Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading spread bets and CFDs with this provider. It’s crucial to understand these risks, especially when engaging with volatile currency pairs like the Euro against the Japanese Yen (EUR/JPY). Before you decide to trade EUR/JPY or any other Forex pair, it’s essential to consider whether you fully comprehend how these instruments work and whether you can afford the significant risk of losing your investment.
Professional clients who trade spread bets and CFDs should be aware that they can lose more than their initial deposit. This amplified risk is a direct consequence of leverage, a tool that can magnify both potential profits and losses in Forex trading. The EUR/JPY pair, known for its volatility due to the economic factors influencing both the Eurozone and Japan, can present even greater risks when leverage is applied.
Options and futures, also complex financial instruments, carry a similarly high risk of rapid losses due to leverage. They are generally not suitable for most investors, particularly those new to the Forex market. If you are considering trading options or futures on EUR/JPY, or any currency pair, a thorough understanding of their mechanics and risks is paramount. Furthermore, you must assess your financial capacity to absorb losses that could exceed your original investment.
Trading stocks and shares ‘on margin’ within a US options and futures account introduces additional risks. Margin trading, where only a portion of the position’s cost is financed by the investor, can lead to losses that surpass the initial investment. When trading EUR/JPY indirectly through related stocks or indices on margin, these same principles apply. Moreover, margin trading incurs extra costs for the investor, and securities bought on margin may be held as collateral by the lender. This arrangement can restrict shareholder rights and the ability to utilize the securities until the margin trade is closed. These risks should be carefully considered before engaging in margin trading strategies related to EUR/JPY or any other asset.
The value of shares, ETFs, and other ETPs, including those potentially linked to currency movements or the Japanese and European markets, can fluctuate. Investing in these instruments through share dealing accounts, US options and futures accounts, stocks and shares ISAs, or SIPPs carries the risk of losing money. The potential for returns also exists, but it’s important to remember that past performance is not indicative of future results. Certain ETPs may have additional risks based on their structure, and investors should familiarize themselves with these specific risks before investing, especially when considering products linked to the EUR/JPY exchange rate or related markets.
It is important to note the providers of these services. Share dealing and IG Smart Portfolio accounts are provided by IG Trading and Investments Ltd, CFD accounts and US options and futures accounts are provided by IG Markets Ltd, and spread betting is provided by IG Index Ltd.
IG operates under these trading names: IG Trading and Investments Ltd, IG Markets Ltd, and IG Index Ltd. These companies are registered in England and Wales and are authorized and regulated by the Financial Conduct Authority (FCA).
The information provided here is not intended for residents of the United States, Belgium, or any country outside the UK, and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would violate local laws or regulations. When considering trading EUR/JPY or any financial instrument, ensure you are aware of and compliant with the regulations in your jurisdiction.
