Trading Forex instruments may not be suitable for all investors. You may lose a substantial amount of money in a very short period of time. The amount you may lose is potentially unlimited and can exceed the amount you deposit with your Market Equity Inc account. This is because most of Forex trading instruments may be highly leveraged, with a relatively small amount of money used to establish a position in assets having a much greater value. If you are uncomfortable with this level of risk, you should not trade Forex trading instruments with high leverage. You should be aware that the regulatory protections applicable to your account are not intended to insure you against losses you may incur as a result of a decline or increase in the prices. As with all financial products, you are solely responsible for any losses in your account.
As with any high risk financial product, you should not risk any funds that you cannot afford to lose, such as your retirement savings, medical and other emergency funds, funds set aside for purposes such as education or home ownership, proceeds from student loans or mortgages, or funds required to meet your living expenses.
Be cautious of claims that you can make large profits from trading Forex trading instruments. Although the high leverage in the trading instruments can result in large and immediate gains, it can also result in large and immediate losses. As with any financial product, there is no such thing as a “sure winner.”
Because of the leverage and the nature of transactions, you may feel the effects of your losses immediately. Gains and losses in Forex trading instruments are credited or debited to your account’s equity in real-time mode. If movements in the markets of the underlying asset decrease the value of your positions in Forex trading instruments, you may be required to submit additional funds to Market Equity Inc as margin. If your account is under the minimum margin requirements set by Market Equity Inc, your position may be liquidated at a loss, and you will be liable for the deficit in your account.
It may be difficult or impossible to liquidate a position. If you cannot liquidate your position in a Forex trading instrument, you may not be able to realize a gain in the value of your position or prevent losses from mounting. This inability to liquidate could occur, for example, if trading is halted due to unusual trading activity in either the Forex trading instrument or the underlying asset; if trading is halted due to recent news events involving the issuer of the underlying asset; if systems failures occur on an exchange or at Market Equity Inc carrying your position; or if the position is on an illiquid market. Even if you can liquidate your position, you may be forced to do so at a price that involves a large loss.
It may also be difficult or impossible to manage your risk from opening a Forex trading instrument position by entering into an equivalent but opposite position, on another market, or in the underlying asset. This inability to take positions to limit your risk could occur, for example, if trading is halted across markets due to unusual trading activity in the trading instrument or the underlying asset or due to recent news events involving the issuer of the underlying asset.
The prices of Forex trading instruments may not maintain their customary or anticipated relationships to the prices of the underlying asset. These pricing disparities could occur, for example, when the market for the particular Forex instrument is illiquid, when the primary market for the underlying asset is closed, or when the reporting of transactions in the underlying asset has been delayed. For index products, it could also occur when trading is delayed or halted in some or all of the securities that make up the index.
You may experience losses as with any financial transaction if your orders for Forex trading instruments cannot be executed normally due to systems failures on a regulated exchange or at Market Equity Inc carrying your position.
All trading instruments involve risk, and there is no trading strategy that can eliminate it. Strategies using combinations of positions, such as spreads, may be as risky as long or short positions. Trading in Forex instruments requires knowledge of all relevant markets.
Day trading strategies involving Forex instruments and other products pose special risks. As with any financial product, persons who seek to purchase and sell the Forex instrument in the course of a day to profit from intra-day price movements (“day traders”) face a number of risks, including substantial commissions, exposure to leverage, and competition with professional traders. You should thoroughly understand these risks and have appropriate experience before engaging in day trading.
Placing contingent orders such as “stop-loss” orders, will not necessarily limit your losses to the intended amount. Market Equity Inc may permit you to enter into stop-loss orders for CFDs, which are intended to limit your exposure to losses due to market fluctuations. However, market conditions may make it impossible to execute the order or to get the stop price.
You should read and understand our “Customer Agreement” and “Terms and conditions” published on our Website before entering into any transaction.
