Disclaimer and Risk Disclosure
WEALTH WARNING: Trading the financial markets is risky and you can lose all your deposited money. Only use money you can afford to lose.
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Any live trading room we offer is for educational purposes only. The opinions expressed are solely those of the presenter. All trades presented should be considered hypothetical and are not guaranteed to be replicated in a live trading room.
Risk Disclosure
The following statement is provided pursuant to Commodity Futures Trading Commission (“CFTC”) Regulation 1.55(c). This brief statement does not disclose all the risks and other significant aspects of trading in futures, forex, and options. Due to the risks, undertake such transactions only if you fully understand the nature of the contracts and the extent of your exposure to risk. Trading in futures, forex, and options is not suitable for many members of the public. Carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources, and other relevant circumstances.
The risk of loss in trading commodity futures contracts and foreign currency can be substantial. Consider whether such trading is suitable for you based on your circumstances and financial resources. Be aware of the following points:
- You may sustain a total loss of the funds deposited with your broker to establish or maintain a position in the commodity futures or foreign exchange market and incur losses beyond these amounts. If the market moves against your position, your broker may require substantial additional margin funds on short notice to maintain your position. Failure to provide the required funds within the time required by your broker may result in the liquidation of your position at a loss, and you will be liable for any resulting deficit in your account.
- Funds deposited with a futures commission merchant for trading futures and forex positions are not protected by insurance in the event of the bankruptcy or insolvency of the futures commission merchant, or if your funds are misappropriated.
- Funds deposited with a futures commission merchant for trading futures or forex positions are not protected by the Securities Investor Protection Corporation, even if the futures commission merchant is registered with the Securities and Exchange Commission as a broker or dealer.
- Funds deposited with a futures commission merchant are generally not guaranteed or insured by a derivatives clearing organization in the event of the bankruptcy or insolvency of the futures commission merchant. Certain derivatives clearing organizations may have limited insurance programs for customers. Inquire with your futures commission merchant about the insurance of your funds.
- Funds deposited with a futures commission merchant are not held in a separate account for your individual benefit. Futures commission merchants commingle customer funds in one or more accounts, exposing you to losses incurred by other customers if the futures commission merchant does not have sufficient capital to cover such losses.
- Funds deposited with a futures commission merchant may be invested by the merchant in financial instruments approved by the Commission, such as U.S. government securities, municipal securities, money market mutual funds, and certain corporate notes and bonds. The futures commission merchant may retain interest and earnings from these investments. Understand the types of financial instruments that a futures commission merchant may invest your funds in.
- Futures commission merchants may deposit customer funds with affiliated entities. Inquire whether your futures commission merchant deposits funds with affiliates and assess the associated risks.
- Consult your futures commission merchant about the protections available to safeguard funds or property deposited for your account.
Under certain market conditions, it may be difficult or impossible to liquidate a position, for example, when the market reaches a daily price fluctuation limit (“limit move”).
All futures, forex, and options positions involve risk, and a “spread” position may not be less risky than an outright “long” or “short” position.
The high degree of leverage (gearing) in futures and forex trading due to small margin requirements can work against you as well as for you, leading to large losses as well as gains.
Additionally, be familiar with the futures commission merchant you select to trust with your funds. As of July 12, 2014, the Commodity Futures Trading Commission requires each futures commission merchant to make firm-specific disclosures and financial information publicly available on its website to assist in your assessment and selection of a futures commission merchant.
Additional Risks for Foreign Futures or Options Contracts
Foreign futures transactions involve executing and clearing trades on a foreign exchange. Even if the foreign exchange is linked to a domestic exchange, no domestic organization regulates the activities of a foreign exchange or has the power to enforce its rules or the laws of the foreign country. Customers trading on foreign exchanges may not receive the same protections as domestic transactions, including domestic alternative dispute resolution procedures. Funds received for margining foreign futures transactions may not receive the same protections as funds for domestic transactions. Understand the foreign rules that will apply to your transactions.
The price of any foreign futures or option contract and the resulting potential profit and loss may be affected by fluctuations in the foreign exchange rate between the order placement and contract liquidation or exercise.
Conclusion
This brief statement cannot disclose all the risks and other aspects of the commodity and foreign currency markets. Always conduct thorough research and consult with licensed professionals before engaging in trading activities.