Transactions in derivatives based on foreign exchange rates or the prices of precious metals, commodities or equity indices products carry a high degree of risk. Any transaction involving these products is exposed to, among other things, changes in a country's economic condition or political climate as well as acts of nature or terrorism - each of which may substantially affect the price or availability of the these derivatives.
Speculative trading in derivate products is a challenging prospect with a high level of risk. You must therefore carefully consider your investment objectives, level of experience and appetite for such risk prior to trading these products. Most importantly, do not invest money that you are not in a position to lose.
In addition, trading on a margin basis means that any market movement will have a magnified effect on your deposited funds. This can work against you as well as for you. The possibility exists that you could sustain a total loss of all the funds you have deposited. OANDA's trading system is designed to automatically liquidate all open positions if your margin deposit is in jeopardy so that you cannot lose more than the funds you have on deposit in your account. We encourage you to employ such risk-reducing strategies as 'stop-loss' or 'stop-limit' orders, but you should be aware that market conditions may make it impossible to close out your order at the level specified.
There are also risks associated with using an Internet-based trade execution software application including, but not limited to, the failure of hardware and software. OANDA maintains ‘back up’ systems and contingency plans to minimise the possibility of system failure.
OANDA is covered by the Financial Services Compensation Scheme (FSCS) which would reimburse clients in the unlikely event OANDA was to go into liquidation AND there was a deficiency in the client money bank account. The maximum FSCS pay out per client is £50,000; however, this may not provide complete protection (for example, if you have more than this in your OANDA account or in the case of the insolvency of our bank).
Please be sure to read our complete Risk Disclosure Statement and contact us if you have any questions or concerns.