Notification about the risks
SmartFX notifies its clients about the risks which accompany the trading of currency contracts or CFD. It is important that client would have clear idea on which liabilities he undertakes, for avoidance of misunderstandings and disputes.
SmartFX company with the undersigned person came to agreement that conclusion of currency contracts outside the organized market is accompanied with the following:
- Trading transactions at Forex market are speculative and risky.
- Trading at CFD and FX Contracts is accompanied with essential risk of loss of financial assets that is why they are not acceptable for all the clients. Such trading activity can be performed only those traders, which:
- understand the level of risk of transactions and are ready to undertake all the economic and legal risks;
- are experienced sellers and know how to conduct the transactions with securities of high level and underlying assets of options on shares;
- are able to undertake all the losses by virtue of the fact that investors may incur losses from falling of the general nominal value of investments and not only deposit or credit.
Neither currency contracts nor CFD are the appropriate investment means for pension funds. Currency contracts and CFD transactions are quite a risky type of investments that is why they may lead to significant losses. Herewith the client represents that he understands these risks but he is willing and he has a financial opportunity to undertake the risks of trading of currency contracts and CFD, and complete loss of account balance will not affect his style of life.
Risks related to long positions CFD
To have a long position means the purchase of CFD by market price taking into account that the value of underlying asset between the moment of purchase and sale will increase. The owner of long position gains profit if the price of underlying asset increases while CFD is opened. And vice-versa, will incur losses if the value of underlying asset will reduce while the long CFD will be opened. That is why potential loss can be bigger than initially invested margin. Besides, one can face loss when closing position, if there will not be sufficient liquidity at the account to hold position opened.
Risks related to short positions CFD
To have a short position means to sell CFD by market value, taking into account that the price of the asset will fall between the moments of sale and purchase. The owner of short position gains profit if the value of underlying asset reduces while position remains opened. And, vice-versa, will incur losses if the value of underlying asset will start to increase, while CFD position will be opened. That is why potential loss can be higher comparing to initially invested margin. Furthermore, one can incur loss when closing position, if there will not be enough liquidity for margin on the account.
Risks related to low margin and high credit leveraging
High credit leveraging is the specifics both for currency contracts and for CFD. Investments to CFD using the credit leveraging are considered to be more risky comparing to the investments to underlying asset. Currency contracts and CFD are related to usage of high borrowed assets which provides a small deposit comparing to the amount of transaction that is why even insignificant changing of the cost of underlying asset is able to influence the trading significantly. But this can be both an advantage and disadvantage. Slight movement in the cost for your benefit is able to provide high profitability of investments, however the movement of price against the position will lead to significant losses. Still the loss can not be lower than the balance. If the loss will exceed a deposit invested to account the balance sheet will be automatically zero out. And such loss can be immediate, the more is a credit leveraging the higher is the risk. That is why the result of investment can be partially determined by the amount of credit leveraging.
Requirements on contribution of marginal security
The client is obliged to maintain margin not lower than the minimal level required for opened positions. The client performs the control over the account balance by himself. If the margin on account will become too small the client may receive the margin requirement for addition to the deposit. SmartFX is entitled to perform forced closing of one or several opened positions if the margin crossed a marking of minimally required level this may cause closing of currency contracts and CFD, therefore the client will incur losses which he will be obliged to cover.
Spread is the difference between the price which was proposed by the seller, and the price which the buyer is ready to pay. As we act as a market-maker our spreads are established on personal discretion and become effective almost immediately. The information on spreads, roll-over and credit leveraging is provided in the Terms of trading of currency and CFD trading.
Currency contracts and CFD are performed solely through monetary settlement and the difference between the rate of purchase and sale partially determined the efficiency of investment.
Conflict of interests
The counteragent on transactions performed in accordance with the Agreement is a broker and it may happen that his interests will not only coincide with yours but they will conflict with yours.
When performing trades of currency contracts or CFD, when transactions are performed with participation of broker-company, the transactions will not be performed on the assigned investment exchange that is why they are considered as off-exchange transactions. All the opened positions can be closed solely by SmartFX, participation of any other organization is excluded. Off-exchange transactions are usually related to high risk comparing to those concluded at the exchange, because there is no currency market where it is possible to close the opened position. Also there can be no option of forced closing of available position and evaluation of cost of position itself. Broker-company does not oblige to announce the value Ask and Bid (demand and proposition) according to the rules of better performance which are applied at the market. Also there is no centralized clearing that is why no other person will be able to provide guaranties on payments against client. Thus there huge credit risks related to SmartFX. The client may demand performance of all the contracts by account or return of margin only from his broker.
Estimated value, margin and prices are determined by the broker and may differ from the propositions on other sources. SmartFX provides prices which participate in trades, establishment of marginal requirements and estimation of positions value in accordance with the contracted trading policy and market operating procedure. Performance of currency contract or CFD will depend upon those prices which were established by broker as well as market fluctuations of the asset to which the contract concluded by you relates. Therefore any underlying asset contains certain risks which affect the CFD in one or another way.
