GENERAL RISK DISCLOSURE
This notice provides you with information about the risks associated with investment products, which you may invest in through services provided to you by eToro Group entities. eToro provides a wide range of investment services in relation to a number of products through its regulated entities eToro (Europe) Limited, authorised and regulated by the Cyprus Securities and Exchange Commission (CySEC) and eToro (UK) Limited, authorised and regulated by the Financial Conduct Authority (FCA).
Investment products offered by eToro include contracts for differences (CFDs) whose underlying assets are currencies, stocks, commodities, indices, exchange traded funds (ETFs) and cryptocurrencies. Any transactions relating to cryptocurrencies where eToro offers you leverage (which is not available currently) or allow you to enter into short transactions and/or all Copytrading transactions (including Copyfund) relating to Cryptocurrencies shall be CFD transactions.
eToro also offers investors the opportunity to buy cryptocurrencies (i.e. buy transaction for cryptocurrencies in leverage 1), hold such cryptocurrencies and subsequently sell such cryptocurrencies all subject to the Cryptocurrencies Trading Addendum. These are not CFDs and, unlike CFDs, are outside the scope of our regulated investment services and accordingly you will not benefit from the protections available to clients receiving regulated investment services
All these products carry a high degree of risk and are not suitable for many investors. This notice provides you with information about the risks associated with these products but it cannot explain all of the risks nor how such risks relate to your personal circumstances. If you are in doubt you should seek professional advice.
It is important that you fully understand the risks involved before deciding to trade with eToro and that you have adequate financial resources to bear such risks and that you monitor your positions carefully.
Trading involves risk to your capital. You should not invest money that you cannot afford to lose, however you cannot lose more than the equity in your account.
CFD stands for “Contract For Difference”, meaning you are not buying the underlying asset, but rather purchasing a contract to settle the difference in the initial and ending price of the asset. When trading CFDs, you generally trade on margin, which means you only have to deposit a small percentage of the overall value of your position. This is known as “Leverage”, and even small market movements may have great impact, negative or positive on your trading account.
If the market moves against you, you may sustain a total loss greater than the funds invested in a specific position. You are responsible for all losses on your account up to the equity in your account. Before deciding to trade on margin you should carefully consider your investment objectives, level of experience, and risk appetite.
Our CFDs are not listed on any exchange. CFDs involve greater risk than investing in on-exchange products, as market liquidity cannot be guaranteed and it may be more difficult to liquidate an existing position. The prices and other conditions are set by us in accordance with our obligation to provide best execution as set out in our order execution policy, to act reasonably and in accordance with the applicable Terms and Conditions. The characteristics of our CFDs can vary substantially from the actual underlying market or instrument. Full details of all of our CFDs are set out on our website.
In respect of corporate events with respect to the underlying assets, We do not aim to make a profit from our clients from the outcome of corporate events such as rights issues, takeovers, mergers, share distributions or consolidations and open offers. We aim to reflect the treatment we receive, or, would receive if we were hedging our exposure to you in the underlying market. Ultimately however, you are not dealing in the underlying market and therefore in relation to our CFDs the treatment you receive may be less advantageous than if you owned the underlying instrument.
CFDs are not suited to the long term investor. If you hold a CFD open over a long period of time the associated costs increase (such as overnight fees), and it may be more beneficial to buy the underlying asset instead.
Sudden market movements, known as “gapping” may occur, causing a dramatic shift in the price of an underlying asset. Gapping may occur when the underlying market is closed, meaning the price on the underlying market may open at a significantly different level, and at a less advantageous price for you.
At all times during which you have open positions, you must ensure that your account meets Our margin requirements, which may change from time to time. Therefore, if our price moves against you or if our margin requirements have changed, you may need to provide us with significant additional funds to meet your margin requirement, at short notice, to maintain your open positions. If you do not do this, we will be entitled to close one or more or all of your positions and You alone will be responsible for any losses incurred as a result.
Before we open an account for you, we are required to make an assessment of whether the product(s) and/or services you have chosen are appropriate for you, and to warn you if, on the basis of the information you provide to us, any product or service is not appropriate. If you decide to continue and open an account with us, you are confirming that you are aware of and understand the risks.
You should further ensure you are able to monitor positions on your account at all times, as you are solely responsible for this. We are not responsible for monitoring positions on your account.
Although the eToro trading platform is automated and we are giving you the best execution available, it is possible that the market price could have changed between order placement and execution time, and therefore we cannot guarantee that the price requested will be the same as the price that the order is executed, the price you receive can be in your favour or against you.
To limit losses, we require you to choose ‘stop loss’ limits. These set limits to automatically close your position when it reaches a price limit of your choice. There are however circumstances in which a ‘stop loss’ limit is not fully effective – for example, where there are rapid price movements, or market closure. In addition, there are risks associated with use of online deal execution and trading systems including, but not limited to, software and hardware failure and internet disconnection.
eToro offers Social Trading Features. In making a decision to Copy a specific trader or traders and/or follow a particular strategy, You must consider your entire financial situation including financial commitments and you understand that using Social Trading Features is highly speculative and that you could sustain significant losses exceeding the amount used to copy a trader or traders. The risks associated with Social Trading Features, include but are not limited to, automated trading execution whereby the opening and closing of trades will happen in your account without your manual intervention. You can read more about the CopyTrading risks here.
- General: Cryptocurrencies are a type of decentralised digital currency or asset which is not issued by any central bank or issuer in which encryption techniques are used to facilitate the generation of units of the currency or asset and verify the transfer of units.
You should not deal in Cryptocurrencies unless you understand their nature and the extent of your exposure to risk. You should also be satisfied that the product is suitable for you in light of your circumstances and financial position. You should never invest funds that you cannot afford to lose.
