Risk Disclosure
Disclaimer Overview
The risk of loss in trading commodity futures contracts can be substantial. This brief statement does
not disclose all of the risks and other significant aspects of trading in futures. In light of the
risks, you should undertake such transactions only if you understand the nature of the contracts
(and contractual relationships) into which you are entering and the extent of your exposure to risk.
Trading in futures is not suitable for many members of the public. You should carefully consider
whether trading is appropriate for you in light of your experience, objectives, financial resources
and other relevant circumstances.
Risk of Loss in Futures Trading
The information contained in the pages of the Eternal Return Trading, LLC website (the "Information")
has been compiled by sources ("Data Suppliers") believed to be reliable. Performance is based upon
information which has been provided by the trading advisors and such information is not reviewed or
verified by Eternal Return Trading, LLC or the Data Suppliers, but Eternal Return Trading, LLC, its
owners, employees, and contributors take every reasonable step to ensure the integrity of the data.
However, neither Eternal Return Trading, LLC nor any Data Suppliers make any representations or
warranty, express or implied, as to the accuracy, completeness, or fitness for any purpose or use of
the information. Past performance is not indicative of future results and the information may not in
all cases be current and consequently it is subject to continuous change. Accordingly, you should not
rely on any of the Information as authoritative or a substitute for the exercise of your own skill and
judgment in making investment or other decisions. In considering whether to trade or to authorize
someone else to trade for you, you should be aware of the following:
1. Effect of "Leverage" or "Gearing": Transactions in futures carry a high degree of risk. The
amount of initial margin is small relative to the value of the futures contract so that transactions
are "leveraged" or "geared". A relatively small market movement will have a proportionally larger
impact on the funds you have deposited or will have deposited or will have to deposit: this may 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 firm to maintain your position. 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
prescribed time, your position may be liquidated at a loss, and you will be liable for any resulting
deficit in your account.
2. Risk-Reducing Orders or Strategies: The placement of contingent orders, such as a
"stop-loss" or "stop-limit" order, will not necessarily limit your losses to the intended amounts,
since market conditions may make it impossible to execute such orders. Strategies using combinations
of positions, such as "spread" and "straddle" positions may be as risky as taking simple "long" or
"short" positions. A "spread" position may not be less risky than a simple "long" or "short" position.
Hypothetical Performance Results
Hypothetical performance results have many inherent limitations, some of which are described below.
No representation is being made that any commodity trading account will or is likely to achieve profits
or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical
commodity trading performance results and the actual results subsequently achieved by any particular
commodity-trading program. One of the limitations of hypothetical commodity trading performance results
is that they are generally prepared with the benefit of hindsight. In addition, hypothetical commodity
trading does not involve financial risk, and no hypothetical commodity trading record can completely
account for the impact of financial risk in actual commodity trading. For example, the ability to
withstand losses or to adhere to a particular commodity trading program in spite of trading losses
are material points which can also adversely affect actual commodity trading results. There are
numerous other factors related to the commodity markets in general or to the implementation of any
specific commodity trading program which can not be fully accounted for in the preparation of
hypothetical commodity trading performance results, and all of which can adversely affect actual
commodity trading results.
Additional Eternal Return Trading, LLC Disclosures
Recommendations and opinions contained in our products and services reflect judgment, as applicable,
of Eternal Return Trading, LLC as of the date hereof, are subject to change, and are based upon certain
assumptions that could yield different results. You are cautioned there is no universally accepted
method for analyzing financial instruments, including futures. Further, there is no guarantee as to
the liquidity of the instruments involved in its analysis.
Neither the information nor the recommendations and opinions expressed herein constitute an offer to
buy or sell any financial contracts, security, future contract, or derivative instrument. As a matter
of policy, Eternal Return Trading, LLC does not give tax, accounting, regulatory, or legal advice to
clients. Anyone wishing to invest in any of the products mentioned should seek their own financial or
professional advice regarding the tax, accounting, regulatory, or legal implications of the recommended
strategies before any transactions with your account.
Prior to opening an account, the undersigned should contact the National Futures Association to further
research the risks involved with futures trading. The National Futures Association can be contacted
at:
National Futures Association
200 West Madison Street, Suite 600
Chicago, IL 60606
Phone: 1.800.621.3570
Email: www.nfa.futures.org
This does not imply that the National Futures Association endorses this product or any products of
Eternal Return Trading, LLC. This is not an offer to buy or sell futures contracts or financial
instruments of any kind. Notwithstanding any communications between Eternal Return Trading, LLC
and its customers and prospects to the contrary, receipt or use of any material provided by Eternal
Return Trading, LLC, at any time distributed via any method, represents acknowledgement by such
persons of this disclaimer and agreement with its terms and conditions.