Margin and leverage
When Market Equity Inc lends a customer part of the funds needed to buy or sell a Forex instrument, the term “margin” refers to the amount of funds the customer is required to have in his account in order to be able to enter into a trading instrument transaction. Market Equity Inc requires margin to be on deposit in the account before it accepts an order on any Forex instrument.
Because the margin deposit required to open a Forex trading instrument position is a fraction of the nominal value of the underlying assets being purchased or sold, Forex instruments are said to be highly leveraged. The smaller the margin requirement in relation to the value of the underlying asset, the greater the leverage. Leverage allows exposure to a given quantity of an underlying asset for a fraction of the investment needed to purchase that quantity outright. Buying or selling a Forex instrument provides the same Dollar and Cents profit and loss outcomes as owning or shorting the underlying asset. However, as a percentage of the margin deposit, the potential immediate exposure to profit or loss is much higher with a Forex instrument than with the underlying asset.
Risk of Margin trading
You have to understand that trading on margin involves a high degree of risk and may result in a loss of funds greater than the amount you have deposited in your account.
Requirements to maintain sufficient Margin
Your margin transactions are subject to the initial margin and maintenance margin requirements (the “Margin Requirements”) established and posted by Market Equity Inc on its website. The general formula for calculating Margin Requirements provided on the website are only indicative and may not reflect the actual Margin Requirements at a particular time for your portfolio.
The margin required by Market Equity Inc may exceed the margin required by any exchange firm. Market Equity Inc may modify such Margin Requirements for any of your open and new positions, at any time. Market Equity Inc may reject any of your orders if you do not have a sufficient free Margin to meet Margin Requirements and may delay any order while determining the correct margin status of your account. You have to maintain, without notice or demand from Market Equity Inc, a sufficient account balance at all times to continuously meet the Margin Requirements. As set forth herein, you have to submit all payments to satisfy Margin Requirements directly to Market Equity Inc in accordance with the instructions set on its website.
Market Equity Inc has no obligation to notify you of any failure to meet Margin Requirements in your account prior to Market Equity Inc exercising its rights under its “Customer Agreement”. You have to understand that Market Equity Inc generally will not issue Margin Calls notifications and will not credit your account to meet intraday margin deficiencies, and that it is authorized to liquidate positions in your account in order to satisfy Margin Requirements.
Liquidation of positions (short Margin or stop out)
When your account balance has zero equity, or it does not have a sufficient account balance to meet the Margin Requirements, or the “Customer Agreement” between you and Market Equity Inc has been terminated, Market Equity Inc shall have the right to liquidate all or any of your positions in any of your Market Equity Inc accounts, whether carried individually or jointly with others at any time and in such manner and in any market as Market Equity Inc deems necessary, without prior notice or Margin Call to you. You have to agree to be responsible for, and pay to Market Equity Inc, any deficiencies in your account that arise from such liquidation or remain after such liquidation. Market Equity Inc will not have any liability to you in connection with such liquidations (or if the Market Equity Inc Trading Platform(s) experience(s) a delay in effecting, or does not effect, such liquidations), even if you subsequently re- establish your position at a less favorable price.
You have to waive any rights to receive prior notice or demand from Market Equity Inc and agree that any prior demand, notice, announcement or advertisement shall not be deemed a waiver of Market Equity Inc right to liquidate any of your positions. You have to understand that, in the event positions are liquidated by Market Equity Inc, you will have no right or opportunity to determine the order or manner of liquidation.
Market Equity Inc may, in its sole discretion, effect a liquidation on any exchange. In the event that Market Equity Inc liquidates any or all positions in your account, such liquidation shall establish the amount of your gain or loss and indebtedness to Market Equity Inc, if any. You will have to reimburse and hold Market Equity Inc not responsible for all omissions, expenses, fees, penalties, losses and liabilities associated with any such transaction undertaken by Market Equity Inc.
You have to acknowledge and agree that Market Equity Inc deducts overnight adjustments, commissions and various other fees from your accounts and that such deductions may affect the amount of equity in your account to be applied against the Margin Requirements.
