RISK FACTORS

Acknowledgement of Risks

By continuing to use the Collective2 Web site, you acknowledge that you have read and understand this document.

In addition, when you register for an account with Collective2, you will be asked to read and acknowledge this document again before your account becomes fully active.

Collective2 does not offer its own trading advice

Collective2 LLC does not offer its own trading advice. Instead, we provide a Web site where users may search for trading advice, and where vendors of trading systems or trading advice may offer it to the public.

There are many risks associated with trading. We want to warn you about these risks.
A warning about hypothetical trading results

Collective2 attempts to verify all trading signals entered by system vendors on a go-forward basis. We do not accept or publish "backtested" results. When a system vendor creates a new piece of trading advice, our computer software attempts to simulate how that advice would perform in the real world. We do this by tracking real-time quote information provided by our data vendors, and - for those systems that have real-life subscribers AutoTrading the system - we use the volume-weighted-average fill prices achieved in AutoTrading brokerage accounts.

Although this is a useful service, it is not the same as real trading. Our measurements of system performance must be treated as hypothetical performance.

(To read technical information about how we determine hypothetical fill prices, click here.)

Please keep in mind, then, that:
Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.


Specific Commodity (Futures) Risks

While Collective2 is registered with the Commodity Futures Trading Commission (CFTC) as a Commodity Trading Advisor (CTA) and is a member of the National Futures Association (NFA), it does not exercise trading authority over any accounts. Instead, it is a Web site where third-party trading system developers may offer their services. Thus, our model is similar to that of a magazine's. We are paid (indirectly) by advertisers to make consumers aware of advertisers' services.

However, some of the system vendors that offer their services on the Collective2 Web site are Commodity Trading Advisors, either registered with the Commodity Futures Trading Commission, or exempt from registration. Therefore, we think it is important to warn you about the risks of trading commodities (futures), and also to alert you to some of the regulations that Commodity Trading Advisors are required to follow.

THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN ANY TRADING PROGRAM OFFERED ON THIS WEB SITE.

Risk Disclosure Statement

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.

THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ASPECTS OF THE COMMODITY MARKETS. YOU SHOULD THEREFORE CAREFULLY STUDY COMMODITY TRADING BEFORE YOU TRADE, AND DETERMINE IF COMMODITY TRADING IS APPROPRIATE FOR YOU.

Foreign Currency Risks

YOU SHOULD ALSO BE AWARE THAT CERTAIN COMMODITY TRADING ADVISORS MAY ENGAGE IN TRADING FOREIGN FUTURES OR 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 MAY 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 ANY RULES RELEVANT TO YOUR PARTICULAR CONTEMPLATED TRANSACTIONS AND ASK THE FIRM WITH WHICH YOU INTEND TO TRADE FOR DETAILS ABOUT THE TYPES OF REDRESS AVAILABLE IN BOTH YOUR LOCAL AND OTHER RELEVANT JURISDICTIONS.

Not a registered futures commission merchant

COMMODITY TRADING ADVISORS ARE PROHIBITED BY LAW FROM ACCEPTING FUNDS IN THE TRADING ADVISOR'S NAME FROM A CLIENT FOR TRADING COMMODITY INTERESTS. YOU MUST PLACE ALL FUNDS FOR TRADING IN THIS TRADING PROGRAM DIRECTLY WITH A FUTURES COMMISSION MERCHANT.