Commission Advisory
The United States Commodity Futures Commission (CFTC), the federal agency that regulates commodity
features and options markets in the United States, has witnessed an increase in the number of Internet
websites fraudulently promoting commodity trading systems and advisory services. Among other things,
these websites falsely claim that advertised performance results are based on real trading when; in
fact, the results are based on hypothetical trading. The CFTC urges you to be skeptical when promoters
of trading systems and advisory services claim that their products and services will earn high profits
with minimal risks. You also should be forewarned that systems which trigger frequent trading
signals as part of a day trading strategy can result in substantial commissions and fees.
No Trading System Can Guarantee Profits
Commodity trading systems typically are computerized programs that signal members of the public when
to buy and sell commodity futures and options contracts. Systems produce buy and sell signals based on
mathematical formulas and are typically based on technical analysis of trading data (trading volume
and prices), as opposed to fundamental analysis (analysis of economic factors such as supply and demand).
Trading systems that are based on technical analysis attempt to predict future price movements based
on historical prices, price relationships and price trends.
In deciding whether to purchase a particular trading system to trade commodity futures or options,
members of the public should remember that no commodity trading system can guarantee profits. And,
whether or not a trading system is used, commodity futures and options are typically high-risk
endeavors.
Hypothetical Trading Results Can Be Unreliable
Many trading system promoters advertise their systems by reporting hypothetical trading results.
Hypothetical trading results typically are based on trading simulations using historical price data or
simulated “real time” computer trading. To obtain these results, trading system promoters typically
pretend that they traded futures contracts at market prices that occurred some time in the past. They
then calculate the trading results that these purported trades would have achieved had they been
placed, based on actual historical places. These results often show impressive trading results and
large net profits with only a few, small margin calls.
Whether based on historical data or simulated "real time" trading, hypothetical results do not reflect
the results of any actual trading. In other words, there is no actual futures account, no actual
investment, no actual trading, and no actual profits. The results are purely the product of simulation.
Hypothetical trading results have several inherent limitations:
- 20/20 Hindsight with Historical Results--Since the trading systems that produced the
results were not actually traded under real market conditions, the purported results fail to take
into account market circumstances that affect traders and their decision-making process, such as
anticipated news events that could have an impact on the supply, demand or price of the commodity.
- "Real-time" is not Real--When marketing trading systems, some promoters claim that their
systems have performed successfully in "Real-time Trading." "Real-time Trading" only means that the
system has been tested using a live data-feed, rather than being tested using historical market
data. In "Real-time Trading", however, no trades have actually been placed in the market.
Performance results based on "Real-time Trading" are merely a form of hypothetical results, with
the same limitations.
- Financial Limitations--Hypothetical results may not adequately take into account the
ability of a trader to absorb trading losses or to meet margin calls. Trading systems assume that
the trader can withstand all losses generated by the system and can meet resulting margin calls.
It is much easier to absorb a trading loss on paper (hypothetically) than to do so in reality.
Many traders find it unacceptable to sustain several consecutive trading losses and/or margin
calls. Moreover, in an actual trading environment, a trader's financial condition may change over
time and affect his or her ability to continue following a trading system.
- Not Tested Under Real Market Conditions--Hypothetical trading results assume that futures
contracts have been bought and sold at specific prices. Since these assumptions have not been
subjected to actual market conditions, they may overestimate or underestimate the performance of a
system. In addition, some market conditions may make it impossible to execute a trade. For instance,
many systems assume that stop-loss orders will be executed at their stop price. Under actual
market conditions a stop-loss order might be executed at a better or worse price, or not be
executed at all. Further, actual market conditions include bid/ask spreads, which might not be
reflected in the prices used in hypothetical trading. Moreover, the actual execution of a trade
could impact the price paid, especially in less liquid or illiquid markets.
- Trading and System Costs--The profit claims of promoters may fail to take into
consideration the cost of purchasing or leasing a trading system. While the prices of systems vary,
many are sold for thousands of dollars. In addition, most of these systems require that the user
obtain a data feed from a vendor. System promoters may also fail to take into consideration the
impact on profits of commissions and fees charged by brokers in connection with futures and options
trading. Such commissions can have a substantial effect on profitability, particularly when the
system generates frequent trading signals. A user should take all of these costs into account
because they raise the break-even point in trading.