Your positions are subject to liquidation as described herein if deduction of commissions, fees or other charges causes your account to have an insufficient balance to satisfy the Margin Requirements.
Market Equity Inc, in its sole discretion, may liquidate your positions at any time:
- if any dispute arises concerning any of your
- upon your failure to timely discharge your obligations to Market Equity Inc.
- upon your insolvency or filing of a petition in bankruptcy or for protection from
- upon the appointment of a receiver or whenever Market Equity Inc deems liquidation necessary or advisable for Market Equity Inc’s protection or to prevent what Market Equity Inc, in its discretion, considers to be a violation of any applicable regulations or good standards of market
For any deficit in any of your accounts that remains unpaid, you have to agree to pay and to be liable for the reasonable costs and expenses of collection of the debit balance, including, but not limited to, attorneys’ fees and/or collection agent fees.
On the expiration date, the underlying futures contract ceases to exist. The expiration of any futures contracts is established by the exchange on which the contract is listed. However, the exact expiration time for a particular CFD may be established by Market Equity Inc independently from the expiration time of the underlying asset.
If you do not liquidate your position prior to the expiration of the CFD, you are obligated to make or accept a cash settlement, which means the liquidation of the expired CFD at the last dealing price quoted by Market Equity Inc.
Special risks for day traders
Certain traders who pursue a day trading strategy, may seek to use Forex instruments as part of their trading activity. investors engaging in a day trading strategy face a number of risks. You should consider these points before engaging in a day-trading strategy. For purposes of this notice, a “day-trading strategy” means an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to affect both purchase and sale transactions in the same Forex instrument.
Day trading can be extremely risky. Day trading generally is not appropriate for someone of limited resources and limited investment or trading experience and low risk tolerance. You should be prepared to lose all of the funds that you use for day trading. You should not fund day-trading activities with retirement savings, second mortgages, emergency funds, funds set aside for purposes such as education or home ownership, or funds required to meet your living expenses.
You should be wary of advertisements or other statements that emphasize the potential for large profits in day trading. Day trading can also lead to large and immediate financial losses.
Day trading requires in-depth knowledge of the traded markets and trading techniques and strategies. In attempting to profit through day trading, you must compete with professional, licensed traders employed by securities firms. You should have appropriate experience before engaging in day trading.
Day trading requires knowledge of Market Equity Inc’s business practices, including the operation of the firm’s order execution systems and procedures. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market suddenly drops, or if trading is halted due to recent news events or unusual trading activity. The more volatile a market is, the greater the likelihood that problems may be encountered in executing a transaction. In addition, to normal market risks, you may experience losses due to systems failures.
Day trading will generate substantial commissions, even if the trade cost is low. And you will pay a commission on each trade on certain markets, as specified by Market Equity Inc.
Day trading on margin or short selling may result in losses beyond your initial investment. When you day trade with funds borrowed from a firm or someone else, you can lose more than the funds you placed at risk. A decline in the value of the contracts that are purchased may require you to provide additional funds to Market Equity Inc to avoid the forced sale of those contracts. In such markets, short selling as part of your day-trading strategy also may lead to losses because you may have to purchase a CFD at a very high price in order to cover a short position.
As noted above, the purchaser of a CFD does not receive the corporate disclosures that are received by shareholders of the underlying security. Treatment of dividends and other corporate events affecting the underlying security may not be reflected in the CFD depending on Market Equity Inc rules and policies.
Consequently, individuals should consider how dividends and other developments affecting CFDs in which they transact will be handled by the relevant exchange. The specific adjustments to the terms of an underlying asset are governed by the rules of the applicable exchange.
Splits, special dividends, mergers and acquisitions
Corporate occasionally announce stock splits. As a result of these splits, owners of the issuer’s common stock may own more shares of the stock, or fewer shares in the case of a reverse stock split. The treatment of stock splits for persons owning a CFD may vary according to the terms of CFD trading with Market Equity Inc.
