LiquidityX – It is an online trading platform offering services in the Eurozone and Switzerland. The main focus of the service is trading CFDs. However, trading in forex, commodities, energies, indices, precious metals, shares as well as cryptocurrencies is also offered there.

The German website is available at https://www.liquidityx.com/eu/de/. Have you already used LiquidityX and the services it offers? Please tell us about your experience via our contact form.

Table of contents

  1. LiquidityX – Provider details
  2. Licensing – LiquidityX
  3. LiquidityX: the different account types
  4. ESMA requirements and compliance
  5. LiquidityX and CFD Trading
  6. Tools on LiquidityX
  7. Risk warning
  8. Online Trading: general information
  9. Risks of Online Trading
  10. Legal advice

LiquidityX – Information on the operator

The website is operated by Capital Securities S.A., according to the information on the homepage. This is a Greek investment company. The following further information is available on the company:

  • Capital Securities S.A.
  • 58, Metropoleos Street
  • 105 63, Athens
  • Greece
  • Registernummer 31387/06/Β/94/18

The domain is available in English, German, Spanish, Italian, Dutch, Swedish, Polish, Portuguese and Russian.

Licensing

The company claims to be licensed by the Hellenic Capital Market Commission (“HCMC”). The objective of the HCMC is to ensure the protection and orderly and efficient operation of the capital market. HCMC is a member of the European Securities and Markets Authority (ESMA) and operates within its framework and under its auspices.

HCMC is the competent authority for the supervision of the Greek Securities Law. Its licence number is 2/11/24.5.1994.

4 account types

LiquidityX offers 4 different account types:

  1. Base
  2. Gold
  3. Platinum
  4. VIP

These differ in the size of the spread and pips and the deposit amount. For professional client accounts, the maximum leverage can reach 1:400 instead of 1:30. Leveraged trading is a technique that allows traders to “borrow” funds to execute larger trading volumes with relatively small deposits in a given market.

So-called leverage allows investors to open larger positions as they invest only part of the position and the rest is borrowed from the provider. Although high profits can be made on deposits with higher leverage, leveraged trading carries significant risks as losses can quickly exceed capital.

LiquidityX: Classification as a professional client

LiquidityX offers its clients the possibility to be classified as a “professional client” and thus to trade with a higher leverage. Due to high risks, ESMA has taken measures to provide contracts for difference.

The measures came into force on 1 August 2018 for CFDs through the “EUROPEAN SECURITIES AND MARKETS AUTHORITY DECISION”. As a result, only 1:30 leverage was permitted for major currency pairs. However, ESMA’s leverage restriction and protection mechanisms only apply to investors/private clients and not to professional clients.

ESMA – European Securities and Markets Authority

The point at which a retail investor can be classified as a professional client with LiquidityX is indicated on the website.

This is the implementation of the Annex to DIRECTIVE 2014/65 / EU OF THE EUROPEAN PARLIAMENT AND OF 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU. ESMA defines three criteria there , of which at least two must be met:

  1. during the last four quarters, the client has carried out an average of 10 transactions per quarter in a broad relevant market.
  2. the size of the client’s instrument portfolio, defined as including cash deposits and financial instruments, exceeds EUR 500,000.
  3. the client works or has worked in the financial sector for at least one year in a professional position that requires business knowledge of the intended service.

However, the provider must not advertise the classification as a professional client. In addition, the client must be aware of the risks of being classified as a professional client and must be informed about them. Have you been classified as a professional client? Contact one of our lawyers via the contact section for a direct exchange.

LiquidityX CFD Trading

CFD trading is characterised by the trader speculating on rising or falling prices on the international financial markets or individual financial products. If the forecast is correct, a profit can be made based on the difference in price of the asset at the time of purchase and sale of the asset.

When one trades, buys or sells CFDs, one is not trading the underlying asset. Instead of paying for a share or other asset in full and physically owning it, a CFD trader deposits a margin of safety, also known simply as margin. When depositing margin, you determine whether to bet on a rising or falling price.

You can therefore be “short” or “long”. Compared to the corresponding margin, the fluctuations in the underlying asset are then relatively large. The provider advertises the following advantages in the CFD area:

  1. Costs
  2. Coverage
  3. Accessibility
  4. Speed

However, disadvantages are also pointed out:

  1. Holding costs
  2. Input
  3. Risk

LiquidityX Tools

The trading provider advertises a variety of other tools. These include, among others:

  • Analyses
  • E-books
  • CFD Trading Tips
  • Economic Calendar
  • Trading Strategies
  • Glossary

Risk warning

LiquidityX states that between 74-89% of private investors lose money when they trade CFDs (as of 22.09.2021). Such a risk warning is mandatory for CFD companies.

This circumstance is based on a decision of the Financial Market Authority , which serves to ensure the restriction of marketing, distribution or sales contracts at the differential amount.

At the same time, ESMA has clarified the requirements for such a risk warning with the “Notice of ESMA’s Decision on the Extension of Product Intervention in respect of Contracts for Difference”. In addition, the announcement contains corresponding models.

Online trading general information

Due to the many order types, online traders like LiquidityX can customise their trading plans and make different configurations according to their individual needs: Sell entries:

  • Sell stop-loss order: selling higher than the current market price
  • Sell limit order: sell below the current market price
  • Sell market order: Sell at the current market price

Exit Instruction:

  • Trailing stop loss order: develop a moving stop loss based on price
  • Take Profit: Take profit and exit the market when the previously set price is reached
  • Stop Loss: Once the pre-determined price is reached, exit at a loss

Buy entries:

  • Buy at the current market price (Buy Market Order)
  • Buy at a price higher than the current market price (Buy Stop Loss Order)
  • Buy below the current market price (Buy Limit Order)
From an investor’s point of view, another advantage of online trading is the removal of restrictions. Therefore, you are free to choose the right trading strategy and follow your own trading style.
Currently, there are several methods:
  • Scalping: aggressive trading in a short period of time
  • Swing trading: taking risks by exploiting price fluctuations
  • Using robots for automated trading (“Expert Advisors”)
  • Intraday trading – opening and closing positions within one trading day
  • Long-term trading
A large number of these transaction methods first made online transactions possible by eliminating the telephone exchanges with providers that were necessary at the time. From this perspective, one can speak of a trading revolution that bridged the gap between many investors around the world and the global financial market.

Risks in online trading

Not all that glitters is gold, and this also applies to online transactions. Therefore, in addition to the advantages, there are some disadvantages that inclined investors should take into account:

  1. Investors should always pay attention to price developments.
  2. Compared to traditional transactions, it is rather hectic.
  3. Investors should be skilled in trading and rely on flexible strategies.
  4. If you make the wrong decision, you risk big losses. Most importantly, risky day trading is risky for first-time trading investors. This is because the risk of misjudging price movements is high and, given the time pressure, corrections are difficult.

Therefore, this form of trading is more suitable for very competent or extremely risky investors. If you fall into this category, intraday trading is a way to get results quickly. For example, you can also benefit from the elimination of overnight position fees. Finally, such financing costs must also be included in the overall consideration of the investment.

Furthermore, it is also important for day traders to compare the transaction fees of different online brokers. It is worthwhile to choose a flat rate in the form of a fixed price. This is especially worthwhile if your transaction frequency is high and the separately billed order fees significantly reduce the profit.

Free initial consultation on online trading

Would you like to discuss the topics of Forex and CFD trading with one of our lawyers ? The lawyers at Herfurtner Law Firm have experience in the areas of online trading and investor protection and can advise you throughout Germany, Austria and Switzerland.

We will be happy to examine your matter within the scope of a free initial assessment. Arrange an appointment via our contact section.