Because of these limitations, CFTC Regulations require that the presentation of hypothetical trading
results be accompanied by a specific cautionary statement warning of the inherent limitations of these
results.
Futures Contracts Are Volatile and Risky
Persons considering trading commodity futures or options should educate themselves about futures and
options and realize that they may lose large sums of money. Remember: "If it sounds too good to be
true, it probably is too good to be true." The following checklist should help consumers in deciding
whether to use a trading system.
Additional Risks Common to Futures and Options
Terms and Conditions of Contracts
You should ask the firm with which you deal about the term and conditions of the specific futures or
options which you are trading and associated obligations (e.g. the circumstances under which you may
become obligated to make or take delivery of the underlying interest of a futures contract and, in
respect of options, expiration dates and restrictions on the time for exercise). Under certain
circumstances the specifications of outstanding contracts (including the exercise price of an option)
may be modified by the exchange or clearinghouse to reflect the changes in the underlying interest.
Suspension or Restriction of Trading and Pricing Relationships
Market conditions (e.g. illiquidity) and/or the operation of the rules of certain markets (e.g.
the suspension of trading in any contract or contract month because of price limits or 'circuit
breakers') may increase the risk of loss by making it difficult or impossible to effect transactions
or liquidate/offset positions. If you have sold options, this may increase the risk of loss. Further,
normal pricing relationships between the underlying interest and the future, and the underlying
interest and the option may not exist. This can occur when, for example, the futures contract
underlying the option is subject to price limits while the option is not. The absence of an
underlying reference price may make it difficult to judge fair value.
Deposited Cash and Property
You should familiarize yourself with the protections accorded money or other property you deposit
for domestic and foreign transactions, particularly in the event of a firm insolvency or bankruptcy.
The extent to which you may recover your money or property maybe governed by specified legislation or
local rules. In some jurisdictions, property which had been specifically identifiable as your own will
be pro-rated in the same manner as cash for purposes of distribution in the event of a shortfall.
Commission and Other Charges
Before you begin to trade, you should obtain a clear explanation of all commissions, fees and other
charges for which you will be liable. These charges will affect your net profit (if any) or increase
your loss.
Transactions in Other Jurisdictions
Transactions on markets in other jurisdictions, including markets formally linked to a domestic
market, may expose you to additional risk. Such markets may be subject to regulation, which may
offer different or diminished investor protection. Before you trade you should inquire about any
rules relevant to your particular transactions. Your local regulatory authority will be unable to
compel the enforcement of the rules of the regulatory authorities of markets in other jurisdictions
where your transactions have been effected. You should ask the firm with which you deal for details
about the types of redress available in both your home jurisdiction and other relevant jurisdictions
before you start to trade.
Currency Risks
The profit or loss in transaction in foreign currency-denominated contracts (whether they are traded
in your own or another jurisdiction) will be affected by fluctuations in the currency rates where
there is need to convert the currency denomination of the contract to another currency.
Trading Facilities
Most open-outcry and electronic trading facilities are supported by computer-based component systems
for the order routing, execution, matching, registration or clearing of trades. As with all facilities
and systems, they are vulnerable to temporary disruption or failure. Your ability to recover certain
losses may be subject to limits on liability imposed by the system provider, the market, the
clearinghouse and/or member firms. Such limits may vary: you should ask the firm with which you
deal for details in this respect.
Electronic Trading
Trading on an electronic trading system may differ not only from trading in an open-outcry market
but also from trading on other electronic trading systems. If you undertake transactions on an
electronic trading system, you will be exposed to risk associated with the system including the
failure of hardware and software. The result of any system failure may be that your order is either
not executed according to your instructions or is not executed at all.
Off-Exchange Transactions
In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect
off exchange transactions. The firm with which you deal may be acting as your counterparty to the
transaction. It may be difficult or impossible to liquidate an exiting position, to assess the value,
to determine a fair price or to assess the exposure to risk. For these reasons, these transactions
may involve increased risks. Off-exchange transactions may be less regulated or subject to a separate
regulatory regime. Before you undertake such transactions, you should familiarize yourself with
applicable rules and attendant risks.
Eternal Return Trading, LLC is not Liable for Losses or Damages
The employees and partners of Eternal Return Trading, LLC disclaim any responsibility
and shall not in any event, be liable for losses
or any damages arising out of or in connection with the use of this site or any trading signals provided
by Eternal Return Trading, LLC in any manner. The
information contained here is not guaranteed and the user accepts sole responsibility for it's use
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