Risk Disclaimer on the use of Automated Trading Systems
Using Automated Trading Systems offers its users an alternate dimension of risk-return relative to other financial products. But although many of the systems show positive historical results, this kind of operation carries substantial risks that must be taken into account, and they are not suitable for all types of investors.
This document defines the major risks that the customer assumes and accepts by using the TradingMotion platform.
ON THE INFORMATION PROVIDED
The information contained in TradingMotion website on Automated Trading Systems available for activation, is provided in order to inform in detail about their behavior, so that users make their own decisions. In no way should this information be interpreted as investment recommendation or advice.
TradingMotion, SL cares for the quality of the information displayed on its platform, but neither the company nor any of its directors or employees, nor the developers of the systems shown, may be held responsible for any damage caused by decisions made by users of this information.
POSSIBLE ERRORS IN THE WEBSITE
By using the Internet to transmit orders, the following risks are present, among others:
COMPLEXITY OF FINANCIAL PRODUCTS USED
Automated Trading Systems available through TradingMotion platform, operate on financial derivatives. The trading of these products carries significant risks and is not suitable for all types of customers. It requires knowledge and constant monitoring of operations. Profit can quickly turn into a loss due to price changes. As leveraged products, it is possible to lose an amount greater than the account deposit.
As TradingMotion execution services are offered by financial institutions authorized to do so, TradingMotion is exempted from the responsibility of assessing the adequacy of the client to qualify for these products, delegating this responsibility on the financial institution providing the service.
OPERATIONAL RISKS ASSUMED BY THE USER
An Automated Trading System (hereinafter ATS) is defined as a set of rules that have been programmed to process information of markets real-time data, making mathematical calculations on them, and generating buy and sell signals on financial instruments.
The TradingMotion Platform, when it is offered by one of the financial institutions that are licensed, provides a service to run automated ATS. This means you, the user, may instruct through the Platform for your account to be automatically operated following the buy and sell signals generated by one or more ATS.
There are three types of ATS available to the user:
The User acknowledges that the buy and sell signals of the ATS are generated by real-time data broadcast by the markets and reaching TradingMotion through various vendors of real-time financial information, and that these signals generate orders shipped to markets, without human intervention, from TradingMotion servers. Rapid and unexpected movements in prices and/or failures in their diffusion, can generate buy and sell signals that result in gains or losses higher than expected, and are always independent of what may have happened in the historical period analyzed by the user.
In particular, TradingMotion is not responsible for any damages that may result from incorrect functioning of the ATS as well as any technical problem external to TradingMotion servers such as any hardware needed to run or to connect, expressly declining liability for any malfunction of ATS, the telephone network, hosting services and technical support of the ATS. TradingMotion not be responsible for any loss, damage, or expense directly or indirectly caused by delays and/or failures in the processing, management, execution and where appropriate, order liquidation of ATS.
TradingMotion is only dedicated to the operation of the technology for obtaining signals within a technical architecture installed in TradingMotion servers. The user assumes the use of this technology for the implementation of the ATS he requests to activate, accepts as its own all operations performed by ATS and exempts TradingMotion from responsibilities in the economic result that these operations may generate.
ON THE USE OF HYPOTHETICAL DATA
The returns shown in the TradingMotion platform are obtained from three different data types:
ON SLIPPAGES BETWEEN SIMULATED TRADING AND REAL TRADING
The real trading of an automated trading system differs, in most cases, from the simulated execution obtained with the hypothetical application of the rules of the systems using historical data and also with real time data. This difference is called "slippage".
The slippage of a system depends on several factors, such as the liquidity of the product on which it operates, the type of orders used, the times at which signals are generated, or the number of clients that are trading signals of the same system.
In order to provide the most realistic information about the past performance of a system, TradingMotion has developed its own methodology of implementation of slippages, which consists of the following:
In any case, TradingMotion may calculate for their clients, if they wish, the profitability of the systems with a simplified calculation method (a fixed amount for all trades), as is the standard practice in the industry.
ON REQUIRED AND SUGGESTED CAPITAL
The Required Capital shown in the platform is the minimum capital required to maintain an active Trading System in the client's account. This amount shall be available in the account at the beginning of each session, or else the system will be deactivated.
The Suggested Capital shown on the platform, is calculated based on a TradingMotion proprietary methodology of risk analysis of a system. They are designed for a VERY RISKY client with the criteria of having a 95% chance of not losing more than 33% of the suggested capital.
Always using more than the capital required, the user can adjust the risk they want to assume, using our calculation of Suggested Capital as guidance, as well as all other risk data provided in the platform (information of drawdowns, worst session, average losing session, Sharpe ratios, Sortino, Sterling, MAR, etc..)
ON MONTHLY AND ANNUAL RETURNS PERCENTAGE
In all information displayed by TradingMotion as percentage, Suggested Capital is used as the initial capital, and resets at the beginning of each period. This means that simple results are shown for each period, and not compound. The return that a user may get in his real account, may differ from the amounts shown in the Platform based on the evolution of the capital in his account.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS
In the Platform we strongly emphasize all the risks of a system, even if its long-term profitability is positive. There is no perfect system, nor is there a system that always wins. Investment in Automated Systems carries great risks, and past performance shown should not blind the user from them.
It is important to note that the worst losing streak of a system is not yet known, it can happen when the system is active in the user's account. The market circumstances can change from the period in which the system was designed, and rules in the past that have given positive returns, can start giving negative returns.