High
Risk Investment
A high
level of risk exists in trading foreign exchange on margin, and
it may not be suitable for every investor. The high degree of
leverage can work against you as well as for you. Before
deciding to trade foreign exchange you know the risks associated
with foreign exchange trading and seek advice from an
independent financial advisor if you have any doubts. You should
also carefully consider the following to see if you are
personally suitable to trade: your investment objectives,
trading experience level, and amount of risk you are willing to
accept. It is possible to sustain a loss of some or all of your
initial investment; you should not invest money whose loss would
materially affect your lifestyle.
There is considerable exposure to risk in any foreign exchange
transaction. Any transaction involving currencies involves risks
including, but not limited to, the potential for changing political
and/or economic conditions that may substantially affect the price or
liquidity of a currency.
More over, the leveraged nature of FX trading means that any market
movement will have an equally proportional effect on your deposited
funds. This may work against you as well as for you. The possibility
exists that you could sustain a total loss of initial margin funds and
be required to deposit additional funds to maintain your position. If
you fail to meet any margin call within the time prescribed, your
position will be liquidated and you will be responsible for any
resulting losses. Investors may lower their exposure to risk by
employing risk-reducing strategies such as 'stop-loss' or 'limit'
orders.
In addition, the
transactions you are entering into with Tradeamericanfx are not traded
on an exchange. Therefore, under the U.S. Bankruptcy Code, your funds
may not receive the same protections as funds used to margin or
guarantee exchange-traded futures and options contracts, which receive a
priority in bankruptcy. Since the same priority has not been given to
funds used for off-exchange Forex trading, if Tradeamericanfx becomes
insolvent and you have a claim for amounts deposited or profits earned
on transactions with Tradeamericanfx, your claim may not receive a
priority. Without a priority, you are a general creditor and your claim
will be paid, along with the claims of other general creditors, from any
monies still available after priority claims are paid. Even customer
funds that Tradeamericanfx keeps separate from its own operating funds
may not be safe from the claims of other general and priority creditors.
There are also risks associated with utilizing an internet-based deal
execution software application including, but not limited, to the
failure of hardware and software. TradeAmerican FX employs back up systems and
contingency plans to minimize the possibility of system failure, and
phone trading is always available. |
