MAVEST Risk Warnings

The international capital markets not only have new product offerings, but modern technology may also change the nature of trade in securities of all kinds. It is possible to buy and sell the same securities, money market instruments or derivatives (options) on the same-day. These trades are called day trading.

Basically, the day trader intends to take advantage of small price fluctuations and short-term capital gains. Should know such transactions involve special risks to investors.

The conduct of such business of day trading can lead to immediate losses, especially when unexpected developments occur, and the value of the financial instruments used on the same day varies. To avoid further risks (overnight risk) day traders mostly decide to sell the commercial objects of the trading day before closing - even if takes the losses.

The risk is greater, the higher the rate fluctuations within a trading day. Under certain circumstances, trading capital employed may be lost. Day traders with professional and strong financial market participants, which in turn can influence their own risk situation.

Day traders should have in-depth knowledge of securities markets, securities trading techniques, trading strategies and derivative financial instruments.

Leverage risk: if investors back day trading not only with equity but with additional borrowings, it should be noted that there is an obligation to repay these loans regardless of the success of the day trading deal. Speculating on credit also leads to high risks. In addition, day traders often deal with leveraged financial market instruments (such as futures, derivatives), which require special techniques of risk and money management. Thi refers in particular to provisions such as stop-loss orders, stop-loss points and loss thresholds.

With day trading, the trader initiates a very large number of transactions in his depot. The resulting costs (such as commissions and expenses) can be unreasonably high in proportion to the capital employed and the recoverable profit.

In futures, there is also the risk that the investor must raise additional capital or collateral. This is the case when losses have occurred on the same day, beyond the capital employed and the deposited securities. The broker will then arrange for a margin call.

1st Principles of risk of loss in financial futures

MAVEST informs of the following risks

Impairment or decline

Rights on financial futures may expire or lose value, because these trades always give only temporary and conditional rights. The shorter the period, the greater the risk may be.

Non-calculable losses

For liabilities on financial futures, risk of loss can be determined and is recognized over the guarantees set out the other assets.

Lack of hedging opportunities

Deals for which financial risks from exchange transactions are excluded or restricted (closeout stores) may possibly only be made at a loss-making price.

Additives for borrowing or potential loss from exchange rate fluctuations

The risk of loss increases when a credit is taken out for a financial futures transaction. Additional risks arise under a forward contract where obligations or claims are denominated in a foreign currency – exchange rates can fluctuate (exchange rate risk).

2nd The risks of the various types of business

2.1 Purchase of an option

If you buy an option on securities, currencies, commodities or precious metals, the buyer acquires the right to delivery or acceptance of these underlying assets to the purchase of the option is already established strike price.

Risk: A price change in the underlying assets (underlying), for example, the stock or commodity, the option of a contract is based, may reduce the value of the option. An impairment occurs in the case of a call option (CALL) in capital losses in the case of a put option (CALL) in foreign exchange gains in the underlying subject matter. If an impairment loss arises, it is always proportional to the rate of change in the underlying value, even to the worthlessness of the option. An impairment of the option can also occur when the price of the underlying does not change, because the value of the option depends on other factors of price formation (eg, duration or frequency and intensity of price fluctuations of the underlying security) are also determined. Because of the limited term of an option, the investor can not trust that the price of the option will in time recover. Not meet the expectations of market development, waived or the investors to exercise the option, or fails to exercise, the option expires with the expiration of their term. The loss is then paid for the option price plus the costs incurred.

2.2 Purchase of an option on financial futures contracts

If you buy an option on a financial futures contract, the buyer acquires the right to conditions previously fixed a contract (Contract) close by which the seller has to buy or sell the trading object obligated by appointment.

Risk: This option is also subject to the risks described above. After exercising the option, new risks: These depend on the financial futures contract will come into existence and can far above the initial bet - the price of the option - lie. Furthermore, additional risks arise from the following description of financial futures with a settlement of futures.

2.3 Purchase of an option on commodity futures contracts

When you buy an option on commodity futures contracts, the buyer acquires the right to pre-determined conditions to conclude a contract by which he undertakes to purchase or sale of futures commodity futures contracts, for example, orange juice concentrate or wheat contracts.

