Risks

Day Trading Risks & Stock Trading Disclosures

Warning – "Day Trading involves high risks and you can lose a lot of money including your total capital" day trading stocks.

Federal Trade Commission

The Federal Trade Commission has a free brochure, "Day Trading Ads: Cutting Through the Bull," and a web page that advises consumers:

There's no fail-safe way to day trade in stocks, commodity futures, options or similar investments without risk.

No computerized day trading system or advisory service can accurately predict what the price of a security, stock or bond will be on any particular day. Even day trading advisors with long histories of success can suddenly lose a fortune. Extravagant day trading profit claims and glowing day trading testimonials are likely to be exaggerated or totally fabricated.

Your best protection as a day trader or an investor is to know what you're buying, what the ground rules are when you buy and sell stocks, and what level of day trading risk you're assuming.

U.S. Government Required Disclaimer

Stock trading is not appropriate for everyone.

There is a substantial risk of loss associated with trading these markets.

Losses can and will occur.

No system or methodology has ever been developed that can guarantee profits or ensure freedom from losses.

No representation or implication is being made that using our system or the information in this website will generate profits or ensure freedom from losses.

 

Day Trading Risks

PLEASE READ THE FOLLOWING CAREFULLY:

THE RISK OF LOSS IN ELECTRONIC DAY TRADING IS UNLIMITED.

YOU SHOULD THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN CONSIDERING YOUR TRADER WELL BEING, YOUR TOLLERANCE FOR TRADING RISK, AND YOUR AVAILABLE TRADING FINANCIAL RESOURCES/NET WORTH.

We are not registered with the Securities and Exchange Commission nor with National Association of Securities Dealers nor with any other securities regulating body as a broker dealerinvestment advisor or any such entity, as we do not provide any of these services.

We assume no responsibility for your trading results.

Past performance does not guarantee future performance and we do not make any performance presentations or guarantees. Based on my trading performance, you have a potential to reach similar performance. Will you I do not know. There are many factors that enhance and limit each trader's day trading potential for profits.

Any trading callsdemonstration or trading results produced by us presenting trades and using our methods, on this website or in any advertisement, brochure, or online demonstration, magazine, etc. are to be considered simulated trades for illustrational purposes only.

No trading system can guarantee profits.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE LIMITATIONS.

UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY.

SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

The host server for this website is located in Canada

IN CONSIDERING WHETHER TO TRADE OR NOT, YOU SHOULD BE AWARE OF THE FOLLOWING:

 

10 RISK FACTORS:

  1. The electronic securities markets are extremely efficientand competitive. Successful Day Trading typically requires skill, competence with those skills, and discipline as well as experience and knowledgeof the markets. There is no guarantee that you will be successful in implementing any day trading strategy. A substantial number of Day Traders will not be successful – the press has it over 90%. My estimate is north of 98% or all traders worldwide are losers.
  2. You should use only risk capital for trading. Market structure and competitive changes in the markets may cause formerly successful day traders to become less successful.
  3. Electronic day trading involves a high volume of trading activity – the number of transactions in an account may exceed 50 trades per day. Each trade generates a commission and the total daily commission on such a high volume of trading can be excessive.
  4. Day traders should strictly limit both the number of trades they do and the lot size of their trades to reduce the risk of large dollar losses during the learning process.
  5. Electronic Day Trading is designed to produce short-term profits. However, the activity also may result in losses that can exceed more than 100% of your initial capital. You are solely responsible for any losses.
  6. Placing contingent orders, such as "stop-loss" or "stop-limit" orders, will not necessarily limit your losses to the intended amounts, since market conditions on the NASDAQ or any alternative trading system on which the order is placed may make it impossible to execute such orders. Similarly, using "market orders" can be very risky, since large gaps can occur in price movements of active stocks. You are urged in most instances to use limit orders.
  7. Under certain market conditions, you may find it difficult or impossible to liquidate a position quicklyat a reasonableprice. This can occur, for example, when the market for a stock suddenly drops, or if trading is halted due to recent news events or unusual trading activity. The more volatile a stock is, the greater the likelihood that problems may be encountered in executing a transaction.
  8. In addition to normal market risks, you may experience losses due to trading system failures. The firm and its clearing broker rely upon sophisticated computer trading software and hardware to execute transactions, which are subject to failure due to a variety of factors. In addition, NASDAQ and the alternative trading systems have computer systems that often malfunction. Among other events, you may experience losses due to: system crashesduring both peak and low volume periods; theloss of orders on both SOES and Select Net; and, delayedconflicting and inaccurate confirmations on orders or cancellations that you initiate, execute.
  9. The use of any margin or leverage in an account can work against you as well as for you. Leverage can lead to large losses as well as gains. 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 a position, and you may incur losses beyond your initial investment. If the market moves against your position, you may be called upon to deposit a substantial amount of additional margin funds, on short notice, in order to maintain you position. If you do not provide the required funds within the time required, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account.
  10. You should consult your broker concerning the nature of the protectionsavailable to safeguard funds or property deposited in your account.

 

Day Trading RISK DISCLOSURE

Day Trading Risk Disclosure Statement – Rule 2361.

You should consider the following points before engaging in a day trading strategy. For purposes of this notice, a "day trading strategy" means an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to effect both purchase and sale transactions trading in the same security or securities.

Day trading can be extremely risky.

Day trading generally is not appropriate for someone of limited resources and limited investment, or trading experience and competence, and low risk tolerance.

You should be prepared to lose all of the funds that you use for day trading. In particular, you should not fund day trading activities with retirement savings, student loans, second mortgages, emergency funds, funds set aside for purposes such as education or home ownership, or funds required to meet your living expenses. Further, certain evidence indicates that a trading account of less than $50,000 will significantly impair the ability of a day trader to win.

Of course, a trading account of $50,000 or more will in no way guarantee success.

Be cautious of claims of large profits from day trading.

You should be wary of advertisements or other statements that emphasize the potential for large profits in day trading.

Day trading can also lead to large and immediate financial losses.

Day trading requires knowledge of securities markets. Day trading requires in-depth knowledge of the securities markets and trading techniques and strategies. In attempting to profit through day trading, you must compete with professional, licensed traders employed by securities firms, Market Makers, and Hedge Funds.

You should gain the appropriate experience competence before engaging in day trading with cash.

Day trading requires knowledge of your brokerage firm's operations. You should be familiar with the firm's business practices, including the operation of the firm's order execution systems and procedures.

Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a stock suddenly drops, or if trading is halted due to recent news events or unusual trading activity, or as a result of big money "trickery".

The more volatile a stock is, the greater the likelihood that execution problems may be encountered. In addition to normal market risks, you may experience losses due to system failures – your system, your Internet Service Provider, and either or both the systems used trading NASDAQ and NYSE.

Day trading will generate substantial commissions, even if the per trade cost is low. Day trading involves aggressive trading, and generally you will pay commissions on each trade. The total daily commissions that you pay on your trades will add to your losses or significantly reduce your earnings. For instance, assuming that a trade costs $16 and an average of 29 transactions are conducted per day; an investor would need to generate an annual profit of $111,360 just to cover commission expenses.

Day trading on margin or short selling may result in losses beyond your initial money traded. When you day trade with funds borrowed from a firm or someone else, you can lose more than the funds you originally placed at risk. A decline in the value of the securities that are purchased may require you to provide additional funds to the firm to avoid the forced sale of those securities or other securities in your account. Short trading as part of your day-trading strategy also may lead to extraordinary losses, because you may have to purchase a stock at a very high price in order to cover a short position. Take opinion of a licensed financial advisor to know more about risks of engaging in day trading activities.

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