DAY-TRADING RISK AND SUITABILITY DISCLOSURETHE RISK OF LOSS IN ELECTRONIC DAY TRADING CAN BE SUBSTANTIAL. WE THEREFORE STRONGLY RECOMMEND THAT YOU CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, YOUR FINANCIAL RESOURCES AND THE FOLLOWING POINTS: I. Day-Trading Strategy. A "day-trading strategy" is an overall trading strategy characterized by the regular transmission of intra-day orders to effect both purchase and sale transactions in the same security or securities.
II. High Degree of Risk. Day-trading can be extremely risky. Day-trading generally is not appropriate for someone of limited resources and limited investment or trading experience 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 an investment of less than $50,000 will significantly impair the ability of a day-trader to make a profit. Conversely, an investment of $50,000 or more will in no way guarantee success. III. Unwarranted Claims of Potential Profits. 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. IV. Knowledge of the Market. 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. You should have appropriate experience before engaging in day- trading.
V. Knowledge of the Firm. Day-trading requires knowledge of a firm's operations. You should be familiar with a securities 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. The more volatile a stock is, the greater the likelihood that problems may be encountered in executing a transaction. In addition to normal market risks, you may experience losses due to system failures. VI. Commissions. 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.
VII. Your Potential Exposure. Day-trading on margin or short selling may result in losses beyond your initial investment. 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 selling 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.
VIII. Potential Registration Requirements. Persons providing investment advice for others or managing securities accounts for others may need to register as either an "Investment Advisor" under the Investment Advisors Act of 1940 or as a "Broker" or "Dealer" under the Securities Exchange Act of 1934. Such activities may also trigger state registration requirements.
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Extended Hours Trading Risk Disclosure Risk of Lower Liquidity. Liquidity refers to the ability of market participants to buy and sell securities. Generally, the more orders that are available in a market, the greater the liquidity. Liquidity is important because with greater liquidity it is easier for investors to buy or sell securities, and as a result, investors are more likely to pay or receive a competitive price for securities purchased or sold. There may be lower liquidity in extended-hours trading as compared to regular market hours. As a result, your order may only be partially executed, or not at all. Risk of Higher Volatility. Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. There may be greater volatility in extended hours trading than in regular market hours. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price in extended hours trading than you would during regular market hours. Risk of Changing Prices. The prices of securities traded in extended-hours trading may not reflect the prices either at the end of regular market hours, or upon the opening the next morning. As a result, you may receive an inferior price in extended-hours trading than you would during regular market hours. Risk of Unlinked Markets. Depending on the extended-hours trading system or the time of day, the prices displayed on a particular extended-hours trading system may not reflect the prices in other concurrently operating extended-hours trading systems dealing in the same securities. Accordingly, you may receive an inferior price in one extended-hours trading system than you would in another extended-hours trading system. Risk of News Announcements. Normally, issuers make news announcements that may affect the price of their securities after regular market hours. Similarly, important financial information is frequently announced outside of regular market hours. In extended-hours trading, these announcements may occur during trading, and if combined with lower liquidity and higher volatility, may cause an exaggerated and unsustainable effect on the price of a security. Risk of Wider Spreads. The spread refers to the difference in price between what you can buy a security for and what you can sell it for. Lower liquidity and higher volatility in extended hours trading may result in wider than normal spreads for a particular security.
Volatility System response times may vary due to a variety of factors, including trading volume, market conditions, and system performance.
MARGIN DISCLOSURE STATEMENT WE URGE YOU TO CAREFULLY CONSIDER THE FOLLOWING INFORMATION CONCERNING THE BASIC FACTS AND RISKS ASSOCIATED WITH THE USE OF MARGIN, AS WELL AS YOUR OWN CIRCUMSTANCES AND FINANCIAL RESOURCES IN DETERMINING WHETHER MARGIN TRADING IS SUITABLE FOR YOU:
Before trading stocks in a margin account, you should carefully review the margin agreement provided by Remote Day Trader, llc. You should also consult with us regarding any questions or concerns you may have with your margin accounts.
Basic Facts Concerning the use of Margin When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price. If you choose to borrow funds, you will open a margin account. The securities purchased in your account become the collateral for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and, as a result, we can take action, such as issue a margin call and/or sell securities or other assets in any of your accounts held with or through us, in order to maintain the required equity in the account.
Risks Associated with Trading on Margin It is important that you fully understand the risks involved in trading on margin.
These risks include the following: You can lose more funds than you deposit in the margin account. A decline in the value of securities that are purchased on margin may require you to provide additional funds to avoid the forced sale of those securities or other securities in your account.
We can force the sale of securities or other assets in your account(s). If the equity in your account falls below the maintenance margin requirements under the law, or any higher requirements set by our clearing firm or us, we can sell the securities in your account to cover the margin deficiency. You also will be responsible for any shortfall in the account after such a sale.
Although we will make reasonable efforts to contact you before taking any action, we are not required to do so. We, or our clearing firm, can sell your securities without contacting you. Further, even if we have contacted you and provided a specific date by which you can meet a margin call, market conditions or other factors, may dictate that we still take necessary steps, including immediately selling your securities without notice to you.
You should also be aware that you are not entitled to choose which security or other assets in your account(s) are liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, we have the right to decide which security to sell.
We can increase our "house" maintenance margin requirements at any time and we are not required to provide you with advance written notice. These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause the liquidation or sale of securities in your account.
You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to customers under certain conditions, you do not have a right to the extension.
We appreciate the opportunity to service your account.