Corporates also occasionally issue special dividends. A special dividend is an announced cash dividend payment outside the customary practice of a corporation. The terms of a CFD may be adjusted for special dividends in Market Equity Inc’s sole discretion.
With regard to stocks futures or indices, there may be no adjustments for ordinary dividends as they are recognized as a normal and customary practice of an issuer and are accounted for in the pricing of futures and indices.
Corporate issuers occasionally may be involved in mergers and acquisitions. Such events may cause the underlying stock of CFD to change over the contract duration. The terms of CFDs may also be adjusted to reflect other corporate events affecting the underlying assets.
Because of the importance of tax considerations to transactions in CFDs, the reader should consult their tax advisors as to the tax consequences of these transactions and consult them in everything related to this activity.
Market Equity Inc endeavors to provide clients with the best pricing available and attempts to get all orders executed at the requested rate. However, there are times when, due to an increase in volatility or volume, orders may be subject to slippage. This occurs during fundamental news events, trading halts, weekends or other market gaps.
The volatility in the market may create conditions where orders are difficult to execute, since the price may fluctuate in a short time due to the extreme market movement. Although the client may request to execute at a certain price, the market may have moved significantly that it is impossible to execute the order at the requested price and so the order will be executed at the best available price.
Once a stop loss order is triggered, it becomes “at best market” order, and will be executed at the nearest possible rate. There is no guarantee that it will be executed at any particular given price. Therefore, stop loss orders may incur slippage depending on market conditions.
Delays in execution
A delay in execution may occur for various reasons, such as technical issues with the trader’s internet connection to Market Equity Inc servers, which may result in “hanging” orders. The FX net Trading Station may not be maintaining a constant connection with Market Equity Inc servers due to a lack of signal strength from a wireless or dial-up connection. A disturbance in the connection path can sometimes interrupt the signal, and disable the FX net Trading Station, causing delays in transmission of data between the trader’s Trading Station and the Market Equity Inc server.
Greyed out pricing
Market Equity Inc does not intentionally make the prices inactive. However, this is a condition that occurs on the opening of markets, when liquidity decreases, on weekends or when market makers that provide pricing are not actively making a market for particular currency pairs. At times, a severe increase in the difference of the spread may occur due to a loss of connectivity or due to an announcement that has a dramatic effect on the market that dries out liquidity. Such greying out of prices or increased spreads may result in margin calls on a trader’s account.
A Stop loss order is actually a limit order.
The Stop Loss order executes a deal at a relative loss, as determined by the client, at a rate inferior to the current market rate. The client can decide a stop loss rate for opening or closing a position and increasing or decreasing his exposure. Using a Stop Loss order to open a position, is an order to buy or sell a financial asset against another at an inferior rate to the market rate. Using a Stop Loss order to close a position or to decrease an exposure, is an order which executes an opposite position to an existing one at a rate inferior to the market rate.
A Stop Loss order is normally executed at a rate defined by the client, with the exception of the occurrence of rate volatility during market trading hours such as during news events, trading halts or over the weekend, when the first trading day after the trading halt or weekend starts with different opening rates from the market closing rates. In these circumstances, the order will be executed at the nearest possible rate (i.e. market rate during the execution (“at best market” order). Please note that some currencies or other instruments (e.g. commodities and indices) which are not traded on a 24 hour may experience a market gap on a daily basis and are therefore more susceptible to slippage. Therefore, these instruments may experience more incidents of executing Stop Loss orders at best market rate.
This term refers to the interest either charged or applied to a trader’s account on Market Equity Inc. Trading Station for positions held “overnight” or every 48 hours (depending on the account type), meaning after Midnight (GMT). It is important to note that the accumulative “overnight” rollover charges may be higher than the forward outright. When all positions are hedged in an account, although the net position may be flat, the account can still sustain losses due to the spread that occurs at the time rollover occurs.
