Risk Disclosure: Leveraged Forex and CFD Trading
Before you read our review of LiteFinance, please read this page. It explains the risks that come with leveraged forex and CFD trading, in plain terms.
What our partner offersWhat does this site actually do?
Litabrokerza.com is an independent editorial resource. We write reviews and information for readers in South Africa, and on this site we review the broker LiteFinance. We are not that broker. We are not affiliated with it, we do not hold accounts for anyone, we do not accept deposits, and we do not provide financial services or advice.
Because we publish material about leveraged products, we take on a duty to be clear about what those products involve. That duty is the reason this page exists. Nothing here is a recommendation to trade, and nothing on this site should be read as one. If you are deciding whether leveraged trading is right for you, treat this page as a starting point and seek advice from someone who is authorised to give it.
Is my money protected the same way everywhere?
No. Investor protection schemes differ by jurisdiction and by the legal entity you actually deal with. A broker group may operate through several entities in several countries, and the safeguards attached to your account depend on which entity holds it, not on the brand name you see.
Compensation arrangements, dispute procedures and the rules on how client money is held can vary widely from one jurisdiction to another. Some arrangements cover only part of a loss, and some cover nothing at all in certain circumstances. Before funding anything, establish which entity would hold your money and what protection, if any, applies to it. We cannot make that determination for you, and we do not claim any regulatory status for this site.
Can I lose more than I put in?
Yes, you can lose money, and you should only trade with money you can afford to lose entirely. Leverage magnifies both gains and losses, so a small move in the market can have a large effect on your balance. Losses can mount quickly, and in some cases you may be liable for more than your initial deposit, depending on the terms of the product and the entity involved.
What happens if my account falls below the required level?
When your account equity falls below the margin required to keep your positions open, you may receive a margin call. A margin call is not a warning you can ignore; it means you must add funds or reduce your exposure.
If you do neither, the broker may close some or all of your positions automatically, without further notice and at whatever price is available at the time. Automatic closure can lock in losses and can happen fast, including outside the hours you are normally watching the market. The exact thresholds and procedures are set by the broker and can change, so read the terms that apply to your account rather than relying on general descriptions.
Do past results tell me what will happen next?
No. Past performance says little about future outcomes. Markets change, and a strategy or a period of gains tells you nothing certain about what comes next. Published results may also reflect particular market conditions that no longer exist.
Prices can gap over weekends and holidays, meaning the market reopens at a level quite different from where it closed. Slippage can occur when your order is filled at a worse price than you requested. News announcements, central bank decisions and unexpected events can produce sudden volatility, wider spreads and rapid losses. Stops are not guaranteed to protect you at the level you set.
What will trading cost me over time?
Trading is not free. You pay a spread on each position, and if you hold positions overnight you may pay financing charges. Other fees may apply depending on the instrument and the account. These costs accumulate, and they can turn a modestly profitable strategy into a losing one.
Costs also rise when markets are volatile, because spreads tend to widen exactly when many traders want to act. Read the fee schedule that applies to your account before you trade, and work out what the running costs would mean for your intended holding period.
Finally, consider the odds. Regulators in several markets publish figures showing that the majority of retail accounts trading leveraged products lose money. The exact share varies by broker and by period, but the pattern is consistent: most retail traders lose. Assume you are in that majority until you have strong reason to believe otherwise.
