DAY-TRADING DISCLOSURE STATEMENT

You should consider the following points before engaging in a day-trading strategy. For purposes of this notice, a "day-trading strategy" means an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to effect both purchase and sale transactions in the same security or securities.

 

Day trading can be extremely risky.

Day trading generally is not appropriate for someone of limited resources, limited investment or trading experience, or low risk tolerance. You should be prepared to lose all of the funds that you employ in any day-trading strategy. 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, the available evidence indicates that an investment of less than $50,000 will significantly impair the ability of a day trader to make a profit. This does not mean, of course, that an investment of $50,000 or more will in any way guarantee success.

 

Be cautious of claims of large profits from day trading.

You should be wary of advertisements, marketing and other materials that emphasize the potential for large profits in day trading. Day trading can also lead to large and immediate financial losses.

 

Day trading requires knowledge of the securities markets.

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 training and experience before engaging in day trading.

 

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 policies 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 or attempting to execute a transaction. In addition to normal market risks, you may experience losses due to system failures.

 

Day trading will generate substantial commissions and fees, even if the per trade cost is low. 

Day trading involves aggressive trading, and generally you will pay commissions and other fees on each trade. The total daily commissions and other fees that you pay on your trades will add to your losses or significantly reduce your earnings.

 

Day trading on margin or short selling may result in losses beyond your initial investment.

When you day trade with funds borrowed from your broker-dealer, clearing 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 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 securities at a high price in order to cover a short position.

 

Potential Registration Requirements.

Please be advised that persons providing investment advice for others, or managing securities accounts for others, may need to register as an “investment adviser” under the Investment Advisers Act of 1940, as amended, or as a “broker” or “dealer” under the Securities Exchange Act of 1934, as amended. Such activities may also trigger state registration requirements and/or registration requirements with selfregulatory organizations. We cannot advise customers on any matter that relates to potential registration requirements.

Your brokerage firm is furnishing this document to you to provide some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Before trading stocks in a margin account, you should carefully review the margin agreement provided by your firm. Consult your firm regarding any questions or concerns you may have with your margin accounts.

When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price from your brokerage firm. If you choose to borrow funds from your firm, you will open a margin account with the firm. The securities purchased are the firm’s 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, the firm can take action, such as issue a margin call and/or sell securities or other assets in any of your accounts held with the member, in order to maintain the required equity in the account. It is important that you fully understand the risks involved in trading securities 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 the firm that has made the loan to avoid the forced sale of those securities or other securities or assets in your account(s).

The firm 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 or the firm’s higher “house” requirements, the firm can sell the securities or other assets in any of your accounts held at the firm to cover the margin deficiency. You also will be responsible for any short fall in the account after such a sale.

The firm can sell your securities or other assets without contacting you.

Some investors mistakenly believe that a firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities or other assets in their accounts to meet the call unless the firm has contacted them first. This is not the case. Most firms will attempt to notify their customers of margin calls, but they are not required to do so. However, even if a firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to
protect its financial interests, including immediately selling the securities without notice to the customer.

You are not entitled to choose which securities 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, the firm has the right to decide which security to sell in order to protect its interests. The firm can increase its “house” maintenance margin requirements at any time and is not required to provide you 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 member to liquidate or sell securities in your account(s).

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, a customer does not have a right to the extension.

Securities purchased on margin are the firm's 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, the firm can take action, such as issue a margin call and/or sell securities or other assets in any of your accounts held with the member, in order to maintain the required equity in the
account. It is important that you fully understand the risks involved in trading securities on margin. These risks include the following:

  • You can lose more funds than you deposit in the margin account.
  • The firm can force the sale of securities or other assets in your account(s).
  • The firm can sell your securities or other assets without contacting you.
  • You are not entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call.
  • The firm can increase its "house" maintenance margin requirements at any time and is not required to provide you advance written notice.
  • You are not entitled to an extension of time on a margin call.