Risk: This option is also subject to the risks mentioned. Additionally, significant risks from the following described commodity futures with delivery or tender of the obligation of the option added underlying commodity futures contract. The (financial) risks can be significantly higher than the original bet.

3rd Sale of options and financial futures (p. compliance date)

3.1 sale of futures and selling a call option

The seller of futures is under the obligation to deliver securities, currencies, commodities or precious metals at an agreed purchase price. As a seller of a call option meets that obligation only if the option is exercised.

Risk: rising prices, the seller must still provide an option for the previously agreed price, which can now significantly below the current market price. Unless the contract, one has to deliver is already in their possession, rising market prices, the option seller will not benefit. If you want to purchase the contract later, the current market price is significantly higher than the pre-determined price. The price difference is the risk. This risk of loss is not determinable in advance, so theoretically unlimited. It may be well above the collateral provided, if the delivered item does not own, but want to stock up only at maturity. Be made in this case can result in substantial losses because the obligor may, depending on market conditions at very high prices need to buy or appropriate compensation (settlement in cash), if the replacement is not possible.

Important: If the contract is in possession of the debtor by the option, then he is indeed protected against replacement losses. Nevertheless, values ​​for the life of the financial futures contract (as collateral) kept locked in whole or in part, and during this time or do not have to close out the futures contract on this and the values ​​not sell it in order to avoid a falling market losses.

3.2 Purchase of futures and selling a put option

As a buyer of futures or seller of a put option to go to investors a commitment, securities, remove foreign exchange, commodities or precious metals at a fixed price.

Risk: Even with falling prices need to remove the debtor the purchase at the agreed price, which may be significantly less than the current market price. The difference lies the risk. This risk of loss is not determinable in advance and can clearly go beyond any collateral provided. Anyone who intends to sell the goods to decrease immediately, should note that under no circumstances or difficult to find a buyer. The market can then have a sale with substantial price reductions make it necessary.

3.3 Sales of an option on financial futures contracts

When you sell an option on a financial futures contract is an obligation for the seller to close to pre-fixed conditions of a contract by which he is to buy or sell by date of such Securities, currencies or precious metals required.

Risk: If the sold option is exercised, this corresponds to the substantial and previously described risk of a seller or buyer of futures.

3.4 Sale of an option on commodity futures contracts

When you sell an option on commodity futures contracts is one of the seller's obligation to conclude in advance to conditions established by treaty, by which he is for the purchase or sale of futures on commodity futures contracts, eg Corn or coffee contracts required.

Risk: even the sale of an option is subject to the risks mentioned. Additional, substantial risks from the following described commodity contracts on delivery or tender of the obligation of the option added underlying commodity futures contract. This can go far beyond the original bet.

4th Options and Financial Futures Contracts with differential compensation

Some financial futures contracts held as a cash settlement. These are in particular: financial futures contracts or options on an index, a variable number size, which is calculated from a fixed portfolio of securities according to specific criteria and reflects the change in the price movements of securities. Options or financial futures contracts on the interest rate on term deposit with a standardized term. Risk: If the expectations of the investor does not happen, he must pay the difference which exists between the course and at completion underlying the current market price when the contract expires. This difference accounts for its loss. The maximum amount of loss can not be determined in advance. This can vary widely over any collateral provided.

Investors should get information on the context and especially in options trading be clear: The price change of the stock (the underlying index or otherwise), the option of a contract is based, can significantly reduce the value of the option.
A depreciation occurred is always proportional to the rate of change of the underlying asset and may even lead to the complete worthlessness of the option. An impairment of an option can happen if the price of the underlying does not change, because the value of the option of additional pricing factors (eg duration, frequency and intensity of the lever or price fluctuations in the underlying security) are also determined. Particularly because of the limited term of an option, investors can not trust that the price of the option recovers in time. With any business of an option already incurred when buying commissions, which represent a premium on the premium. These costs can significantly reduce the chances of winning, or can even be a chance. This is especially true when buying various options. The premium paid and the commissions are definitely lost and have to be first zurückerwirtschaftet by a positive price development.

5th Other risks on financial futures

5.1 Financial futures transactions with currency risk

If an investor enters into a financial futures contract, which is the obligation or of claimed return on foreign currency (eg USD), or a unit of account or suspended, the value of the subject matter defined below (eg gold), the investment an additional and significant risk . In this case, the risk of loss is not only linked to the performance of the underlying subject matter hereof. Rather, developments in the foreign exchange market can be the cause for additional incalculable losses.

