RISK DISCLOSURE STATEMENT
In consideration of Octa Markets Cyprus Ltd (Company) agreeing to enter into over-the-counter contracts for differences (CFDs) and foreign exchange contracts (FX Contracts) with the undersigned (Client), the Client acknowledges, understands and agrees that:
1. Trading is very speculative and risky
Trading CFDs and FX Contracts is highly speculative, involves a significant risk of loss and is not suitable for all investors but only for those the Clients 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; and
(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 CFDs nor 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. The Client represents, warrants and agrees that the Client understands these risks, is willing and able, financially and otherwise, to assume the risks of trading CFDs and FX Contracts and that the loss of the Client’s entire account balance will not change the Client’s lifestyle.
2. Risks related to long CFD positions, i.e. for purchasers of CFDs
Being long in CFD means you are buying the CFDs on the market by speculating that the market price of the underlying 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 rises whilst your CFD long position is open. On the contrary, you will generally suffer a loss, if the market price of the underlying 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 due to the closure of your position, in case you do not have enough liquidity for the margin on your account in order to maintain your position open.
3. Risks related to short CFD positions, i.e. for sellers of CFDs
Being short in CFD means you are selling the CFDs on the market by speculating that the market price of the underlying 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 falls whilst your CFD short position is open. On the contrary, you will generally suffer a loss, if the market price of the underlying 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 due to the closure of your position, in case you do not have enough liquidity for the margin on your account in order to maintain your position open.
4. High leverage and low margin can lead to quick losses
The high degree of “gearing” or “leverage” is a particular feature of both CFDs and FX Contracts. The effect of leverage makes investing in CFDs riskier than investing directly in the underlying asset. This stems from the margining system applicable to CFDs which generally involves a small deposit relative to the size of 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 favour can provide a high return on the deposit, however, a small price movement against you may result in significant losses. Your losses will never exceed the balance of your account, which is balanced to zero, if the losses are higher than the amount deposited. Such losses can occur quickly. The greater the leverage, the greater the risk. The size of leverage therefore partly determines the result of your investment.
5. Margin Requirements
The Client must maintain the minimum margin requirement on his/her open positions at all times. It is the Client's responsibility to monitor his/her account balance. The Client may receive a margin call to deposit additional cash if the margin in the account concerned is too low. The Company has the right to liquidate any or all open positions whenever the minimum margin requirement is not maintained, and this may result in the Client’s CFDs or FX Contracts being closed at a loss for which the Client will be liable.
6. Cash Settlement
The Client understands that CFDs and FX Contracts can only be settled in cash and the difference between the buying and selling price partly determines the result of the investment.
7. Prices, Margin and Valuations are set by the Company and may be different from prices reported elsewhere
The Company will provide prices to be used in trading, valuation of the Client positions and determination of margin requirements. The performance of your CFD or FX Contract will depend on the prices set by the Company 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.
8. Rights to Underlying Assets
You have no rights or obligations in respect of the underlying instruments or assets relating to your CFDs or FX Contracts. The Client understands that CFDs can have different underlying assets, such as stocks, indices, currencies and commodities.
9. Currency Risk
Investing in FX Contracts and CFDs 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 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.
10. One click trading and immediate execution
The Company’s online trading system provides immediate transmission of the Client’s order once the Client enters the notional amount and clicks “Buy/Sell.” This means that there is no opportunity to review the order after clicking “Buy/Sell” and market orders cannot be cancelled or modified. This feature may be different from other trading systems the Client has used. The Client should utilize the Demo Trading System to become familiar with the Online Trading System before actually trading online with the Company. The Client acknowledges and agrees that by using the Company’s online trading system, the Client agrees to the one-click system and accepts the risk of this immediate transmission/execution feature.
11. The Company is not an adviser or a fiduciary to the Client
Where the Company provides 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 FX Contracts or CFDs. Each decision by the Client to enter into a CFD or FX Contract with the Company and each decision as to whether a transaction is appropriate or proper for the Client, is an independent decision made by the Client. The Company is not acting as an advisor or serving as a fiduciary to the Client. The Client agrees that the Company has no fiduciary duty to the Client and no liability in connection with and is not responsible for any liabilities, claims, damages, costs and expenses, including attorneys’ fees, incurred in connection with the Client following the Company’s generic trading recommendations or taking or not taking any action based upon any generic recommendation or information provided by the Company.
12. Recommendations are not guaranteed
The generic market recommendations provided by the Company are based solely on the judgment of the Company’s personnel and should be considered as such. The Client acknowledges that he/she enters into any transactions relying on his/her own judgment. Any market recommendations provided are generic only and may or may not be consistent with the market positions or intentions of the Company and/or its affiliates. The generic market recommendations of the Company are based upon information believed to be reliable, but the Company cannot and does not guarantee the accuracy or completeness thereof or represent that following such generic recommendations will reduce or eliminate the risk inherent in trading CFDs and/or FX Contracts.
13. No guarantees of profit
There are no guarantees of profit nor of avoiding losses when trading CFDs and FX Contracts. The Client has received no such guarantees from the Company or from any of its representatives. The Client is aware of the risks inherent in trading CFDs and FX Contracts and is financially able to bear such risks and withstand any losses incurred.
14. Internet Trading
When the Client trades online (via the internet), the Company shall 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 the Company, the Client, any exchange or any settlement or clearing system.
15. Quoting Errors
Should a quoting error occur (including responses to the Client requests), the Company is not liable for any resulting errors in account balances and reserves 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 the Company in its sole discretion and acting in good faith, of the relevant market at the time such an error occurred. In cases where the prevailing market represents prices different from the prices the Company has posted on its screen, the Company 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 Client statements. This may or may not adversely affect the Client’s realized and unrealized gains and losses.
The Company participates in the Investor Compensation Fund for clients of Investment Firms regulated in the Republic of Cyprus. The Client will be entitled to compensation under the Investor Compensation Fund where the Company is unable to meet its duties and obligations arising from the Client’s claim. Any compensation provided to the Client by the Investor Compensation Fund shall not exceed EUR 20,000 (twenty thousand Euros). This applies to the Client’s aggregate claims against the Company.