Trading Risk
It is important to understand the risk in FX Margin Trading. The risk relating to your trade could be greater than your balance (Usable Margin). Therefore you need to consider a trading plan with your balance. You should not trade FX margin prior to fully understanding the high range of risk and characteristics that come with it.
You should fully understand the following risks.
1. Foreign Exchange Risk
In the FX market, the FX rate is moving 24 hours a day (excl. Saturday, Sunday and a part of a holiday). When the market moves in the opposite way from a client?s prediction, exchange loss will be occur.
2. Market Liquidity Risk
Your original deposited margin for FX trading will not be protected. If the market moves in the opposite way to a client's prediction, "Chart Trader" will automatically be activated to close your position when your account balance reaches a specific low level, but please note that in some cases it may be possible that your position will not be closed automatically when the market moves rapidly. As a result, it is possible that you may suffer huge losses (the account balance will be negative) from your account.
3. Credit Risk
All assets deposited by customers are required to be segregated and managed separately from company assets according to Article 43 section 3 under the Financial Instruments and Exchange Law and Article regulations 143 to 145 under the other relevant Laws. However, a client's property is not completely secured in a system or law like deposit insurance. When the trust situation of our company and counterparties undergoes a crisis, there is a possibility of incurring major loss. Please understand that the foreign exchange investment capital is not the target of the Japan Investor Protection Fund.
4. Internet Risk
"Chart Trader" is our original online FX margin trading system. When a problem occurs within the network environment, or the server our company system resides on, all clients take a risk of loss of profit due to these obstacles. All clients must agree to take responsibility for these risks when participating in FX trading.
The definition of System Failure
System failure is a situation when a client cannot make an order through the internet due to the system failure of the Chart Trader platform, and only if we deem the system failure of the Chart Trader platform. In the case of a communication failure, such as internet access between a client's PC and server /client's PC/Mobile phone etc, please note that these failures do not fall under the definition of system failure.
Support , when a system failure occurs
We accept close order only, we do not accept open/entry stop/entry limit order. We can accept orders by telephone when a connection failure occurs on the client's side (such as internet / PC etc.), please understand that we will charge you 2,000 yen for each separate order. It the failure occurs on our side, there will be no charge. You must agree to take full responsibility when a trading loss occurs in the following situations. Delayed execution and/or when its not possible to make an order due to a connection failure on clients side. You couldn't make an order by telephone (Furthermore, we shall take no responsibility for any losses caused by margin call before additional deposit has been placed in your trading account.) .
5. The Merit/Demerit of Leverage Effect
In FX margin trading, the effects of leverage may work as merit and/or as demerit for you. As it is possible to hold a large position with deposited funds, you could be in a position to receive a large profit from a fund of small sum, then again, lose all deposited funds, or occasionally make a loss beyond your deposited fund. So you must take into mind that the use of a leverage effect can lead to huge profit, but at the same time can also lead to serious damage.
6. Risks Involved In Performing Limit Orders/Stop Orders
"Stop Orders" and "Limit Orders" are not mechanisms that absolutely guarantee to settle a Customer's position at a predetermined price. Depending on market circumstances, it may not be possible to settle at a predetermined price. In such instances, unforeseen losses may arise, and a Customer's account may end up in deficit.
7. Others
FX trading can also become affected due to a restriction of foreign exchange dealings of public institutions, or the change of government of a country due to political or economic problems etc.
Moreover, restrictions and discontinuation of dealing due to unexpected situations such as natural disasters, fire, power failure or failure of a communication facility, may also arise.
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