We calculate prices for each market based on the available underlying asset, information on which we obtain at the exchange or from external sources of information. We obtain the data on prices for currency contracts from the biggest market participants. Despite the fact that broker aspires to make the prices maximally close to those available at the market, they may slightly differ from those one that can be used for performance of transactions by banks or other market participants. The broker has certain authorities for conclusion of transactions by the price that he will consider optimal when charging margin. Broker has a right to convert assets available at the account of the client for withdrawal of margin into any currency by the exchange rate which is established by SmartFX on his own discretion based on the exchange rates dominating at currency market at the corresponding moment.
The client has no rights and obligations concerning instruments or assets which are the basis for currency contracts or CFD. He understands that contracts may have different underlying assets, for instance, shares, currency, indexes, commodities. These moments are agreed in the Conditions of Trade of currency and Trading CFD.
If the currency contract or CFD is performed in the currency which differs from the basis one this may affect the amount of income when performing conversions.
Trading with one pressing and immediate performance
Trading system SmartFX operating in the online-mode provides an immediate transfer of client’s instruction at the moment when the conditional price will be determined by pressing “Purchase/Sell”. Which means that after pressing this button it will be impossible to change of cancel such instruction. This function may slightly differ from those available in other trading systems of trades. To learn all the nuances of operation of trading platform before the start of trades in online-mode it is recommended to use demo-version to avoid the possible problems. The client confirms that he agrees to use the system of one pressing when conducting trades in online-mode with SmartFX and that he undertakes the whole risk related to immediate confirmation of instruction.
Instructions made by telephone
Performance of instructions which the client makes by telephone using the corresponding service of SmartFX is performed at the moment when broker informs “Transaction completed”. After such confirmation the transaction of purchase or sale is completed therefore cancellation of instruction is impossible. Thus by sending the instruction by telephone the client agrees with the function of immediate performance and undertakes all the risks related to such operation.
SmartFX is not an authorized representative or consultant of the client
SmartFX provides wide recommendations and characteristics on current situation at the market, they are not individual that is why they can not account all the circumstances and tasks which were determined by the client for himself. All the advices on investments or purchase/sale of currency pairs are solely of recommendation nature. The client makes each solution on conclusion of currency contract or CFD with SmartFX or on appropriateness of transaction by himself. Broker does not provide consultations and does not act as the authorized person. The client agrees that SmartFX has no such obligations against him and understands that he is solely responsible for credit leveraging, losses, requirements, expenses and costs including the cost of services related to general recommendations.
Recommendations are not guaranteed
Trading recommendations provided by SmartFX are based solely on the evaluation of employees of broker company therefore they can be considered solely like such ones. The client understands that he concludes transactions based solely on his own opinion. Any market recommendations provided by SmartFX employee are universal that is why they can be inconsistent with some certain positions. Market recommendations of the broker are based on the information that he believes reliable but he can not guarantee the accuracy and completeness thereof. That is why it is impossible to eliminate or reduce the risk using the broker recommendations when performing transactions.
Waiver form guaranteed profit
SmartFX waives the liability for the income or profit therefore it gives no guaranties of gaining thereof when performing trading transactions with currency contracts and CFD. The client knows about the possible risks and has financial opportunities to answer for decisions being made and to undertake all the possible losses.
The client may have no opportunities to close the opened positions.
In virtue of trading conditions which are often accompanied with the fluctuations of market prices SmartFX may have no opportunity to close the position with the price that was specified. The client agrees that SmartFX bears no liability for non-fulfillment of instruction.
If the client performs trading transactions in online-mode, SmartFX bears no liability on requirements, losses, expenses or costs which are directly or indirectly related to failure or malfunction of system operation (computer equipment, software for trading performance which was provided by broker) during transfer of data or conduction of settlements.
In case if during the time of quotations provision an error took place, SmartFX bears no liability for failure or malfunction in operation of telephone equipment as well as does not guarantee its permanent availability through telephone communication. To avoid conflicts the client knows about such obligation. In case of malfunction of telephone equipment or unavailability of manager for communication at specific moment of time the client has to give instructions through other available SmartFX means.
Errors of quotations provision
If an error took place when providing quotations including the client’s request, SmartFX bears no liability for incorrect data at the accounts balances and has a right to perform correction by himself. Disputes which may arise based on such errors will be settled according to data established by SmartFX. The broker acts on his sole discretion, in good faith, by reasonable market price of corresponding segment as of the moment of error. If the prices which dominate at the market are significantly different from those provided by broker in terminal window, SmartFX will take all the efforts to resolve the issue reasonably and to close transaction by market prices. Dominating prices finally will be represented in client’s order. SmartFX bears no liability for unprofitability or profitability of transaction performed by the client.
I read and understood the abovementioned and confirm that I know about the risks which accompany trading transactions and I know the operation procedure and trading policy of SmartFX.