What you are trading
A CFD (contract for difference) is a contract that pays the difference in an asset's price between opening and closing a position. You never own the asset. Forex pairs, metals, indices, energies and crypto are usually offered as CFDs.
These products are leveraged. Leveraged CFD and forex trading can lose money fast, and this site does not say otherwise.
How leverage works against you
Leverage lets you open a position much larger than your deposit. The deposit you put up is called margin. Leverage magnifies a price move in both directions.
- A small move in your favour gives a larger gain relative to your margin.
- A small move against you gives a larger loss relative to your margin, and it can use up your margin quickly.
- If your account equity falls too far, the broker can close your positions automatically. This is called a stop-out, and it can happen at a worse price than you expected.
Prices can also jump between quotes (a gap), for example over a weekend or around news. Stop-loss orders do not guarantee the exit price in a gap.
Other risks
- Costs. Spreads, commissions and overnight swap fees reduce results. A position held for a long time can cost more than you planned.
- Crypto CFDs. Crypto prices can be very volatile, so losses can be larger and faster.
- Behaviour. Overtrading, adding to losing positions and trading to "win back" losses are common ways accounts are emptied.
- Broker disclosures. Many brokers publish what share of their retail accounts lose money. Where a broker publishes this figure, read it before trading. We do not quote it here unless we can source it.
What Pakistani regulators say
Trading leveraged products with offshore platforms carries legal and practical risk in Pakistan:
- On payments: per the SBP, remitting foreign exchange to overseas forex/margin/CFD platforms is not allowed through any payment channel (FERA s.5(1)).
- On residents: per the SBP, the purchase of offshore forex/margin/CFD products by Pakistani residents violates section 4(1) of FERA 1947.
- On approval: per the SECP, offshore forex/CFD platforms operate without regulatory approval in Pakistan.
- On protection: per the SECP, offshore platforms have no Pakistani licence or oversight and offer no legal protection or recourse.
- The supervisor is the Securities and Exchange Commission of Pakistan (SECP), with trading in listed securities and commodities only via SECP-licensed securities and futures brokers.
This means a dispute with an offshore platform may not be resolvable through Pakistani authorities. For more detail, see Law and regulators and Regulation and Safety.
Before you risk money
- Read the Risk management section: position size, stop-losses and how much of your account you can afford to lose.
- Practise on a demo account with virtual money first. A demo does not show real slippage or real emotions, so treat it as practice, not proof.
- Learn the terms in the Trading glossary and Trading basics.
- Only trade money you can afford to lose completely.
Nothing on this site is investment advice, a signal or a forecast. This site is a partner of a broker, which is explained in our Partnership disclosure. Please also read our Terms of use.
Frequent questions
Can I lose more than I deposit?
Leverage can cause losses larger than you expected, and fast. Whether your balance can go below zero depends on the broker's conditions. Check the current terms on the broker's official site.
Is forex trading risky in Pakistan?
Yes. Besides market risk, the SBP and SECP warn about offshore platforms, and residents have no local legal protection with them.
Does a demo account remove the risk?
No. It lets you practise without real money, but live trading has costs, slippage and emotional pressure a demo does not show.
Does a stop-loss protect me fully?
No. In fast markets or price gaps, a stop-loss can close at a worse price than the level you set.