Understand the Risks Before You Trade Leveraged Forex and CFDs
Leverage cuts both ways, and most retail accounts lose money - read this before you open a position.
More on the sponsored brokerStart by Facing the Loss Numbers
If you are reading this page, you are probably comparing what a broker advertises against what trading actually costs you. The first fact to absorb is the least comfortable one. Regulators in several major jurisdictions require brokers to publish the share of retail accounts that lose money when trading contracts for difference. Across the industry, that figure consistently sits between roughly seventy and eighty per cent, and sometimes higher. The exact number varies by broker, by product and by reporting period, but the direction does not.
Put plainly, most people who trade leveraged forex and CFDs with their own money end up with less than they started. This is not a warning aimed at careless beginners alone. It applies to anyone who assumes that skill, a good month, or a particular strategy changes the underlying maths. Before you deposit anything, treat that statistic as the baseline you are trying to beat, not as a marketing claim to be dismissed.
This site reviews FXTM as an editorial resource for readers in the United Arab Emirates. We are not the broker, we do not hold or handle client funds, and we do not open accounts, accept deposits or give trading advice. Everything below is general risk information, and you should read the broker's own legal documents before acting.
Count the Costs That Run While You Hold
Leveraged products do not only cost you when a trade goes wrong. They cost you while it is open. The spread - the difference between the price at which you buy and the price at which you sell - is charged on every position, and on short timeframes it can swallow a meaningful share of any move. Wider spreads around market opens, closes and major announcements make this worse.
If you hold a position overnight, financing charges usually apply. These reflect the cost of the leverage you are using and the interest differential between the two currencies involved, and they can be positive or negative depending on direction. Over weeks and months, overnight financing can quietly erode a position even when the price has barely moved. Commissions, inactivity fees and currency conversion charges may also apply depending on the account type.
None of these costs care whether you are right about direction. Add them up over a year of active trading and they can exceed what many traders expect to make. Model them before you trade, not after.
Know Which Entity Holds Your Money
Investor protection is not uniform. The scheme that applies to you depends on the legal entity you have contracted with, and on the jurisdiction in which that entity is licensed. Different entities within the same group may be regulated in different places, and those places offer different levels of compensation, different complaint procedures and different rules on how client money is held.
If you are based in the United Arab Emirates, the entity that accepts you as a client may sit outside the UAE, and the protections you assume you have may not follow you. Segregated accounts, negative balance protection and compensation limits are not universal. Some jurisdictions cap what you can recover if a firm fails; others offer no compensation scheme at all.
Before you deposit, identify the exact entity named in your client agreement, find which regulator supervises it, and read what that regulator actually guarantees. If you cannot establish this from the documents, ask through the contact form on this site and we will point you to where the information should appear - but the decision remains yours.
See How Leverage Cuts Both Ways
Leverage lets you control a position far larger than your deposit. That is its only function, and it is symmetrical. A small move in your favour produces a large gain relative to your margin; an equally small move against you produces a large loss. The multiplier does not discriminate.
Because losses are calculated on the full position size, not on your deposit, a modest adverse move can wipe out most or all of your margin in a short time. Stop-loss orders help, but they are not guarantees, and they can be jumped in fast markets. Margin calls may force you to add funds or close positions at the worst moment.
There is no strategy that removes this arithmetic. Position size, not conviction, determines how long you survive a losing run. If you cannot state in advance the maximum you are prepared to lose on a trade, you are not ready to place it.
Trade Only What You Can Afford to Lose, and Expect Gaps
Use only risk capital: money whose complete loss would not affect your rent, your debts, your family or your plans. Not borrowed money, not credit, not funds set aside for anything else. If losing the full amount would change your life, it does not belong in a leveraged account.
Prices gap. A market can close on Friday and reopen Sunday at a level that skips straight past your stop-loss, leaving you with a loss larger than planned. Slippage means your order fills at a worse price than requested. News releases, central bank decisions and unexpected events can turn a calm market into one where spreads widen sharply and liquidity thins. These are ordinary features of leveraged trading, not rare failures.
No risk management removes these exposures entirely. Treat every position as capable of costing more than you intended, keep your exposure small, and review your results honestly against the loss statistics above. If trading is affecting your finances or your wellbeing, stop and seek independent professional advice.
