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The risk of loss
in trading commodity
futures contracts
can be substantial.
You should, therefore,
carefully consider
whether such trading
is suitable for
you in light of
your circumstances
and financial resources.
You should be aware
of the following
points:
(1) You may sustain
a total loss of
the funds that you
deposit with your
broker to establish
or maintain a position
in the commodity
futures market,
and you may incur
losses beyond these
amounts. If the
market moves against
your position, you
may be called upon
by your broker 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 by your
broker, your position
may be liquidated
at a loss, and you
will be liable for
any resulting deficit
in your account.
(2) Under certain
market conditions,
you may find it
difficult or impossible
to liquidate a position.
This can occur,
for example, when
the market reaches
a daily price fluctuation
limit (“limit
move”).
(3) 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 exchange
where the order
is placed may make
it impossible to
execute such orders.
(4) All futures
positions involve
risk, and a “spread”
position may not
be less risky than
an outright “long”
or “short”
position.
(5) The high degree
of leverage (gearing)
that is often obtainable
in futures trading
because of the small
margin requirements
can work against
you as well as for
you. Leverage (gearing)
can lead to large
losses as well as
gains.
(6) You should consult
your broker concerning
the nature of the
protections available
to safeguard funds
or property deposited
for your account.
ALL OF THE POINTS
NOTED ABOVE APPLY
TO ALL FUTURES TRADING
WHETHER FOREIGN
OR DOMESTIC. IN
ADDITION, IF YOU
ARE CONTEMPLATING
TRADING FOREIGN
FUTURES OR OPTIONS
CONTRACTS, YOU SHOULD
BE AWARE OF THE
FOLLOWING ADDITIONAL
RISKS:
(7) Foreign futures
transactions involve
executing and clearing
trades on a foreign
exchange. This is
the case even if
the foreign exchange
is formally “linked”
to a domestic exchange,
whereby a trade
executed on one
exchange liquidates
or establishes a
position on the
other exchange.
No domestic organization
regulates the activities
of a foreign exchange,
including the execution,
delivery, and clearing
of transactions
on such an exchange,
and no domestic
regulator has the
power to compel
enforcement of the
rules of the foreign
exchange or the
laws of the foreign
country. Moreover,
such laws or regulations
will vary depending
on the foreign country
in which the transaction
occurs. For these
reasons, customers
who trade on foreign
exchanges may not
be afforded certain
of the protections
which apply to domestic
transactions, including
the right to use
domestic alternative
dispute resolution
procedures. In particular,
funds received from
customers to margin
foreign futures
transactions may
not be provided
the same protections
as funds received
to margin futures
transactions on
domestic exchanges.
Before you trade,
you should familiarize
yourself with the
foreign rules which
will apply to your
particular transaction.
(8) Finally, you
should be aware
that the price of
any foreign futures
or option contract
and, therefore,
the potential profit
and loss resulting
there from, may
be affected by any
fluctuation in the
foreign exchange
rate between the
time the order is
placed and the foreign
futures contract
is liquidated or
the foreign option
contract is liquidated
or exercised.
THIS BRIEF STATEMENT
CANNOT, OF COURSE,
DISCLOSE ALL THE
RISKS AND OTHER
ASPECTS OF THE COMMODITY
MARKETS
QUESTIONS: PLEASE
EMAIL
[email protected]
OR CALL 1-800-998-7870
(INTERNATIONAL +1-561-829-8291)
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