Risk Disclosure Statement
Last updated: February 2026
CRITICAL RISK WARNING
Trading Contracts for Difference (CFDs) carries a high level of risk to your capital. Your losses can equal your entire deposited capital. GUDAX provides Negative Balance Protection on all retail accounts, meaning your account balance cannot go below zero. CFDs are complex instruments and may not be suitable for all investors. Please ensure you fully understand the risks and seek independent financial advice if necessary.
1. Nature of CFDs
A Contract for Difference (CFD) is a derivative financial instrument that enables you to speculate on the rising or falling prices of fast-moving global financial markets, including forex, indices, commodities, cryptocurrencies, and stocks. When you trade a CFD, you do not own the underlying asset; instead, you enter into a contract with GUDAX to exchange the difference in value of the asset from the time the contract is opened to when it is closed.
CFDs are traded on margin, meaning you are required to deposit only a fraction of the total trade value to open a position. While this allows you to gain larger market exposure with a smaller initial capital outlay, it also means your losses can exceed your initial deposit if the market moves against your position. Unlike traditional investments where losses are limited to the amount invested, CFD trading exposes you to significant losses up to the full amount of your deposited capital.
The value of a CFD can fluctuate rapidly and unpredictably due to various factors beyond your control, including macroeconomic events, geopolitical developments, central bank policy changes, and sudden shifts in market sentiment. Past performance of any financial instrument is not a reliable indicator of future results. You should never invest money you cannot afford to lose.
2. Leverage Risk
Leverage amplifies both potential profits and potential losses. GUDAX offers leverage ratios up to 1:500 on certain instruments, meaning you can control a position worth $500 with just $1 of margin. While high leverage can generate significant returns if the market moves in your favor, it can equally result in catastrophic losses if the market moves against you.
A 1% adverse price movement in a highly leveraged position can result in a total loss of your invested capital. For example, if you open a $50,000 position with 1:500 leverage using $100 margin, a mere 0.2% price movement against your position will wipe out your entire $100 margin. If the market continues to move unfavorably, you may receive a margin call requiring you to deposit additional funds immediately to maintain your positions, or your positions may be automatically liquidated at a loss.
We strongly advise inexperienced traders to use lower leverage ratios and implement strict risk management practices, including setting stop-loss orders on every trade. However, stop-loss orders do not guarantee protection against losses during periods of extreme market volatility or when markets gap, as your position may be closed at a significantly worse price than your specified stop level.
3. Market Risk
Financial markets are inherently volatile and subject to sudden, unpredictable price movements driven by factors including economic data releases, central bank announcements, political events, natural disasters, and shifts in investor sentiment. These events can cause rapid price swings that result in substantial losses within seconds or minutes, regardless of your trading strategy or risk management techniques.
Certain events, such as "flash crashes," geopolitical crises, or unexpected regulatory changes, can cause markets to gap—meaning prices jump from one level to another without trading at the intermediate levels. During such events, it may be impossible to execute orders at desired prices, and stop-loss orders may be filled at significantly worse prices than intended, resulting in much larger losses than anticipated.
Cryptocurrency markets are particularly volatile and operate 24/7, exposing traders to price movements even when they are not actively monitoring their positions. Regulatory actions, exchange hacks, and large-scale liquidations can trigger cascading price declines exceeding 50% in a single day. You should never allocate capital to crypto CFDs that you cannot afford to lose entirely.
4. Liquidity Risk
Liquidity refers to the ease with which you can enter or exit a position at a desired price. Markets with high liquidity, such as major forex pairs during peak trading hours, generally allow for tight spreads and swift execution. However, during periods of low liquidity—such as overnight hours, holidays, or in exotic currency pairs and small-cap stocks—spreads may widen dramatically, and order execution may be delayed or partially filled.
Illiquid markets can exacerbate losses because large orders can move prices significantly, causing slippage between the price you expect to receive and the price at which your order is actually executed. In extreme cases, you may be unable to close a position at all, leaving you exposed to continued losses as the market moves against you. This risk is particularly acute in instruments with limited trading volumes or during periods of market stress.
GUDAX sources liquidity from multiple Tier-1 banks and liquidity providers to minimize slippage and ensure competitive spreads. However, we cannot guarantee execution at specific prices during periods of extreme volatility or low market liquidity. You acknowledge that market conditions beyond our control may impact order execution quality.
5. Technology Risk
Trading via electronic platforms carries inherent technology risks, including but not limited to system failures, internet connectivity issues, server outages, software bugs, cyberattacks, and hardware malfunctions. Any of these events could prevent you from accessing your account, executing trades, modifying or closing positions, or managing your risk in real-time.
While GUDAX employs industry-leading infrastructure with redundancy and security measures, we cannot guarantee uninterrupted access to the trading platform. In the event of a platform outage, you may be unable to close losing positions, potentially resulting in significant losses. We recommend maintaining alternative communication methods, such as our customer support hotline, to manage positions during technical disruptions.
You are responsible for ensuring your own devices, internet connection, and security measures are adequate for trading activities. Malware, phishing attacks, or compromised credentials could result in unauthorized access to your account and financial losses. We will not be liable for losses resulting from your failure to maintain adequate security precautions or from technical issues on your end.
6. Regulatory Risk
Financial markets are subject to evolving regulatory frameworks that can change with little or no advance notice. Regulatory authorities in various jurisdictions may impose restrictions on leverage, margin requirements, product availability, or trading practices. Such regulatory changes could materially affect your ability to trade certain instruments or maintain existing positions.
For example, regulatory bans on cryptocurrency trading, restrictions on forex leverage, or prohibitions on CFD marketing to retail clients have been enacted in various jurisdictions in recent years. If regulations change in your country of residence or in jurisdictions where GUDAX operates, you may be required to close positions immediately, potentially at unfavorable prices, or you may lose access to certain products entirely.
GUDAX is authorized and regulated under License No. L15883/G, issued by the Anjouan Offshore Finance Commission (AOFC). GUDAX provides Negative Balance Protection (NBP) on all retail client accounts. This means that your maximum loss is limited to the funds deposited in your trading account. However, regulatory protections vary by jurisdiction, and you may not have access to investor compensation schemes or dispute resolution mechanisms available in other regions. You are responsible for ensuring that your trading activities comply with the laws of your country of residence.
7. General Disclaimer
This Risk Disclosure Statement does not disclose all the risks and other significant aspects of trading CFDs. You should not engage in CFD trading unless you fully understand the nature of the transactions you are entering into and the extent of your exposure to loss. You should carefully consider whether such trading is suitable for you in light of your financial circumstances, investment objectives, and risk tolerance.
Information and educational materials provided by GUDAX, including market analysis, trading signals, and research reports, are for informational purposes only and do not constitute financial advice or recommendations to buy or sell any financial instrument. Any trading decisions you make are your sole responsibility. We recommend consulting with an independent financial advisor before engaging in CFD trading.
By opening an account with GUDAX and engaging in CFD trading, you acknowledge that you have read, understood, and accepted the risks outlined in this Risk Disclosure Statement and our Terms of Service. You confirm that you are trading with money you can afford to lose and that you will not hold GUDAX liable for any losses incurred as a result of your trading activities.