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TM - Risk Disclaimer - Non US

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:

  1. Delays in the execution of queries and/or operations that originate on downtime, overloads or deficiencies of the Network;
  2. Errors in the information provided by third party suppliers to TradingMotion (eg data sources in real time).
  3. Errors that may be caused by illegal interference by third parties and computer viruses.

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:

  1. Proprietary systems developed by the user. In this case, TradingMotion can automate the execution of an ATS whose source code has been provided by the user.
  2. Systems for free use. TradingMotion may make available to the Platform user a number of ATS, which are free to use. In some cases they may be open source systems, and other systems that TradingMotion or some external developer has decided to offer free of charge to TradingMotion users.
  3. Systems with third party licences. In this case the user must subscribe to a use license of the ATS from the developer. TradingMotion Platform enables to activate only the systems licensed to the user, providing the means of payment outlined in the Platform.

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:

  1. Simulated trades obtained from a BackTest: Trades are generated from the application of the rules of the trading system on past data. The generation of these operations is performed by TradingMotion just before introducing a new system to its platform. There is a risk that TradingMotion can not control, that the system may have been created by the developer so that it generates misleading returns.
  2. Calculated in real time trades: Those operations that have been calculated in real time by TradingMotion from a Trading System since it is available on the platform. In this case, the operations obtained, although simulated, are audited by TradingMotion and the developer is prevented from intervening in the generation thereof.
  3. Customer Trades: They are identical to the previous ones, but also the trades are being executed in the real market for at least one user of the TradingMotion platform.

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:

  1. In trades that have been executed in real accounts, the obtained average execution price of all accounts is applied.
  2. In simulated trades, which have not been executed in real accounts, TradingMotion applies the average obtained slippage on the last 50 sessions of all other systems trading the same financial instrument.
  3. In cases where there is not enough information to calculate the point 2, TradingMotion will use a slippage considered a realistic estimate.

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.