The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. In considering whether to trade or to authorize someone else to trade for you, you should be aware of the following:
If you purchase a commodity option you may sustain a total loss of the premium and of all transaction costs.
If you purchase or sell a commodity future or sell a commodity option you may sustain a total loss of the initial margin funds and any additional funds that you deposit with your broker to establish or 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 requested 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.
Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market makes a "limit move."
the placement of contingent orders by you or your trading advisor, 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.
A "spread" position may not be less risky than a simple "long" or "short" position.
The high degree of leverage that is often obtainable in commodity trading can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
In some cases, managed commodity accounts are subject to substantial charges for management and advisory fees. It may be necessary for those accounts that are subject to these charges to make substantial trading profits to avoid depletion or exhaustion of their assets. This disclosure document contains, at page 11, a complete description of each fee to be charged to your account by the commodity trading advisor.
This brief statement cannot disclose all the risks and other significant aspects of the commodity markets. You should therefore carefully study this disclosure document and commodity trading before you trade, including the description of principal risk factors of this investment at page 15 of pardo capital limited's disclosure document.
You should also be aware that this commodity trading advisor may engage in trading foreign futures on options contracts. Transactions on markets located outside the united states, including markets formally linked to a united states market may be subject to regulations which offer different or diminished protection. Further, united states regulatory authorities my be unable to compel the enforcement of the rules of regulatory authorities or markets in non-united states jurisdictions where your transactions may be effected. Before you trade you should inquire about and ask the firm with which you intend to trade for details about the types of redress available in both you r local and other relevant jurisdictions.
This commodity trading advisor is prohibited by law from accepting funds in the trading advisor's name from a client for trading commodity interest. You must place all funds for trading in this trading program directly with a futures commission merchant.
