Risk Disclosure Statement
1. Nature of Algorithmic Trading
Algorithmic trading (also known as automated trading, algo trading, or black-box trading) uses computer programs to execute trades automatically based on pre-defined rules and strategies. While this approach offers several potential benefits, including:
- Faster execution speed compared to manual trading
- Removal of emotional decision-making from trading
- Ability to monitor multiple markets and securities simultaneously
- Backtesting capabilities to evaluate strategies on historical data
Algorithmic trading also introduces unique and significant risks that may not be present in manual trading. These risks include technical failures, programming errors, market disruptions, and unintended order execution. You must understand these risks before deploying any strategy to live trading.
2. Risk of Loss
WARNING: YOU CAN LOSE MONEY TRADING FINANCIAL INSTRUMENTS.
Algorithmic trading carries substantial risk of financial loss. You should be aware of the following risks:
Total Loss of Capital
You can lose your entire investment. There is no guarantee of profit, and historical performance does not indicate future results. Market conditions can change rapidly, and strategies that were profitable in the past may result in losses in the future.
Leverage and Margin Risks
If you use leverage or margin trading:
- Leverage amplifies both gains AND losses - A small adverse market movement can result in losses exceeding your initial investment
- Margin calls - Your broker may liquidate positions if your account falls below maintenance margin requirements
- Forced liquidation - Positions may be closed automatically at unfavorable prices during volatile markets
- Interest charges - Margin trading incurs borrowing costs that reduce profitability
Market Volatility
Financial markets can experience sudden and severe price movements due to:
- Economic news releases, earnings reports, or geopolitical events
- Flash crashes or "fat finger" errors causing temporary price dislocations
- Low liquidity periods (e.g., overnight, holidays, market open/close)
- Circuit breakers or trading halts that prevent order execution
During volatile periods, automated strategies may execute trades at worse-than-expected prices or fail to execute at all.
Gap Risk
Markets can "gap" (open significantly higher or lower than the previous close) due to overnight news or events. Stop-loss orders may not protect you from gap risk, as they execute at the next available price, which may be far from your intended stop level.
3. Technical Risks
Algorithmic trading relies on technology infrastructure that can fail. You should be aware of the following technical risks:
System Failures and Outages
- Internet Connectivity: Loss of internet connection may prevent strategy monitoring, order submission, or emergency stops
- Server Outages: TickHint infrastructure failures (Azure downtime, database issues) may disrupt trading sessions
- Broker API Failures: Third-party broker service disruptions or API rate limiting are outside our control
- Power Outages: Local power failures may prevent access to trading controls
Strategy Errors and Bugs
- Programming Errors: Bugs in your strategy code may result in unintended orders or losses
- Logic Errors: Flawed strategy logic may perform poorly despite passing backtests
- Unexpected Behavior: Edge cases or unusual market conditions may trigger unintended strategy behavior
- Order Duplication: Technical errors may result in duplicate orders being submitted
Latency and Execution Delays
- Network Latency: Delays in market data or order transmission may result in missed opportunities or worse prices
- Order Queues: During high-volume periods, broker order queues may delay execution
- Slippage: Orders may execute at prices different from expected due to market movement or liquidity constraints
Data Quality Issues
- Delayed Data: Real-time market data may be delayed by seconds or minutes due to data provider issues
- Incorrect Data: Bad ticks, erroneous prices, or missing data may cause incorrect strategy decisions
- Feed Interruptions: Market data feeds may disconnect temporarily, preventing strategy monitoring
Emergency Stop Limitations
TickHint provides emergency stop mechanisms (pause and stop buttons), but we cannot guarantee instant execution due to:
- In-flight orders that have already been submitted to the broker
- Network latency between TickHint servers and broker APIs
- Broker order processing delays during volatile markets
- Partial fills that may occur before the stop command takes effect
4. Past Performance Warning
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS
Backtesting results do NOT guarantee future performance. Historical data does not predict future market conditions. Strategies that performed well in backtests may fail in live trading due to:
Overfitting
Strategies optimized on historical data may be "overfitted" - tuned to perform well on specific past data but fail on new data. Overfitted strategies often show excellent backtest results but poor live trading performance.