Exchange rate fluctuations:
Reduce the value of a purchased option, the more expensive contract, to provide the obligor to meet the financial futures business must go through if he is to pay in foreign currency or a unit of account. The same applies to a payment obligation under the financial futures business to be met in foreign currency or a unit of account. The value or sale proceeds from the decrease of the financial futures contract goods so purchased or the value of payments received.

5.2 Transactions with risk of exclusion or restriction

Investors should not assume that it is possible, during the term at any time to transact business, the risks can be compensated or limited on financial futures. Whether this possibility exists, depends on market conditions and also on the design of their financial futures transactions. Under certain circumstances, the investor can not be an appropriate business or just to make an unfavorable market price, which can result in a loss to him.

5.3 Use of credit

The risk increases if, in particular the purchase of options or the fulfillment of delivery or payment obligations under financial contracts is financed by credit. In this case, the investor if the market is moving, contrary to his expectations, not only suffered the loss occurred, but also to pay interest and repay the loan. Investors should consider before a transaction, whether their financial circumstances allow it to guarantee the interest and any short-term repayment of a loan, even if losses occur instead of the expected profits. The risk increases dramatically if in addition to the borrowing financial transactions were concluded with foreign exchange risk.

5.4 Margining

On completion of the sale of futures and options investors must provide a security called margin or margin. This ranges from not put up more margin of safety in exchange rate losses, investors must either immediately upon request, provide additional collateral so, or the position will be liquidated in the market. Margin calls can go far beyond collateral paid and collect, all other assets of an investor. Forced liquidations lack of additional funding can lead to significant losses that may far exceed the collateral.

6th Specific risks of commodity futures

In addition to the above risks occur when entering into commodity futures, in particular to the conclusion of futures transactions, physical performance or purchase commitments, further significant risks.

6.1 Tender and Delivery

It is important to note that the seller has to date during the tender period the right to serve the goods. The buyer may require delivery by appointment only at the expiry of the contract. The delivery to the specified delivery locations within the stock market is at the delivery location specified by the seller after the prescribed quantity and quality range required by prior notice. Here, the seller can choose the exact delivery date free, but must deliver within the delivery month and delivery this one working day before announcing (ANDI) with the written put option (Note Of Delivery).

Risk: The risk is not timely closing for buyers is to face a sudden sell-off obligations and thus exposed. Sellers may be confronted at the expiry of a contract with a commitment to delivery. In addition, the seller at a closing within the month of delivery are faced with a forward contract that is subject to a tender notice. This forces him to purchase or transfer of such delivery. The goods must be on the current spot market to the local conditions are acquired or sold. This may incur additional costs incurred by market participants.

6.2 Acceptance Commitment

The risk increases in case of purchase commitment: A commodity futures contract that is not offset in time by an offsetting transaction, it requires the purchased goods actually lose weight and to pay in full. Furthermore, the resulting significant additional storage and transportation costs are paid. The risk of loss is not determinable in advance and goes far beyond any collateral. It can in some cases cover the entire personal assets.

6.3 Delivery Commitment

In the case of the delivery obligation in a timely manner by not buying an offsetting trade commodity futures contract closed out the investor the appropriate product in the specific quantity and quality, store and deliver. This created significant additional costs must be borne. This financial risk is not determined in advance and can go far beyond collateral provided. It can in some cases cover the entire personal assets.

6.4 Forecast of price development

In the future prices of goods due to the large number of influencing factors is particularly difficult to estimate. It may in particular because of unforeseen circumstances (eg natural disasters), but which have a significant impact on the price level, the predictions of the future supply flows can be very difficult. The demand for goods may be subject to large fluctuations and is difficult to predict. This gives rise to significant additional risks to investors, but they are hardly measurable.

7th Securitization in securities

The risks of the transactions described above do not change if the rights and obligations in a securities (eg warrants) are securitized. Additional features and risks (issuer risk) may occur here, however.

8th Specific risks arising from financial futures transactions

Anyone taking out forward contracts, must also take into account the following specific risks. Without knowledge of these risks should be conducted no business appointment.

