Risk Disclosure
RISK DISCLOSURE STATEMENT For Transactions in Foreign Exchange and Derivatives (Including Contracts for Differences)
In consideration of YOURT NORTH LTD (hereinafter referred to as, “we”
or “us”) agreeing to enter into over-the-counter (“OTC”) contracts for
differences (“CFD's”) and spot foreign exchange contracts (“Spot FX
Contracts”) with the undersigned (hereinafter referred to as the
“Customer”, “you”, or “your”), Customer acknowledges, understands and
agrees that:
This statement, which constitutes an addition to the Retail Client
Agreement and the General Terms & Conditions, cannot and does not
disclose or explain all of the risks and other significant aspects
involved in trading foreign exchange and derivatives. Engaging in
these types of transactions can carry a high risk to your capital,
potentially resulting in the total loss of such capital. Should you
require a more comprehensive understanding of the risks involved,
please contact us for further information.
In consideration of the risks, you should not engage in trading in the
above mentioned products unless you understand the nature of the
contracts and the contractual legal relationship into which you are
entering. Transactions in foreign exchange derivatives are not
suitable for many members of the public. You should carefully consider
whether transacting in foreign exchange is appropriate for you in
light of your experience, objectives, financial position and other
relevant circumstances.
If in doubt, it is advisable to seek independent financial advice.
Foreign Exchange and Derivatives Trading Is Very Speculative and
Risky.
Trading CFD's and Spot FX Contracts is highly speculative, and
involves a significant risk of loss; it may not be 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;
(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.
Neither CFD's nor Spot 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 he understands these risks, and is willing
and able, financially or otherwise, to assume the risks of trading
CFD's and Spot 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
CFD's
Being Long in a CFD means you are buying the CFD's on the market by
speculating that the market price of the underlying asset 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 asset rises whilst your CFD long position is open. On the
contrary, you will generally suffer a loss, if the market price of the
underlying asset 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 as a result of closing
your position, in circumstances which you do not have enough liquidity
for the margin on your account in order to maintain an open
position.
Risks related to Short CFD positions, i.e. for sellers of CFD's
Being Short in a CFD means you are selling the CFD's on the market by
speculating that the market price of the underlying asset 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 asset falls whilst your CFD short position is open. On the
contrary, you will generally suffer a loss, if the market price of the
underlying asset 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 as a result of closing
your position, in circumstances which you do not have enough liquidity
for the margin on your account in order to maintain an open position.
High Leverage And Low Margin Can Lead To Quick Losses
The high degree of “Gearing” or “Leverage” is a particular feature of both CFD's and Spot FX Contracts. The effect of leverage makes investing in CFD's riskier than investing in the underlying asset. This stems from the margining system applicable to CFD's which generally involves a small deposit relative to 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 favor can provide a high return on the deposit, however, a small price movement against you may result in significant loss which could exceed the money placed on deposit. Such losses can occur quickly. The greater the leverage, the greater the risk. Leverage therefore partly determines the result of the investment.
Effect of “Leverage” or “Gearing”
Transactions in foreign exchange and derivatives carry a high degree of risk. The high degree of “Leverage” or “Gearing” that is often obtainable in foreign exchange and derivatives trading can work against you as well as for you due to fluctuating market conditions. If the market moves against you, you may not only sustain a total loss of your initial margin deposit and any additional funds deposited with us to maintain your position, but you many also incur further liability to us. You may be called upon to deposit additional funds on short notice to maintain your position. Failing to comply with a request for deposit of additional funds may result in closure of your position(s) by us on your behalf; you will be liable for any resulting loss or deficit.
Risk-reducing Orders or Strategies
The placing of certain orders (e.g., “stop-loss” orders or “stop-limit” orders), which are intended to limit losses to certain amounts, may not be adequate given that market conditions or technological limitations that may make it impossible to execute such orders, e.g., due to illiquidity in the market. It should be noted that strategies using combinations of positions, such as “Spread” and “Straddle” positions may be as risky as taking simple “long” or “short” positions.
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 call to deposit additional cash if the margin in the account concerned is too low. We have the right to liquidate any or all open positions whenever the minimum margin requirement is not maintained. This may result in Customer’s CFD's or Spot FX Contracts being closed at a loss for which you will be liable.
Spread
The difference between Our Bid Price and Our Ask Price is “Our Spread”. Our Spreads are set in our absolute discretion, since we are acting as market maker, and any changes are effective immediately.
Cash Settlement
Customer understands that CFD and Spot FX Contracts can only be settled in cash, and the difference between the buying and selling price partly determines the result of the investment.
Conflicts of Interest
We are the counterparty to all transactions entered under the Customer Agreement and, as such, our interests may be in conflict with yours. Our conflicts of interest policy are available on our website.
OTC Transactions
When trading CFD's or Spot FX Contracts with us, such Transactions will not be executed on a recognized or designated investment exchange and are known as OTC (Over the Counter) 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 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 and based on best execution policies applicable in the market and even when they are, we may find it difficult to establish a fair price particularly when the relevant exchange or market for the underlying asset is closed or suspended. There is no central clearing and no guarantee by any other party of our payment obligations to the Customer. Thus, the Customer is exposed to credit risk with us. The customer must look only to us for performance of all contracts in the Customer’s Account and for return of any Margin or Collateral.
Suspension of Trading
Under certain market conditions, it may be difficult or impossible to
liquidate a position, increasing the risk of loss. This may occur, for
example, at times of rapid price movement if the price for the
underlying asset rises or falls in one trading session to such an
extent that trading in the underlying asset is restricted or
suspended.
