Foreign exchange margin trades are subject to a variety of risks, including price fluctuation in the foreign exchange markets. Clients are requested to take care to judge before trading whether the trades to be undertaken are appropriate to individual experience, financial resources, objectives, and plans. Clients are asked to read the description of the risks below, and not to begin to trade unless they have read this document fully and are sufficiently aware of the structure of foreign exchange margin trades and the dangers associated with them.

	Price fluctuation risk
Foreign exchange margin trades are based on foreign exchange rates, meaning that fluctuations in these rates can result in losses to the client. Neither the margin deposited with FXFor Japan K.K. nor any profit are guaranteed. Margins may not be fully recovered, and losses may exceed the client's margin payment.
	Leverage risk
Foreign exchange margin trades carry greater risk than normal trading because they apply leverage. The trading margin that forms the investment principal is smaller than the amount traded. This relatively large position size means that even small fluctuations in foreign exchange rates have a major impact on the client's profit or loss. To limit losses caused by exchange rate fluctuation, the client may need either to settle positions, either fully or in part, or to pay in additional margin. Note: To repeat, positions are much larger than the margin deposited with FXFor Japan K.K.. This means that, while even small fluctuations in foreign exchange rates can bring substantial profit, the client can also lose the entire margin and suffer losses that exceed the client's principal.
	Interest rate risk
The amount of interest is calculated from the interest rate differential between the pair of currencies in an open position when it is rolled over. This is reflected in the handling of swap points. A short position in the higher-yielding currency generates a payment of swap points by the client, and losses occur at each rollover even if the foreign exchange market remains completely unchanged. Conversely, a long position in the higher-yielding currency generates swap points as profit to the client. Note: Swap rates vary according to changes in the yield differential and the cross-rate between the two currencies.
	Risk associated with the stop-loss rule
Foreign exchange margin trades are subject to enforced stop-loss orders to help limit the loss of a client's margin and help prevent losses that exceed the deposited principal. A client's entire position is settled at market if a client's Margin Utilization as shown on the Kawase Trader Account Summary reaches 150%. Notes: 1. No guarantee is made clients will not lose their entire margin deposited. 2. The margin balance can become negative as a result of large or sudden moves in foreign exchange rates (weekend risk is a particular issue, as exchange rates may move over a Saturday and Sunday). 3. The enforced stop-loss level of 150% Margin Utilization is subject to change in the future.
	Risk associated with stop orders designed to limit losses
Stop orders (including if-done orders and one-cancel-other orders) designed to limit losses on foreign exchange margin trades can fail to function effectively if foreign exchange rates make rapid and unexpected moves, such as when market rates move sharply in one direction. Unintended losses can result from slippage that occurs when the market rate is less advantageous than that specified by the client.
	Risk associated with the nature of trading foreign exchange on margin
Foreign exchange margin trades are off-exchange transactions. They differ from exchange trades in that they are carried out via an interbank market. Trades are executed using foreign exchange rates that are based on the trading rates of financial institutions such as banks and securities companies.
	Liquidity risk and extraordinary market conditions
Major currencies traded in the foreign exchange markets are highly liquid, although other currencies are less liquid, which creating the risk of an inability to settle or conduct new trades. The announcement of major economic data, statements by influential individuals, important events, and gaps between trading sessions can result in sharp declines in liquidity, even during regular trading periods, with the result that trades take longer than expected to execute. Trading in specific currencies can also become difficult or impossible in extraordinary conditions, including acts of nature, war, terrorism, political upheaval, or changes in foreign exchange policy.
	8. Risks associated with the use of electronic trading systems
The absence of a human intermediary to receive an order when using an electronic trading system means any error by the client when inputting a buy or sell order can result in either the intended order not being fulfilled or an unintended order being executed. Electronic trading systems run the risk of being unavailable, either momentarily or for a period of time, as a result of a number of causes that include problems with either FXFor Japan's or the client's own communications or system equipment, technical faults or congestion affecting communications lines, disruption to the transmission of information, or problems with the electronic trading system itself. It is also possible that delivery delays or complete failure to receive a client's order instructions can render the order invalid. A further risk is that the unavailability of the electronic trading system, for whatever reason, can prevent all trading and related activities. The prices displayed by electronic trading systems are subject to delay, and discrepancies can arise between the price displayed by the system and the actual market price. The account numbers, passwords, and other information used when trading via an electronic trading system are at risk of theft or eavesdropping. Abuse of such information by a third party can lead to losses for the client.
	Credit risk
Foreign exchange margin trades are conducted on the basis of agreements among the parties. This means the credit status of the counterparty represents a risk. Clients therefore are exposed to the credit risk of FXFor Japan K.K., which reports on the state of all assets and funds in client accounts to the Financial Services Agency (FSA) at the end of each quarter. It also subjects itself to auditing by the FSA immediately on discovery of any problem with asset management or the status of assets. All trading may be suspended or other steps taken to protect client assets. FXFor Japan's counterparties are also subject to similar risks, including counterparty risk and asset management risk.
	Risk of changes in the tax and legal structures
The possibility exists of future changes in the tax and legal structures governing foreign exchange trading in Japan and other countries that are less advantageous than at present.

This simple presentation of the typical risks affecting trades of foreign exchange on margin is not exhaustive. Clients are advised to acquaint themselves fully with the structure of these trades, and the risks associated with them, before making any trades.