You could sustain a loss greater than the margin required to establish and maintain a CFD position. In addition you could be required to pay further funds representing losses (and even other fees) on your CFD positions.
The interest you receive or pay in relation to your CFD account balance will be affected by fluctuations in the interest rate specified by your CFD broker for the currency in which your account is nominated.
Where you deal in a CFD that is in another currency other than the base currency of your account, all margins, profits, losses and financing credits and debits are calculated using the currency of your CFD. Accordingly, your profits and losses may be affected by fluctuations in the relevant foreign exchange rate between the time the orders is placed for the CFD and the time the position is closed.
Derivative markets can be highly volatile. The prices of CFDs and the underlying assets and indices may fluctuate rapidly and over wide ranges and may reflect unforeseeable events or changes in conditions, none of which can be controlled by you.
If the CFD price moves against your CFD position you may be required, at short notice, to deposit further money with you broker in order to satisfy the brokers margin requirements and maintain your position. The amount of the additional margin may be substantial. If you fail to provide these additional funds when required, your position may be closed at a loss and you will be liable for any shortfall in your CFD account resulting from the failure to provide further margin.
Failure to pay additional margin promptly may result in:
some or all of your open positions being closed or liquidated by your broker.
your being prevented from opening new positions or extending existing positions.
you being liable for interest charges on negative or debit balances.
As a customer of a CFD provider you are exposed to the financial and business risks, including credit risk, associated with dealing with any business. For example if your CFD broker were to become insolvent, it may be unable to meet its obligations to you.
There is only a small range of share CFDs available for trading. Depending on your provider you may have access to anything from 50 to 500 share CFDs.