Transaction risks
Transactions on the foreign financial markets contain risks which can differ from the risks connected with investments in Latvia. In some cases risks can be higher.
Executing transactions with financial instruments, using principles of the marginal trade, the customer undertakes to credit funds to the marginal account. The customer himself must monitor a state of the margin and ensure it in the sufficient volume all the time an open position exists. In case of a negative balance the RC can oblige the customer to additionally credit the account and to pay in a guarantee deposit or collateral acceptable to RC, but if the client fails to ensure sufficient amount of funds on the account the position can be closed.
Trade in financial instruments with use of trading platforms can essentially differ from trade in other systems. In this case the risk may arise for the customer to suffer losses as a result of malfunction of a computer network or others devices, risk of unauthorised access to a trading platform by the third party, etc.
Transactions with derivative financial instruments are connected with high risk and can be unsuitable for some investors. The leverage is usually used in the trade in derivative financial instruments therefore big losses may be sustained or big profit can be gained. It means that small changes in prices may cause heavy changes in equity. Large volatility in prices is characteristic to derivatives which increases the risk to sustain losses accordingly.
Transactions outside the regulated market are connected with rather higher risk than the risk in the transactions on the regulated market because of probability that trades in financial instruments outside the regulated market can be stopped, and evaluation and closing of open positions can be interfered.