Changed Market Conditions
Market dynamics change over time due to:
- New market participants and algorithmic traders
- Changes in market structure (tick sizes, trading venues, regulations)
- Shifts in correlations between assets
- Changes in volatility regimes
- Macroeconomic shifts (interest rates, inflation, economic cycles)
Execution Differences
Backtesting typically assumes:
- Perfect fills - Backtests may assume orders fill at desired prices without slippage
- Zero commissions - Real trading incurs commissions, fees, and borrowing costs that reduce returns
- Infinite liquidity - Real markets have limited liquidity, especially for large orders or illiquid securities
- No market impact - Large orders may move the market against you
Survivorship Bias
Backtesting on historical data may suffer from survivorship bias - securities that failed or were delisted are excluded from the dataset, artificially inflating backtest results.
Look-Ahead Bias
Strategy code may inadvertently use future information not available at the time of the trade, resulting in unrealistic backtest performance.
5. No Financial Advice
TickHint is a technology platform only. We provide software tools for algorithmic trading, but we are NOT:
- A financial advisor - We do not provide investment advice or recommendations
- A broker or dealer - We do not execute trades or hold customer funds
- An investment manager - We do not manage portfolios or make investment decisions on your behalf
- A registered investment advisor (RIA) - We are not registered as an investment advisor
- A trading signal provider - We do not provide trading signals, tips, or recommendations
Your Sole Responsibility
All trading decisions are your sole responsibility. You are responsible for:
- Determining whether algorithmic trading is suitable for your financial situation and risk tolerance
- Reviewing and understanding all strategy code before deployment
- Setting appropriate risk parameters (position sizes, stop losses, exposure limits)
- Monitoring strategies continuously during market hours
- Deciding when to start, pause, or stop trading sessions
- Complying with all applicable laws, regulations, and broker terms of service
Seek Independent Advice
You should consult independent financial advisors before engaging in algorithmic trading. A licensed financial advisor can help you:
- Assess your risk tolerance and investment objectives
- Determine appropriate position sizing and leverage levels
- Understand tax implications of trading activity
- Evaluate whether algorithmic trading aligns with your overall financial plan
6. Suitability Warning
Algorithmic trading is not suitable for everyone. You should only engage in algorithmic trading if:
Financial Suitability
- You can afford to lose your invested capital - Only trade with money you can afford to lose completely
- You have adequate financial resources - Trading losses should not materially affect your lifestyle or financial obligations
- You have an emergency fund - Maintain separate savings for unexpected expenses
- You are not using borrowed money - Do not use loans, credit cards, or home equity to fund trading
Knowledge and Experience
- You understand financial markets - Knowledge of market structure, order types, and trading mechanics
- You understand programming - Ability to read and debug C# code
- You understand strategy logic - Ability to analyze and validate trading strategies
- You understand risk management - Knowledge of position sizing, stop losses, and portfolio management
Time Commitment
- You can monitor strategies regularly - Algorithmic trading is not "set and forget"
- You can respond to emergencies - Ability to stop strategies if unexpected behavior occurs
- You can stay informed - Monitoring news and market conditions that may affect strategies
Risk Tolerance
- You can tolerate losses - Drawdowns are inevitable; you must be psychologically prepared for losses
- You can remain disciplined - Avoid emotional decisions like prematurely stopping winning strategies or doubling down on losing ones
- You can accept responsibility - You must accept full responsibility for all trading outcomes
7. Regulatory Status
TickHint is operated by ALPITY LTD, a company registered in the Republic of Cyprus.
What We Are NOT
- NOT a broker - We do not execute trades, hold customer funds, or custody securities
- NOT a financial advisor - We do not provide investment advice or recommendations
- NOT an exchange - We do not operate a trading venue or match orders
- NOT a custodian - We do not hold or safeguard your assets
- NOT a registered investment advisor - We are not registered with any financial regulatory authority as an investment advisor
What We Provide
We provide software tools for algorithmic trading, including:
- Strategy development environment (code editor, SDK, indicators)
- Backtesting infrastructure (historical data, performance analysis)
- Integration with third-party brokers (Alpaca Markets)
- Trading session management (start, pause, stop controls)
Third-Party Brokers
Actual trading is executed through third-party brokers (e.g., Alpaca Markets) that you authorize. Your broker is responsible for:
- Order execution and routing
- Holding and safeguarding your funds
- Regulatory compliance and reporting
- Customer protection and insurance (e.g., SIPC coverage in the US)
You must comply with your broker's terms of service and all applicable regulations. TickHint is not responsible for broker actions or failures.