8.1 Risks of the Business

8.1.1 The decay of these transactions purchased by the customer limited rights (risk of total loss) or suffer an impairment. This is not an exceptional case, but is predominantly found on balance.

8.1.2 The risk of loss on purchased options in the option premium and the expended costs incurred.

8.1.3 Other forward transactions (futures) and the sale of options, the risk of loss can not be determined and clearly go beyond collateral paid. There may be additional collateral required.

Does the client is not in demand, he must count on an immediate closure of its open futures and the immediate recovery of the collateral already. Then the losses that occur can lead to additional indebtedness and thus capture the remaining property because the debt risk is never determined in advance.

8.1.4 Transactions in which the risks associated with futures commitments are to be excluded or restricted may, or may not be made only at a loss-making market price. This is especially true for so-called stop-loss orders (stop orders).

8.1.5 An additional risk is created when the business in a foreign currency or foreign unit of account to be handled (currency risk).

8.1.6 So-called spread or combination transactions are not necessarily less risky than individual items.

8.2 Risks due to transaction costs

8.2.1 Cost for MAVEST ACTIVITY

Costs of our activities or other financial service providers have switched a negative impact on the financial results of operations. Surcharges, and fees on or next to the Exchange application impair the chances of winning, because the costs have to be earned again only by the corresponding price in the market development for the benefit of customers. The payable Commission / brokerage may options at a small premium (eg options from money and / or at short maturities) may even be greater than the premium to be paid.

8.2.2 increase the risk for first loss

If there is a first loss of the use of a very high price movement of the initial price of a futures contract is necessary to achieve the financial starting point again. It is uncertain whether such price movements occur during the term of this business. Even with renewed and further losses in subsequent transactions can be for obtaining a per-net-income market movements required to potentiate Heights, which exclude not only a profit at the end of speculation, but inevitably lead to permanent losses.

8.2.3 increase the risk of high activity

Transaction costs can be compared to the fair use absolutely too high, or to be relatively high, due to frequent entry and exit into and from the shops. This can be caused by a one-sided discussion of the preference customers under the commission of the consultant have interest. It may be that such measures are to limit losses to just calculated over the expected range of fluctuation in the price of the transaction (stop order). This can lead to a busy and exiting, with the consequence of ever-renewed attack of the costs, then devour the use without significant losses occurred due to market changes. Odds are impossible in such cases, losses due to transaction costs likely.

8.2.4 Credit risk costs

Futures are not suitable credit basis. They should be financed with credit in any case. Speculation fails, not only must the loan be repaid, but also the interest. The loss becomes greater again.

8.3 Risks person by the contractor / third parties (account representative)

Through the person of the contractor, the broker konto-/depotführenden may be at risk of insolvency. There is also a risk exploitation, because the broker is authorized to award his client assets in accordance with certain rules and to use as collateral for their own general credit. These risks are not covered if the broker account may not belong to any investor compensation scheme.

When a third party (account representative), who - as an asset manager - receive revenue-based compensation, there is a risk that he carries because of his interest is not economically justifiable compensation transactions. The existing conflict of interest here, the account managing third party who is both committed to a proper account management and would like to receive the other hand, the highest possible compensation represents an additional risk of dissolved oxygen in the

8.4 Inevitability of risks

If one person says one investor, the above risks are not present in the concrete case, he acts without authority. The above risks can be neither advice nor exclude a certain technical equipment or computer programs, but there are in each case.

9th Specific risks in forex trading / FOREX

Foreign exchange transactions involve a high risk of loss. Committed before the investor / investor market participants in the international currency markets, they should be informed on the process and handling, especially on typical risks associated with foreign exchange transactions. This risk information can not explain all possible risks associated with foreign exchange trading, and therefore contains only references to the typical risks of forex trading (including exchange rate fluctuations) and the online foreign exchange (for example, the execution risk and technical risks). Currency trading and the associated risks require special knowledge, skills and experience. Currency trading is therefore not suitable for many investors. Investors should consider very carefully whether the online foreign exchange trading is in view of their own experience, investment objectives, financial resources and other system-relevant personal circumstances an appropriate form of capital investment.

MAVEST asks investors to carefully read these risk disclosure and to consider whether the investor is willing and able to understand the economic risks associated with foreign exchange transactions and to carry.
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