This Risk Disclosure is provided to ensure that anyone who reads the educational content on Sterlavion has a clear understanding of the risks involved in forex and CFD trading. Sterlavion is an educational platform. The content here does not constitute financial advice. If you are considering trading, please seek independent professional advice.
General Risk Warning
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose.
Forex and CFD trading is complex. It requires knowledge, experience, and a clear understanding of how markets work. The educational content on Sterlavion is designed to help build that understanding, but education alone does not eliminate the risks inherent in trading financial markets.
Leverage Risk
Leverage allows traders to control a position larger than their deposited capital. While leverage can amplify gains when a trade moves in the expected direction, it equally amplifies losses when a trade moves against the position. A relatively small adverse price movement can result in a loss that exceeds the initial deposit.
Under FCA rules for retail clients in the UK, leverage on major forex pairs is capped at 30:1. For minor pairs and other instruments, lower limits apply. These limits are intended to protect retail clients from the most severe effects of leverage. However, even within these limits, losses can be substantial and can occur rapidly.
Traders should always understand the leverage ratio applied to their positions and the potential loss that results from a given price movement before entering any trade.
Market Volatility
Forex markets can experience sudden and significant price movements. These can be triggered by economic data releases, central bank announcements, geopolitical events, or changes in market sentiment. Volatility can cause prices to move rapidly through stop-loss levels, resulting in losses greater than anticipated.
During periods of high volatility, spreads may widen, and the execution of orders may be subject to slippage. Slippage occurs when an order is filled at a price different from the requested price. This is more common in fast-moving markets and can affect the actual cost of entering or exiting a trade.
Liquidity Risk
While major forex pairs are among the most liquid financial instruments in the world, liquidity can vary significantly depending on the time of day, the pair being traded, and prevailing market conditions. Minor and exotic pairs typically have lower liquidity, which can result in wider spreads and greater difficulty executing large orders without affecting the price.
During periods of low liquidity, such as around market open or close, or during public holidays in major financial centres, price movements can be more erratic and spreads can widen substantially.
Counterparty Risk
When trading forex or CFDs through a broker, the trader enters into a contract with that broker. This creates counterparty risk: the risk that the broker may be unable to fulfil its obligations. Choosing a regulated broker reduces but does not eliminate this risk.
Trade Nation Financial UK Ltd, as an FCA-regulated firm, is subject to requirements including the segregation of client funds. Eligible clients may also have access to the Financial Services Compensation Scheme (FSCS) in the event of firm failure. These protections reduce but do not eliminate counterparty risk.
Technology Risk
Electronic trading platforms are subject to technology risks including system failures, connectivity issues, and software errors. These can affect the ability to place, modify, or close trades at the intended time or price. Traders should be aware of these risks and consider how they would manage open positions in the event of a platform outage or connectivity failure.
Sterlavion does not operate a trading platform and is not responsible for any technology issues that may arise in connection with trading activities carried out through any third-party platform.
Currency Risk
If your trading account is denominated in a currency different from the currency pair you are trading, currency conversion will affect your profit and loss. Exchange rate movements between your account currency and the traded currency can add an additional layer of risk to your overall position.
This risk applies when trading any currency pair where the quote currency differs from the account base currency, and should be factored into position sizing and risk calculations.
Not Financial Advice
The educational content on Sterlavion is provided for informational purposes only. Nothing on this website constitutes financial advice, investment advice, or a trading recommendation. The content describes how forex markets work and how trading concepts are understood generally. It does not take into account the individual circumstances, objectives, financial situation, or risk tolerance of any specific person.
Before making any decision to trade forex or CFDs, you should seek independent financial advice from a suitably qualified and authorised financial adviser. Past performance of any currency pair, trading strategy, or market is not indicative of future results.
Regulatory Information
Sterlavion operates in association with Trade Nation Financial UK Ltd, authorised and regulated by the Financial Conduct Authority (FCA reference number 525164, company number 07073413). Registered address: 14 Bonhill Street, 6th Floor, London EC2A 4BX, United Kingdom.
The FCA register can be accessed at register.fca.org.uk. For general enquiries about Sterlavion's educational content, please contact us at support@sterlavion.org.