- Note: Cryptocurrency buy orders made without leverage is buying the underlying asset subject to the Addendum to Terms and Conditions for Cryptocurrencies Trading. Any transactions relating to Cryptocurrencies where we do offer you leverage, or allow you to enter into short transactions and/or all Copytrading (including Copyfund) transactions relating to Cryptocurrencies shall be a CFD transaction. The following warnings in this section apply only to transactions in the underlying asset: Unregulated Service; Third Parties; Omnibus Account; Delisting and/or unsupported Cryptocurrencies
- Unregulated Service: Trading in underlying Cryptocurrencies are outside the scope of our regulated investment services and accordingly you will not benefit from the protections available to clients receiving regulated investment services, including without limitation, you will not have access to financial compensation: for Customers of eToro (Europe) Ltd. – the Investor Compensation Fund for Customers of Cypriot Investment Firms; for customers of eToro (UK) Ltd. – the Financial Services Compensation Scheme (FSCS), nor the Financial Ombudsman Service for dispute resolution. Our Cryptocurrencies Trading Service will not be subject to the rules relating to best execution, client money and safekeeping of client assets, nor any other CYSEC / FCA rules, regulations and guidance.
- Third Parties: As part of the Cryptocurrencies Trading Service, eToro may be relying on third party service providers (including affiliated companies) to buy or hold the Cryptocurrencies on your behalf and those third parties may be based outside of the EEA and/or may be unregulated. You should also take note that we rely on unregulated liquidity providers for cryptocurrency liquidity. eToro will not be responsible in the event of losses caused by those third parties.
- Omnibus Account: In the event of the insolvency or any other analogous proceedings in relation to that third party, eToro may only have an unsecured claim against the third party on behalf of the client, and the client will be exposed to the risk that the money and/or Cryptocurrencies received by eToro from the third party is insufficient to satisfy the claims of the client in respect of the relevant account and/or wallet. eToro does not accept any liability or responsibility for any resulting losses.
- Volatility: The Cryptocurrencies market is a dynamic arena and their respective prices are often highly unpredictable and extremely volatile. Furthermore, our own spread is added to online quotes which makes a trade on our websites even more volatile. Accordingly, cryptocurrencies are an extremely high risk asset. As a result you may increase or lose value in your assets at any given moment and your asset may even become worthless. In addition Cryptocurrencies are unique kind of currencies, backed by technology and trust. There is no central bank that can take corrective measure to protect the value of Cryptocurrencies in a crisis or issue more currency.
- Indicative prices: It is important to make a distinction between indicative prices which are displayed on charts and dealable prices which are displayed on our trading platform. Indicative quotes only give an indication of where the market is. Because the Cryptocurrencies markets are decentralized, meaning it lacks a single central exchange where all transactions are conducted, each market maker may quote different prices. Therefore, any prices displayed on any chart made available by us or by a third party will only reflect “indicative” prices and not necessarily actual “dealing” prices where trades can be executed.
- Trading in Weekends: As cryptocurrency exchanges may operate over weekends, eToro may or may not provide trading services over weekends, and where we do not, there may be a significant difference between Friday’s closing price and Monday’s opening price.
- Liquidation of positions: Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market reaches a daily price fluctuation limit, if there is insufficient liquidity in the market. Placing contingent orders, such as “stop-loss” or “stop-limit” orders, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.
- Delisting and/or unsupported Cryptocurrencies: If at any time any of the Cryptocurrencies that forms the subject of your order is delisted and/or we no longer support the trading in such Cryptocurrencies for any reason, then the applicable order will be immediately closed. If eToro is notified that a Cryptocurrency you hold in your Account is likely to be delisted and/or removed and/or canceled from any of the exchanges (some of them or all) and eToro believes that it shall not be able to trade in such Cryptocurrencies, eToro shall make an effort to sell the Cryptocurrencies on your behalf at such time and price, and in such manner, as it determines.
- Operation of Cryptocurrency Protocols: eToro does not own or control the underlying software protocols which govern the operation of Cryptocurrencies available for trading in our platform. In general, the underlying protocols are open source and anyone can use, copy, modify, and distribute them. eToro is not responsible for operation of the underlying protocols and eToro makes no guarantee of their functionality, security, or availability. The underlying protocols are subject to sudden changes in operating rules (“Forks”), and such Forks may materially affect the value, function, and/or even the name of the Cryptocurrency eToro holds for your benefit. In the event of a Fork, eToro may temporarily suspend eToro operations (with or without advance notice to you) and that eToro may (a) configure or reconfigure its systems or (b) decide not to support (or cease supporting) the Forked protocol entirely. eToro may, but is not obligated to do so, adjust your account in respect of a Fork depending on the circumstances of each event attributable to any specific Cryptocurrency held by You.
Automated Trading & Internet Risks
While trading on our website and/or applications, system errors might occur. You should be aware of the risks that may result from any system failure which could mean that your order may be delayed or fail. You should also be aware of the risk of malicious software introduction, and the risk that third parties may obtain unauthorized access to information and/or assets (including your Cryptocurrencies) stored on your behalf.
Fees and Costs
Our fees and charges are set out on our website etoro.com under the ‘Fees’ section. Please be aware of all costs and charges that apply to you, because such costs and charges will affect your profitability.
Any opinions, news, research, analyses, prices, or other information contained on this website are provided as general market commentary, and do not constitute investment advice. eToro shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information provided
Past performance is not an indication of future performance. The value of investments can go down as well as up.
Your account with eToro will be held in USD which may be different from the currency you used to deposit, accordingly you should be aware of currency fluctuations.