Risk Disclosure

1. General Risk Warning

Trading in foreign exchange, contracts for difference (CFDs), commodities, and other financial instruments carries a high level of risk. The high degree of leverage available in these markets can work against you as well as for you. Before deciding to trade, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment, and therefore you should not invest money that you cannot afford to lose.

2. Leverage Risk

Leveraged trading means that both profits and losses are magnified. A relatively small market movement can have a proportionally larger impact on the funds you have deposited. This can work against you as well as for you. You may sustain a total loss of initial margin funds and any additional funds deposited with the broker to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to deposit additional funds on short notice to maintain your position. Failure to comply with a request for additional funds may result in your position being liquidated at a loss, and you will be liable for any resulting deficit.

3. Market Risk

Financial markets are subject to rapid and unpredictable price movements caused by economic events, geopolitical developments, central bank decisions, natural disasters, and other factors beyond anyone's control. Market gaps, sudden spikes in volatility, and liquidity disruptions can cause significant losses even when risk management measures are in place. Weekend gaps, holiday market closures, and unexpected news events can result in positions being closed at prices significantly different from the intended stop-loss levels.

4. Algorithmic and Systematic Trading Risk

BabahAlgo employs algorithmic trading strategies that are developed based on historical data and statistical models. These strategies are subject to the following specific risks:

• Model risk: Trading models are based on historical patterns that may not repeat in the future. Market regime changes can cause models to underperform or generate losses.
• Overfitting risk: Despite rigorous validation procedures, there is a risk that strategies may be inadvertently fitted to historical noise rather than genuine market patterns.
• Technology risk: Algorithmic trading depends on technology infrastructure including servers, network connections, and software. Hardware failures, software bugs, connectivity issues, and power outages can disrupt trading and cause losses.
• Execution risk: The difference between expected and actual execution prices (slippage) can reduce returns. During periods of high volatility or low liquidity, slippage may be significant.

5. Past Performance

Past performance is not indicative of future results. Historical returns, backtested results, and simulated performance do not guarantee future profitability. Performance data shown on our platform represents the results of a specific account or strategy configuration and may not be representative of all client experiences. Actual client returns may differ based on account size, timing of entry, fee structure, broker execution quality, and other factors.

6. Counterparty and Broker Risk

Client funds held at brokers are subject to the financial stability and regulatory compliance of those brokers. While we work exclusively with regulated brokers that maintain segregated client accounts, there remains a risk of broker insolvency, regulatory action, or operational failure that could affect the availability or safety of your funds. BabahAlgo does not guarantee the solvency or performance of any broker partner.

7. Liquidity Risk

Under certain market conditions, it may be difficult or impossible to liquidate a position at the desired price. This can occur during major news events, market opens following weekends or holidays, or during periods of extreme market stress. In such conditions, stop-loss orders may be executed at prices significantly worse than the specified level, resulting in larger-than-expected losses.

8. Regulatory and Legal Risk

Changes in laws, regulations, or regulatory interpretation in any jurisdiction where BabahAlgo operates or where clients reside may affect the availability, legality, or terms of our services. Tax treatment of trading profits and losses varies by jurisdiction and may change. You are responsible for understanding and complying with the tax and regulatory requirements applicable to your situation.

9. PAMM and Managed Account Risk

If you invest in a PAMM or managed account, you are entrusting trading decisions to BabahAlgo. While we employ risk management frameworks to limit losses, there is no guarantee that these measures will prevent significant drawdowns or losses. You should only allocate capital to managed trading that you can afford to lose entirely. The profit-sharing fee structure means that BabahAlgo earns fees on profitable periods even if your overall investment is at a loss when accounting for prior drawdowns, although our high-water mark provisions mitigate this risk.

10. Acknowledgment

By using BabahAlgo services, you acknowledge that you have read and understood this Risk Disclosure Statement. You confirm that you understand the risks involved in trading financial instruments and that you are willing to accept these risks. You acknowledge that BabahAlgo has not made any guarantees regarding the performance of its trading strategies or the safety of your investment.

If you do not understand any aspect of this Risk Disclosure Statement, you should seek independent financial advice before using our services.

For questions about risk disclosure, contact us at [email protected].