Risk Disclosure

TRADING CFDs AND FOREX CARRIES A HIGH LEVEL OF RISK.

1. General Warning

This **Risk Disclosure** statement is intended to inform you of the significant risks associated with trading Contracts for Difference (CFDs), Forex (FX), and other leveraged products. The information provided on ForexRoasted regarding brokers and EAs does not constitute investment advice.

**CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs.** You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

2. Leverage and Margin Risk

**Leverage** is a double-edged sword. It allows you to control a large position with a relatively small amount of capital (margin), it also means that a relatively small market movement can lead to a proportionally much larger movement in the value of your investment. This can work against you as well as for you and can lead to substantial losses exceeding your initial margin deposit.

  • **Margin Call:** If your position moves against you, your broker may require you to deposit additional funds (margin call) to maintain your position. Failure to do so may result in your positions being automatically closed at a loss.
  • **Stop Out:** Brokers have mechanisms to automatically close your positions when your equity falls below a certain percentage of your required margin. This is known as a "stop out" and can result in significant losses.
  • **Unlimited Leverage:** Certain offshore brokers offer leverage up to 1:2000 or unlimited. This is **extremely dangerous** and should be avoided unless you are an expert risk manager.

3. Market Volatility and Gapping

Financial markets can be highly volatile, with prices changing rapidly and unpredictably, especially during major news events, political changes, or economic releases.

  • **Slippage:** Orders may not be executed at the requested price due to market gapping, especially around major news events (NFP, FOMC). This can cause your stop-loss order to execute at a much worse price than anticipated, increasing your loss.
  • **Gapping Risk:** Prices can jump between two levels without trading in between. You may not be able to close a position or execute an order at or near your stop-loss level.

4. Counterparty and Broker Risk

The choice of broker is critical, as highlighted throughout the ForexRoasted reviews:

  • **Market Maker (B-Book):** Many "commission-free" brokers profit when you lose, creating an inherent **conflict of interest**.
  • **Regulatory Tier:** Brokers with Tier-3 (Offshore) regulation (VFSC, IFSC, FSC Mauritius) offer **minimal** client compensation and protection compared to Tier-1 (FCA, ASIC, NFA).
  • **Liquidity:** Inferior brokers may provide poor execution, requotes, or platform "glitches" that always seem to work against you during profitable trades.

5. Risks Associated with EAs and Copy Trading

Automated trading (Expert Advisors/EAs) and Copy Trading introduce specific risks:

  • **Backtest Failure:** Past performance (especially backtested results) is no guarantee of future success. Many EAs are **curve-fitted** to historical data.
  • **Blow-Up Risk:** Strategies like **Martingale and Grid** are designed to explode accounts eventually during high volatility.
  • **Execution Mismatch:** Your broker's execution speed and spreads may differ from the signal provider's, leading to substantially worse results.

6. No Advice Provided

The content on ForexRoasted is for informational and educational purposes only. It is not financial or investment advice. We provide independent reviews based on our own testing. You should seek advice from an independent financial advisor if you have any doubts.

**DO NOT TRADE** with money you cannot afford to lose. All capital is at risk.