Last updated: March 27, 2026

Risk Disclosure

1. Trading Risks

1.1 Market Risk

Cryptocurrency markets are highly volatile. Prices can move dramatically in short periods due to market sentiment, regulatory changes, technological developments, macroeconomic events, and other factors. This volatility can result in substantial gains or losses.

1.2 Leverage Risk

The Platform supports leveraged trading through cryptocurrency derivatives (futures). Leverage amplifies both gains and losses. A small market movement against your position can result in losses significantly exceeding your initial margin. You can lose more than your initial investment when using leverage.

1.3 Liquidation Risk

Leveraged positions may be liquidated by the exchange if the margin falls below maintenance requirements. Liquidation can occur rapidly during volatile market conditions and may result in total loss of the margin allocated to the position. The Platform's risk controls (stop-losses, drawdown limits) may not prevent liquidation in all scenarios, particularly during extreme market events or exchange outages.

1.4 Funding Rate Risk

Perpetual futures contracts are subject to periodic funding rate payments. Depending on market conditions, funding rates can be positive or negative and may significantly impact the profitability of positions held over extended periods.

2. Automated Trading Risks

2.1 Strategy Risk

Automated trading strategies, including all strategies available on the Platform, are based on quantitative models and historical patterns. Markets can behave in ways that differ from historical patterns, rendering strategies ineffective or loss-making. No trading strategy guarantees profits.

2.2 Backtest Limitations

Backtest results presented on the Platform are subject to significant limitations:

• Survivorship bias: Backtests may not account for delisted assets.
• Look-ahead bias: Despite best efforts, some degree of look-ahead bias may exist.
• Execution assumptions: Backtests assume fills at historical prices, which may not reflect real-world slippage and liquidity constraints.
• Fee approximation: Trading fees and funding rates in backtests are estimated and may differ from actual costs.
• Overfitting risk: Strategies optimized on historical data may perform poorly on new data.

Past performance, whether from backtests or live trading, does not guarantee future results.

2.3 Technical Risk

Automated trading depends on reliable technology. Risks include:

• Platform outages or bugs that may prevent timely execution of trades.
• Exchange API outages, rate limits, or changes that disrupt trading.
• Network latency or connectivity issues affecting order execution.
• Data feed errors or delays affecting strategy decisions.
• Software bugs that may result in unintended trades or positions.

2.4 Rebalancing Risk

Bots rebalance on fixed schedules (e.g., every 4 hours). Between rebalances, market conditions can change significantly. The Platform cannot guarantee that positions will be adjusted in real-time to respond to sudden market movements.

3. Copy Trading Risks

• Copy trading involves following another user's trading decisions. The performance of the strategy manager does not guarantee the same results for followers.
• Execution timing differences may cause follower returns to deviate from the manager's returns.
• Strategy managers may change their approach, take on more risk, or stop trading without notice.
• Fees charged by strategy managers reduce net returns for followers.
• We do not vet, endorse, or certify strategy managers. Verified track records confirm historical data integrity, not future performance.

4. Exchange and Counterparty Risk

• Paradox Alpha does not hold custody of your funds. Your assets remain on the connected exchange.
• Exchanges may experience insolvency, hacking, regulatory action, or operational failures.
• We are not responsible for losses resulting from exchange failures or actions.
• Exchange terms of service and fee schedules may change without notice.

5. Regulatory Risk

Cryptocurrency regulations vary by jurisdiction and are evolving rapidly. Changes in laws or regulations may affect the legality of cryptocurrency trading, restrict access to exchanges, or impose new compliance requirements. You are responsible for understanding and complying with applicable laws in your jurisdiction.

6. Risk Controls

The Platform offers risk management tools including stop-losses, drawdown limits, leverage caps, and position sizing controls. While these tools can help manage risk, they cannot eliminate it. Specifically:

• Stop-losses may not execute at the exact trigger price during fast-moving markets (slippage).
• Drawdown limits are checked periodically, not continuously.
• Risk controls may not prevent losses during exchange outages or extreme market events.
• No risk control can protect against all possible loss scenarios.

7. Minimum Capital and Position Sizing

A minimum capital allocation of $200 is required for live trading. Trading with insufficient capital relative to position sizes and leverage increases the risk of significant losses or margin calls. Consider your financial situation carefully before allocating capital.

8. Tax Considerations

Cryptocurrency trading may have tax implications in your jurisdiction. You are solely responsible for determining and fulfilling your tax obligations. We do not provide tax advice. Consult a qualified tax professional for guidance.

9. Acknowledgment

By using the Paradox Alpha platform, you acknowledge that:

• You have read and understood this Risk Disclosure in its entirety.
• You understand that cryptocurrency derivatives trading carries a high level of risk.
• You are trading with capital you can afford to lose.
• You will not hold Paradox Alpha liable for trading losses.
• You are solely responsible for your trading decisions and their outcomes.

10. Contact

For questions about trading risks, contact us at support@paradoxalpha.com.