should be taken to understand the extent of your liabilities. You should understand these may add to your overall risk exposure when trading and that you are fully liable for these with regard to the operation of your account. Duties may also apply and whist certain tax treatments and advantages currently attach to the products on offer from TRUE TRADE LTD, this may of course change.
TRUE TRADE LTD has taken reasonable measures to ensure the accuracy of the information on its website and will continue to do so. The content on this website, including this Risk Warning, is subject to change at any time without notice.