This notice is provided to you because you are proposing to undertake dealings in financial instruments in the form of CFDs with a firm which is carrying on investment business. This notice cannot and does not disclose or explain all of the risks and other significant aspects involved in dealing in such products.
YLDFX is prohibited from providing you with investment advice relating to investments or possible transactions in investments or from making investment recommendations of any kind. We can give you factual market information or information, in relation to a transaction about which you have enquired, as to transaction procedures, potential risks involved and how those risks may be minimised.
Engaging in CFDs (in this notice referred to as a “Transaction”) carries a high risk to your capital. Youshould not engage in this form of investing unless you understand the nature of the Transaction you are entering into and the true extent of your exposure to the risk of loss. Your profit and loss will vary according to the extent of the fluctuations in the price of the underlying markets on which the trade is based.
For many members of the public, these Transactions are not suitable. You should, therefore, consider carefully whether they are suitable for you in the light of your circumstances and financial resources and investment objectives. In considering whether to engage in this form of investing, you should be aware of the following:
The high degree of “gearing” or “leverage” is a particular feature of this type of Transaction. This stems from the initial financial requirements applicable to such Transactions which generally involve a comparatively modest deposit or margin in terms of the overall market value of the Transaction involved, so that a relatively small movement in the underlying market can have a disproportionately dramatic effect on your Transaction. If the underlying market movement is in your favour, you may achieve a good profit, but an equally small adverse market movement can quickly result in the loss of your entire deposit.
You may be called upon to deposit substantial additional margin, at short notice, to maintain your position. If you do not provide such additional funds within the time required, your position may be closed at a loss. You cannot and must not rely on YLDFX to close a position.
The purpose of a CFD Transaction is to secure a profit or avoid a loss by reference to fluctuations inthe price of underlying property or an index (the “Underlying Market”). In the context of our activities, the Underlying Market may be a single security, a basket of securities, a securities Index, an exchange rate between two currencies, a treasury product, a bullion, a commodity or such other investment as we may from time to time agree in writing. It is an express term of each CFD Transaction that neither you nor us:
- acquire any interest in or right to acquire or is obliged to sell, purchase, hold, deliver or receive the Underlying Market; and
- that the rights and obligations of each party under the spread bet or CFD Transaction are principally to make and receive such related payments.
Transactions with YLDFX are not transacted on a recognised or designated investment exchange and, accordingly, they may expose you to greater risks than exchange transactions. The Transactions structure and rules will be established solely by YLDFX. For example, if you wish to close the position earlier than the time at which it would otherwise automatically expire, you will have to close it at YLDFX’s quotation which may reflect a premium or discount to the Underlying Market. When theUnderlying Market is closed, YLDFX’s quotation can be influenced by the weight of other client’sbuying or selling with YLDFX. You will have to close any position with the same provider with whom it was originally entered into.
Where entering into such Transactions, YLDFX must do so under a two-way client agreement (i.e. Terms and Conditions and documents incorporated by reference therein). You should satisfy yourself that dealing is conducted throughout in strict conformity with that client agreement.
Gapping (or Slippage) refers to an occurrence whereby the market moves past a Stop Loss level. This may be because the particular Underlying Market has become unusually volatile for a period of time. In such instances the Underlying Market may have stopped trading and may only recommence trading at a price below a Stop Loss level. Where this happens a Stop Loss may not be effective and the Position will be closed at the current YLDFX Quote. Accordingly, where you have an open Position in a volatile market environment you must understand the potential impact of Gapping.
Foreign markets will involve different risks from UK markets. In some cases risks will be greater. The potential for profit or loss from transactions on foreign markets or in foreign currency denominated markets will be affected by fluctuations in foreign exchange rates.
Under certain trading conditions it may be difficult or impossible to liquidate a Position. This may occur, for example at times of rapid price movement if the price rises or falls in one trading session to such an extent that trading is restricted or suspended.
For the avoidance of doubt, clients have one trading account with YLDFX, but may have multiple sub accounts in the form of trading platform logins. Therefore, the aggregate sum of monies held on all platforms will be taken into consideration and may be used to offset a Negative Balance.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.