Prices, Margin Prices, Margin And Valuations are set
by us and may be different from prices reported elsewhere. We will
provide prices to be used in trading, valuation of customer positions
and determination of Margin Requirements in accordance with its
trading policies and procedures and market information sheets. The
performance of your CFD or Spot FX Contract will depend on the prices
set by us 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 source\s or exchange\s. For our CFD and Spot FX
Contracts, we obtain price data from wholesale market participants.
Although we expect that these prices will be reasonably related to
prices available in the market, our prices may vary from prices
available to banks and other market participants. We have considerable
discretion in setting and collecting Margin. We are authorized to
convert funds in Customer’s Account for Margin into and from such
foreign currency at a rate of exchange determined by us in our 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 CFD's or Spot FX Contracts. The Customer understands that CFD's can have different underlying assets, such as stocks, indices, currencies and commodities.
Currency Risk
Investing in Spot FX Contracts and CFD's 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 Spot 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.
We are not an adviser or a fiduciary to the customer
Where we provide 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 Spot FX Contract with us and each
decision as to whether a transaction is appropriate or proper for the
Customer, is an independent decision made by the Customer. We are not
acting as an advisor or serving as a fiduciary to the Customer.
Customer agrees that we are not in a fiduciary duty to the Customer
and have no liability in connection with and are not responsible for
any liabilities, claims, damages, costs and expenses, including
attorneys’ fees, incurred in connection with Customer following the
generic trading recommendations or taking or not taking any action
based upon any generic recommendation or information provided by us.
Recommendations Are Not Guaranteed
The generic market recommendations provided by us are based solely on
the judgment of our personnel and should be considered as such.
Customer acknowledges that he/she enters into any Transactions relying
on their own judgment. Any market recommendations provided are generic
only and may or may not be consistent with the market positions or
intentions of Goodmanglobalmarkets and/or its affiliates.
Our generic market recommendations are based upon information believed
to be reliable, but we cannot and do not guarantee its accuracy or
completeness. Therefore, following such generic recommendations will
not reduce or eliminate the risk inherent in trading CFD's and/or Spot
FX Contracts.
No Guarantees Of Profit
There are no guarantees of profit nor of avoiding losses when trading
CFD's and Spot FX Contracts.
Customer has received no such guarantees from us or from any of our
representatives. Customer is aware of the risks inherent in trading
CFD's and Spot FX Contracts and is financially able to bear such risks
and withstand any losses incurred.
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, it may be unable to close out Customer’s position at the price specified by Customer and the risk controls imposed by Goodmanglobalmarkets might not work. Customer agrees that we will not be liable for a failure to do so.
Internet / Electronic Trading
Trading through our trading system may differ from trading on other
electronic trading systems as well as from trading in a conventional
or open market. Trading on an electronic trading system will expose
you to risks associated with the system including the failure of
hardware and software, system downtime, in relation to either our
trading system or the individual customer’s system and the
communications infrastructure (e.g., the internet) connecting with our
platform with our customers. The result of any system failure may be
that your order is either not executed according to your instructions
or is not executed at all and a lack of capability to keep you
informed continuously about your positions and fulfillment of the
margin requirements. When Customer trades online (via the internet),
we will 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 us, to the
Customer, any exchange or any settlement or clearing system.
Quoting Errors
Should a quoting error occur (including responses to Customer
requests), we are not liable for any resulting errors in Account
balances and reserve 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 Goodmanglobalmarkets in its sole discretion and
acting in good faith, from the relevant market at the time such an
error occurred.
In cases where the prevailing market represents prices different from
the prices provided on our screen, 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.
Terms and Conditions of Contracts
You have the responsibility to fully understand the rules of trading and/or terms and conditions of the transactions to be undertaken and/or the Retail client Agreement, including, but without limitation any terms describing risk factors, such as volatility, liquidity, and so on.
Weekend Risk
Various situations may arise over a weekend (Friday 22:00 CET – Sunday 23:30 CET), or during a holiday when the financial markets generally close for trading, that may cause the markets to open at a significantly different price from where they closed. Our customers will not be able to use the Goodmanglobalmarkets trading system to place or change orders over the weekend, on market holidays or and at other times when the markets are generally closed. There is a substantial risk that stop-loss orders left to protect open positions held during these periods will be executed at levels significantly worse than their specified price.
Charges and Commissions
Before you begin to trade, you should obtain from us details of all commissions and other charges for which you will be liable. These charges will affect your net profit or loss.
Money and Collateral
You acknowledge that you can afford to lose the sums that you remit to Goodmanglobalmarkets as deposit. When you deposit money with us, this will generally be held in a segregated client’s account held with one or more authorized credit and/or banking institution/s situated in Europe and/or in an EEA member state as shall be indicated on our website from time to time. The companies set rules pertaining to client money and Safeguarding of Client Assets will apply. You acknowledge that the holding of money in a segregated client’s account may not provide complete protection, particularly in the event of the insolvency of any third-party institution/s entrusted by our company to hold client assets.
Specific risks to Asset Management and Advisory Services
YOURT NORTH LTD has no obligation to cease entering into transactions when the assets on the Account decrease, even substantially. Therefore, the client undertakes to control the development of his/her account so as to be able to terminate the asset management service if s/he is of the opinion that the results do not conform to his/her expectations or needs.
Leveraged Trading Example
Leverage Basics
Leveraging a position is an expression in Forex trading; whereby
collateral (often referred to as margin) is put down to cover a
position significantly larger than the funded value. It is common for
brokers to offer clients 300 effectively allowing the trade value to
be multiplied 300 times of the balance in the account.