Assessing your understanding of CFDs

Trading CFDs and FX Contracts is considered highly speculative and involves a significant risk of loss and is therefore not suitable for all investors. Neither CFDs nor FX Contracts are appropriate investments for monies set aside for funding a retirement. CFD and FX transactions are among the riskiest types of investments and can result in large losses.

As an investment, CFDs and other forms of leveraged trading are only suitable for those investors who:

understand and are willing to assume the risks involved;
are experienced and knowledgeable about trading in derivatives and in underlying asset types; and
are financially able to assume losses significantly in excess of margin or deposits because investors may lose the total value of the contract not just the margin or the deposit.

CSS Investments therefore require any client looking to trade CFDs to confirm to us that they understand these risks; that they are willing and able, financially and otherwise, to assume the risks of trading CFDs and FX Contracts and that any ensuing losses, which may exceed the amount invested, will not change their lifestyle.
In order to help us determine (under regulatory guidance) that you know and understand the risks and characteristics of CFD and leveraged investing we would ask you to answer the following questions. Please note there are no right or wrong answers, nor are we looking for a length response; however, we are required to assess whether CFD clients have the knowledge and understanding to trade such products.

Your Full Name *

Email Address *

General Questions

Why are CFDs considered high risk products? *

What can happen if the market moves for or against you? *

What can happen if you do not have sufficient margin on your account to maintain your open positions? *

What risk management tools do SAXO make available to you to help limit your loss? *

CFD Terminology

Do you understand what it means to go short or long on a CFD contract? Please indicate your understanding together with how you would profit or sustain a loss from such a strategy. *

Do you understand what “leverage” is and explain what impact it has when trading CFDs. *

Could you explain what the term “margin” means and what impact changes to it could affect your account. *

Do you understand the term stop loss? Please explain what it means and how it works. Are there any situations where you feel it might be inappropriate to have one in place? *

CFD Fees and Charges

CFD’s are subject to overnight financing. Do you understand why you would pay or receive an amount of interest for holding a CFD position? Could you outline your understanding below? *

Are you aware of the charges associated with buying, holding or selling a CFD? What are the charges associated with opening and maintaining a CFD position. *

Holding a CFD Position

What would be the impact on your portfolio of CFD positions should SAXO announce a re-rating on one of your CFD positions? *

What happens to dividend payments to stock based CFDs? Is there any difference if you are holding a long or short position? *

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