This statement cannot disclose all of the risks and other important matters associated with precious metals trading (London gold and London silver). In view of the related risks, customers should clearly understand the nature and risk level of the relevant transactions before starting precious metals trading, and understand that precious metals trading is not suitable for general investors. Customers must carefully consider whether precious metals trading is suitable for them based on relevant factors such as personal investment experience, purpose, financial situation and risk tolerance. Clients should seek legal and other independent professional advice before opening an account and commencing trading. Clients must clearly understand the terms and conditions of buying and selling precious metals and their obligations.
Risks of Precious Metals Trading
Margin trading risks
Precious metals trading involves considerable risk. This type of transaction is a leveraged transaction, that is, using a leverage ratio, customers can control extremely high trading contracts with extremely low initial margins. Even small movements in the market can have a huge impact on the funds that customers have deposited or will deposit. In order to maintain the position, the client must bear the consequences of the possible loss of the initial margin deposited with the company and any additional funds. If the market changes are unfavorable to the customer or the margin level increases, and the customer fails to replenish the margin in time to maintain the position, the position will be forced to be liquidated and the loss will be borne by the customer.
Instructions or strategies for reducing risk
Instructions by the Client to set a loss limit of a specific amount (such as a "stop limit" order) may not take effect or not executed. If the order is a stop-limit order, the dealer cannot guarantee that the order will be executed at the limit price or that it will not be executed at all. Additionally, some strategies that use position merging (such as spreads or price matching orders) carry the same risks as holding a "long" or "short" position.
Additional Risks of Trading Other Precious Metals
Most electronic trading facilities consist of computer-based systems for the delivery, execution, matching, registration and clearing of trading orders. Like all facilities and systems, they are prone to temporary failures. Accordingly, a customer's ability to recover certain losses may be limited by limited liability established by system providers, markets, clearinghouses and/or companies. These limited liabilities may vary.
Different from the trading operations of open outcry trading, customers through electronic trading may encounter problems caused by computer hardware, software, Internet transmission and other reasons, resulting in the customer's order being unable to be executed or not being executed at all. You must understand the risks and bear the corresponding responsibilities yourself.
Trade in other jurisdictions markets, including markets formally connected to local markets, may expose clients to additional risks. Depending on the relevant regulations in these markets, the protection provided to investors may be different or even reduced. Before commencing a transaction, clients should inquire about any regulations relevant to the transaction and understand the remedies available in their jurisdiction and in other jurisdictions.
Market conditions and/or certain market operating regulations (such as the suspension of any precious metals trading due to market closures) may increase a client's risk of loss as they may make it difficult or impossible to complete a transaction or clear a trading order. In addition, there may not be a normal trading relationship between the underlying assets and precious metals, and the underlying assets lack a reference price, making it difficult to evaluate or determine a "fair" price.
Clients must familiarize themselves with the various protections relating to funds and property deposited "for the purpose of carrying out local or foreign transactions", particularly in the event of the dealer's insolvency or bankruptcy. The extent to which clients can recover cash and property depends on specific legislation or local rules. In some jurisdictions, when there is a deficit in debt repayment, there is a special provision that all of the client's assets will be prorated along with cash.
Clients should understand all commissions, fees and other charges payable before commencing trading. These fees will impact the client's potential profits or increase the client's losses. Clients must understand that the margin invested in the precious metals account is not used as margin and does not earn any interest.