“The investment in CFD, forex trading, and binary options is not suitable for most investors. investing in Binary Options, Forex CFD involves a high level of risk to the invested fund due to the volatility of the markets and the high level of leverage.
In the advisory paper addressed to the Italian traders, Consob also declares “you must always make sure that the derivatives products provider is authorized to operate in Italy, by consulting the appropriate records published on regular basis by Consob.
For this purpose, it is also relevant to refer to “Notice to investors” which is published by Consob on their corporate website including reports, from foreign regulatory authorities, as well as by Consob,
The website regularly warns from the financial activities carried out unlawfully “.
Here are the characteristics of these instruments outlined by Consob in its document:
CFDs are contracts between a broker and an investor within each party agrees to pay the other the difference between the current value of a given asset (shares, currencies, commodities, financial indices, etc.) And the future value that asset. Once a CFD position opened, the investor can close it at any time by paying or collecting the difference.
CFDs are leveraged products, meaning that investors can, through these products, take a position on the underlying asset, paying only a fraction (called “initial margin” or “initial deposit”) of the total value of the position taken. As leveraged products, investors may be required to pay additional sums to supplement those initially deposited due to the performance of the underlying asset (the “margin call”) and, moreover, the result (loss or gain ) may well be bigger than the amount paid as initial margin (so-called “leverage effect”).
Products similar to CFDs are forex trades and spread betting, the main feature of which – in addition to that of having to exclusively currencies object – consists in the fact that the investor can maintain its open position thanks to a mechanism, called roll-over, by means of the which transactions closed at the end of the day are automatically re-opened the following day.
Binary options are contracts that guarantee the payment of a predetermined amount if the event (for example, attaining a specified level of the price of a share or of the exchange rate between two currencies) occurs within a predetermined time limit. If the event does not occur you lose the entire amount invested.
binary options are based on a single proposition with two options to choose from, enables you to trade on markets volatility, and to trade even when you can’t predict market direction
The binary options have a structure (and therefore risk) similar to that of a bet. Often they are characterized by the very short duration – for example, one hour, or even less than a minute – thus accentuating the characteristics of its gambling nature, since it is particularly difficult, if not impossible, to predict the market’s performance with a minimum of foundation in such a short period of time.
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