8. Your Responsibilities
As a TickHint user deploying strategies to live trading, you are responsible for:
Strategy Review and Testing
- Review strategy code thoroughly - Read and understand every line of code before deployment
- Backtest extensively - Test strategies on multiple years of historical data across different market conditions
- Paper trade first - Deploy to paper trading (simulated trading) for a minimum of 30 days before live trading
- Validate assumptions - Ensure backtests accurately reflect live trading conditions (commissions, slippage, liquidity)
- Test edge cases - Consider what happens during market open/close, low liquidity, earnings announcements, etc.
Risk Management
- Set position size limits - Limit exposure per trade and per strategy
- Use stop losses - Implement stop-loss orders to limit downside risk
- Diversify strategies - Do not rely on a single strategy
- Maintain adequate capital - Ensure sufficient funds in broker account to handle drawdowns
- Monitor leverage - Avoid excessive leverage that amplifies losses
Ongoing Monitoring
- Monitor strategies regularly - Check performance, open positions, and P&L daily
- Respond to alerts - Act on notifications for errors, margin calls, or unexpected behavior
- Stop if needed - Do not hesitate to stop strategies that behave unexpectedly
- Review logs - Analyze trading session logs to understand strategy behavior
Compliance
- Comply with broker terms - Follow your broker's rules and restrictions
- Comply with regulations - Obey all applicable securities laws and regulations
- Report taxes - Report all trading activity and gains/losses to tax authorities
- Avoid market manipulation - Do not develop or deploy strategies intended for wash trading, spoofing, or other illegal activities
9. Limitation of Liability
TickHint (ALPITY LTD) is not liable for:
- Trading losses - Any financial losses resulting from strategy execution
- Missed opportunities - Profits you could have made but didn't due to system failures or delays
- Strategy malfunctions - Bugs, errors, or unexpected behavior in your strategy code
- Broker execution failures - Orders rejected, delayed, or filled at worse-than-expected prices by brokers
- Market disruptions - Circuit breakers, trading halts, flash crashes, or extreme volatility
- Connectivity issues - Internet outages, server failures, or network latency
- Data quality - Inaccurate, delayed, or missing market data
- Third-party failures - Broker API outages, cloud provider failures, or data provider issues
Maximum Liability: Our total liability to you for all claims is limited to the amount you paid to TickHint for subscription fees in the past 12 months, or €100, whichever is greater. See our Terms of Service for complete details.
10. Emergency Measures
TickHint provides emergency controls to help you manage trading sessions:
Available Controls
- Pause Button - Temporarily pause strategy execution (prevents new orders, existing orders remain active)
- Stop Button - Stop strategy and attempt to cancel all open orders and close positions
- Emergency Stop (All) - Stop all active trading sessions simultaneously
Limitations
We cannot guarantee:
- Instant execution - Stop commands may take seconds to minutes to execute due to network latency and broker processing delays
- Order cancellation - In-flight orders that have already been submitted to the broker may execute before cancellation takes effect
- Position closure - Market conditions (low liquidity, trading halts) may prevent positions from being closed at desired prices
- Gap risk protection - Overnight price movements cannot be prevented by stop mechanisms
- Broker compliance - Brokers may reject or delay order cancellations during volatile markets
Your Responsibility
You are responsible for monitoring your broker account directly and using your broker's controls if TickHint emergency measures are insufficient. Maintain access to your broker's platform for direct order management.
11. Acknowledgement Required
Before deploying any strategy to live trading, you must explicitly acknowledge that you have:
- Read and understood this entire Risk Disclosure Statement
- Reviewed your strategy code and understand its logic and expected behavior
- Backtested your strategy and analyzed its performance on historical data
- Paper traded your strategy for a sufficient period (recommended: 30+ days)
- Understand the risk of loss and accept that you can lose your entire investment
- Accept sole responsibility for all trading decisions and outcomes
- Verified suitability - You have determined that algorithmic trading is suitable for your financial situation and risk tolerance
- Consulted advisors (recommended) - You have sought independent financial advice from a licensed professional
Your consent is valid for 24 hours and expires thereafter. You must re-consent before each deployment session for your protection.
12. Contact Information
If you have questions about these risks or need clarification, please contact us:
ALPITY LTD
Registered Office: [Cyprus address to be provided by legal team]
Registration Number: [To be provided by legal team]
Contact:
Legal Inquiries: legal@tickhint.com
General Support: support@tickhint.com