Errors in rates
Online trading strategy is not perfect and, in rare cases, it can be disrupted. This may only last for a moment, but when it does, spreads often become affected. During these rare occasions, Market Equity Inc advises clients to avoid placing At Best orders. While it may be tempting to place an “arbitrage transaction”, keep in mind that the prices are not real and your actual fill may be many pips away from the displayed price.
In the event that trades are executed at rates not actually offered by Market Equity Inc, the company reserves the right to reverse such trades, as they are not considered valid trades. Keep in mind these instances are usually rare, and by placing orders or not trading during these moments, traders can avoid the risk.
Forex weekly activity begins on Sunday Midnight until Friday midnight, During the Daylight-Saving times these activity hours changes, seasonal time adjustments, and unusual liquidity conditions arise from exceptional global events. The open or close times may also be altered by the Trading Desk because it relies on prices being offered by financial institutions that provide liquidity to Market Equity Inc. Outside of these hours, most of the major world banks and financial centers are closed. The lack of liquidity and volume during the weekend impedes execution and price delivery. MT5 trading servers of Market Equity Inc follows GMT+2 with DST enabled.
Prices updating before the opening
Shortly prior to the opening, the trading desk refreshes rates to reflect current market pricing in preparation for the opening. At this time, trades and orders held over the weekend might be executed. Quotes during this time are not executable for new market orders. After the open, traders may place new trades, cancel or modify existing orders.
Please be aware that when markets tend to be thinner than usual, it may result in wider spreads, as there are fewer buyers and sellers and Market Equity Inc cannot guarantee a fixed spread.
Sunday’s opening prices may or may not be the same as Friday’s closing prices. At times, the prices on the Sunday open are near to the prices of the Friday close. At other times, there may be a difference between Friday’s close and Sunday’s open. The market may gap if there is a significant news announcement or an economic event changing how the market views the value of a currency. Traders holding positions or orders over the weekend should be fully aware of the possibility of the market gap. One of the great things about trading at forex is that outside of announced major holidays, the trading hours routinely close only once a week on the weekends, which corresponds with the hours of major banks and financial institutions. In contrast, most stock exchanges close five times each week, and can gap significantly on each day’s open.
Traders who fear that the markets may be extremely volatile over the weekend, that gapping may occur, or that the potential for weekend risk is not appropriate for their trading style, may close out orders and positions ahead of the weekend.
Indicative prices displayed on the platform
It is important to make a distinction between indicative prices (displayed on charts) and tradable prices (displayed on the Trading Station). Indicative quotes are those that offer an indication of the prices in the market, and the rate at which they are changing. Market watchers, compile indicative quotes for the market’s actual movement. These prices are derived from a host of contributors such as banks and clearing firms, which may or may not reflect where Market Equity Inc’s liquidity providers are making prices. Indicative prices are usually very close to dealing prices. Indicative quotes only give an indication of where the market is. Executable quotes ensure finer execution and thus a reduced transaction cost. Equity and futures traders are used to prices being the same at any given time, regardless of which firm they are trading through or which charting provider they are using—and they often assume the same holds true for spot forex. Because the spot forex market is decentralized—meaning it lacks a single central exchange where all transactions are conducted—each forex dealer (market maker) may quote slightly different prices. Therefore, any prices displayed by a third-party charting provider, which does not employ the market maker’s price, will reflect “indicative” prices and not necessarily actual “dealing” prices where trades can be executed.
Internet risk and technology
The trader must realize that there are risks related to his use of technology and Internet means represented in interruption, disruption, delay, hackers attempts, data stealing and other risks that require the trader to take all measures to confront them and reduce the risks.
As all companies and banks are exposed to risks related to bankruptcy, seizure and other actions that may pose a risk to their money.
Risks of wars, natural disasters and force majeure
The client’s trading may be subject to irregularity, interruption or disruption and other procedures that prevent stability due to wars, natural disasters and force majeure.