|
On Line Trading Risk Disclosure Statement THE
RISK OF LOSS IN ELECTRONIC DAY TRADING CAN BE SUBSTANTIAL. YOU SHOULD,
THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN
LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. IN CONSIDERING WHETHER
TO TRADE, YOU SHOULD BE AWARE OF THE FOLLOWING POINTS: (1)
The national securities markets are extremely efficient and
competitive. Successful Electronic Day Trading typically requires skill and
discipline as well as experience and knowledge of the capital markets. There
is no guarantee that you will be successful in implementing your investment
strategy. A substantial number of Electronic Day Traders will not be
successful. Moreover, changes in market structure and competitive conditions
also may affect your continued success. Only Risk capital should be used for
trading. Market structure and competitive changes in the markets may cause
formerly successful traders to become less successful. (2)
Electronic Day Trading involves a high volume of trading activity-the
number of transactions in an account may exceed 100 per day. Each trade
generates a commission and the daily commission on such a high volume of
trading can be in excess of any earnings. (3)
Persons who are new to Electronic Day Trading should strictly limit
both the number of trades they do and the size of their trades to reduce the
risk of large dollar losses during the learning process. (4)
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 in
your account. (5)
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". (6)
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. The
more volatile a stock is, the greater the likelihood that problems may be
encountered in executing a transaction. (7)
In addition to normal market risks, you may experience losses do to
system failures. The firm and its clearing broker rely upon sophisticated
computer 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 crashes during both peak
and low volume periods: the loss of orders on both SOES and Select Net; and;
delayed, conflicting and inaccurate confirmations on orders or cancellations
that you initiate. (8)
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
your 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. (9)
You should consult your broker concerning the nature of the
protection available to safeguard funds or property deposited in your
account. ALL
OF THE POINTS NOTED ABOVE APPLY TO ELECTRONIC DAY TRADING OF DOMESTIC EQUITY
SECURITIES. IF YOU ARE CONTEMPLATING TRADING FUTURE OR OPTION CONTRACTS, YOU
SHOULD BE AWARE THAT THESE INSTRUMENTS POSSESS ADDITIONAL RISKS. THE
RISK OF ELECTRONIC DAY TRADING MAY BE SUBSTANTIAL. THIS BRIEF STATEMENT
CANNOT, OF COURSE, DISCLOSE ALL THE RISKS AND OTHER ASPECTS OF ELECTRONIC
DAY TRADING. ONLY RISK CAPITAL SHOULD BE USED FOR SUCH TRADING.
|