Understanding the risks of CFDs
This page explains in plain words how you can lose money when you trade CFDs. Read it before you open an account.
Leverage can increase your losses
Leverage lets you open a position that is larger than the money you put up. A small price move can then cause a large change in your account balance.
This works in both directions. Gains are larger, and losses are larger too. You can lose money quickly, you can lose more than you expected to risk on a trade, and you can lose all the money in your account.
Margin, margin call and stop-out
- Margin
- Margin is the part of your balance that is set aside to keep a leveraged position open. It is not a fee.
- Margin call
- A margin call is a warning that your equity is getting low compared with the margin your positions use.
- Stop-out
- If your equity falls further, the platform can close some or all of your open positions. This is a stop-out. It can happen without further notice, and positions can close at a loss.
The levels that apply to each account are shown in the client portal before you open it. Read how margin call and stop-out work.
Gaps and fast markets
Prices do not always move smoothly. A price can jump from one level to another with nothing traded in between. This is called a gap. It can happen when a market reopens or around news.
When markets move fast, your order can be filled at a different price from the one you saw. A stop order does not guarantee the price you chose. Fast markets can also make it harder to place or change an order.
You may lose more than you deposit
Do not assume your loss is limited to the money in your account. In fast markets a position can close at a worse price than the level where it was meant to close, and your balance can fall below zero.
What happens to a negative balance is set out in the client agreement. Read it before you trade.
Who takes the other side of your trade
A CFD is a contract between you and your broker. The broker can have an interest that is different from yours. How orders are executed, and how conflicts of interest are handled, is described in the legal documents and in the client portal.
Read these before you trade, and ask us if anything is unclear.
Platform and connection problems
You trade over the internet. A lost connection, a device problem or a platform fault can delay or stop an order, or stop you from closing a position. Open positions stay open and keep moving with the market while you are offline.
Costs add up when you hold positions
Positions held overnight can carry a swap charge. A position held for days or weeks can build up a large charge, even if the price does not move. Spread and commission apply each time you open and close a position.
Tax and currency
Tax rules depend on where you live, and SENT Finance does not give tax advice. If your account currency is different from your own currency, exchange rates can change the value of your results.
Crypto CFDs
A crypto CFD gives you price exposure to a digital asset. You do not own any coins, and you cannot send them to a wallet. Crypto prices can change sharply and in a short time.
Leverage applies to crypto CFDs as it does to other CFDs, so losses can build quickly. All the risks on this page apply. Instrument names are examples. Availability is confirmed per account in the portal.
Other things to keep in mind
- This site is general information and not personal advice.
- Trading CFDs does not mean owning the underlying asset.
- Availability depends on your country of residence.
- Past performance is not a reliable guide.
Questions to ask before you trade
If you are not sure about any answer, wait and learn more first. Trading is your own decision.
- Do I understand how CFDs work?
- Can I afford to lose this money?
- Have I read the account conditions in the client portal?
- Do I know how margin call and stop-out work?
- Do I understand that leverage can increase my losses?
Read the risks, then decide
Sign up, verify your identity and review your account conditions in the portal before you trade.
Questions before you start? Visit the help centre