Understanding Financial Risk
Market Risk
Prices and investment values move because of economic events, political developments, interest rates, market sentiment or unexpected news. This is the most basic risk in any market, and it never fully goes away.
Capital-Loss Risk
You may lose some or all of the money committed to a transaction or portfolio. Positive results are never guaranteed, however the service or product is described.
Leverage Risk
Leverage increases your market exposure using a smaller amount of capital. It magnifies gains and losses alike, so a small price movement can have a significant effect on your position.
Liquidity Risk
Some positions or investments are difficult to sell, close or convert into cash quickly. Available prices can be less favourable during periods of limited liquidity.
Execution Risk
An order may not complete immediately or at the price visible when it was submitted. Market movement, liquidity and technical delays can all affect execution.
Currency Risk
Changes in exchange rates can increase or reduce the value of a transaction, investment or portfolio, even when the underlying asset itself hasn't moved.
Counterparty Risk
A transaction can depend on another party meeting its obligations. Failure or delay by that party can result in loss or disruption.
Technology Risk
Internet, device, platform, market-data or system failures can affect account access, information or order placement, usually at the worst possible moment.
Risks Connected With AETRAM's Active Services
OTC Derivatives & Spot FX
These transactions can involve leverage, rapid price movements, liquidity limitations, execution differences, spreads, financing costs and counterparty exposure. A stop-loss or similar order helps manage risk, but it cannot guarantee that a position will close at a particular price.
International Markets
International market activity can involve currency risk, different trading hours, settlement procedures, local market rules, political events and jurisdictional limits. Access, execution and settlement vary between markets, so what holds true in one is not automatically true in another.
Portfolio Management
Managed portfolios remain exposed to market movements, capital loss, liquidity, currency, concentration and third-party risks. Diversification and ongoing monitoring can help manage certain risks, but they cannot prevent losses or guarantee investment performance.
Before Using a Financial Service
Before you begin, make sure you understand:
- How the service actually works
- How much capital you could lose
- The effect of leverage, where it applies
- The spreads, commissions and charges that apply
- Any liquidity or withdrawal limitations
- How orders are executed or settled
- Any product or mandate restrictions
- Your own financial circumstances
Educational material like this page cannot decide whether a service is suitable or appropriate for you specifically; that judgement depends on your own circumstances and, for portfolio management, on our formal suitability process. Review the relevant agreements and ask us for clarification before you proceed. There's no such thing as a question too basic to ask before committing capital.
Need Clarification?
The formal risk documents contain the complete legal wording. This page is a clear educational summary, meant to prepare you for those documents, not replace them.
Risk education does not provide investment advice, trading signals, product recommendations or guaranteed outcomes.