Advanced Algorithmic Design
RISK OF LOSS IN FUTURES TRADING
THE RISK OF LOSS IN TRADING COMMODITY FUTURES CONTRACTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE IN LIGHT OF YOUR FINANCIAL CONDITION. IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZE SOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD BE AWARE OF THE FOLLOWING: YOU MAY SUSTAIN A TOTAL LOSS OF THE INITIAL MARGIN FUNDS AND ANY ADDITIONAL FUNDS THAT YOU DEPOSIT WITH YOUR BROKER TO ESTABLISH OR MAINTAIN YOUR POSITION. IF THE MARKET MOVES AGAINST YOUR POSITION, YOU MAY BE CALLED UPON BY YOUR BROKER TO DEPOSIT A SUBSTANTIAL AMOUNT OF ADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, IN ORDER TO MAINTAIN YOUR POSITION. IF YOU DO NOT PROVIDE THE REQUIRED FUNDS WITHIN THE PRESCRIBED TIME, YOUR POSITION MAY BE LIQUIDATED AT A LOSS, AND YOU WILL BE LIABLE FOR ANY RESULTING DEFICIT IN YOUR ACCOUNT. UNDER CERTAIN MARKET CONDITIONS, YOU MAY FIND IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE A POSITION. THIS CAN OCCUR, FOR EXAMPLE, WHEN THE MARKET MAKES A “LIMIT MOVE”. THE PLACEMENT OF CONTINGENT ORDERS, SUCH AS A “STOP LOSS” OR “STOP LIMIT” ORDER, WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS, SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS. A “SPREAD” POSITION MAY NOT BE LESS RISKY THAN A SIMPLE “LONG” OR “SHORT” POSITION. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES TRADING BECAUSE OF THE SMALL MARGIN REQUIREMENT CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. THIS BRIEF STATEMENT CANNOT, OF COURSE, DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ASPECTS OF THE COMMODITY MARKETS. YOU SHOULD THEREFORE CAREFULLY STUDY FUTURES TRADING BEFORE YOU TRADE.
ADDITIONAL GLOBEX TRADING SYSTEMS DISCLOSURES
All material provided by Globex Trading Systems is believed to be reliable. However, due to the number of sources from which we obtain information, and the inherent risks of distribution, there may be omissions or inaccuracies in such information and services. Globex Trading Systems its owners, employees, and contributors take every reasonable step to ensure the integrity of the data. However, Globex Trading Systems, its owners, employees, and contributors, cannot and will not warrant the accuracy, completeness, or fitness for a particular purpose of the information contained in our products or services. Recommendations and opinions contained in our products and services reflect judgment, as applicable, of Globex Trading Systems as of the date hereof, are subject to change, and are based upon certain assumptions that could yield different results. You are cautioned there is no universally accepted method for analyzing financial instruments, including futures. Further, there is no guarantee as to the liquidity of the instruments involved in its analysis.
Neither the information nor the recommendations and opinions expressed herein constitute an offer to buy or sell any financial contracts, security, future contract, or derivative instrument. As a matter of policy, Globex Trading Systems does not give tax, accounting, regulatory, or legal advice to clients. A client should therefore consult their own advisor regarding the tax, accounting, regulatory, or legal implications of the recommended strategies before any transactions with your account.
Prior to opening an account the undersigned should contact the National Futures Association to further research the risks involved with futures trading. The National Futures Association can be contacted at:
This does not imply that the National Futures Association endorses this product or any products of Globex Trading Systems. This is not an offer to buy or sell futures contracts or financial instruments of any kind. Notwithstanding any communications between Globex Trading Systems and its customers and prospects to the contrary, receipt or use of any material provided by Globex Trading Systems, at any time distributed via any method, represents acknowledgement by such persons of this disclaimer and agreement with its terms and conditions.
NO TRADING SYSTEM CAN GUARANTEE PROFITS
Commodity trading systems typically are computerized programs that signal members of the public when to buy and sell commodity futures and options contracts. Systems produce buy and sell signals based on mathematical formulas and are typically based on technical analysis of trading data (trading volume and prices), as opposed to fundamental analysis (analysis of economic factors such as supply and demand). Trading systems that are based on technical analysis attempt to predict future price movements based on historical prices, price relationships and price trends. In deciding whether to purchase a particular trading system to trade commodity futures or options, members of the public should remember that no commodity trading system can guarantee profits. And, whether or not a trading system is used, commodity futures and options are typically high risk endeavors.
FUTURES CONTRACTS ARE VOLATILE AND RISKY
Persons considering trading commodity futures or options should educate themselves about futures and options and realize that they may lose large sums of money. Remember: “If it sounds too good to be true, it probably is too good to be true.” The following checklist should help consumers in deciding whether to use a trading system.
IS A FUTURES/OPTIONS TRADING SYSTEM RIGHT FOR YOU?
- Do you have the financial ability to sustain trading losses and meet margin calls? When trading futures contracts on margin, you risk losing much more money than the initial margin amount. If the market moves against you, you may be required to pay additional funds. The use of margin creates potentially large exposures to loss.
- Can you lose your entire investment and more without a change in your lifestyle?
- Do the trading results sound too good to be true?
- Are the advertised trading results based on actual trading or “hypothetical” trading?
- Has any trader used the system in actual trading? If so, how has the trader fared?
- Will the system promoter provide you with independent verification of the claimed trading results?
- What is the total cost of the system?
- Have you factored into your purchasing decision the impact of commissions and fees that can result from frequent trading?
- What are the additional costs (data feed, etc)?
- Not all system promoters are required to be National Futures Association (NFA) members or registered with the CFTC. A call to the NFA (800-621-3570 or 800-6764 NFA) or the CFTC, or a visit to the NFA’s website at http://www.nfa.futures.org/basicnet/, can confirm the status of a particular promoter.
- Have you checked with the NFA whether the system promoter has been disciplined by commodity regulators?
Questions concerning this advisory may be addressed to the CFTC’s Office of Public Affairs at
Washington, D.C. 20581
For other consumer advisories concerning possible fraudulent activity in the commodity futures and options industry, click on Consumer Alerts. The CFTC’s website also offers general information about trading in the commodity futures and options markets. For example, the CFTC offers brochures online, such as “Futures and Options What You Should Know Before You Trade” and “Glossary: The Language of the Futures Industry.” To obtain this and other information, go to the CFTC site map. he Federal Trade Commission’s Advisory Day Trading Ads: Cutting Through the Bull”