RISKS

 

ABOUT RISKS


BECAUSE RISK MANAGEMENT IS KEY TO LONG TERM SUCCESS 

Despite all the risk control measures put into place by Odysseia Capital, the transactions with financial instruments made available by the usage of our technology (as well as the other associated risks when the complete investing structure is considered) may, in certain conditions, result in loss of funds. Therefore, any prospective client should only consider to subscribe a service plan after an exhaustive assessment has been made to determine if and whether his/her financial situation is appropriate for such transactions and associated risks. Odysseia Capital is not an investment advising or wealth management service, therefore is the responsibility of each customer to perform his/her own due diligence and to determine if the kind of financial instruments made available by our technology are compatible with his/her risk profile, financial objectives and risk tolerance.

In this section clients can find further information about the risks they might be exposed when investing in the instruments made available by Odysseia Capital’s technology. Namely below you can find more detailed information about some of the risks present in or associated with the instruments made available by Odysseia Capital, as well as a risk assessment and possible risk mitigation measures. Please note that both risk identification, risk assessment and mitigation measures are the point of view of Odysseia Capital about its own products and its own stance as an investor in its own strategies. Therefore, the information herewith should only be regarded as a guidance for the risk assessment and due diligence that each individual client should perform, before subscribing any of Odysseia Capital’s plans.

Below you can find information about a number of different risk sources that may be present in or associated with the strategies and plans offered by Odysseia Capital.

One important aspect to understand from start is that the sources of risk are various and have different origins, when all the complete ecosystem to follow Odysseia Capital’s strategies is taken into account:

Risks inherent to Odysseia Capital’s strategies

Technological risks

Risks associated with market

Risks associated with brokers

The risk assessment below is therefore structured according with the above risk classes.

Finally, it’s also important to realize that to identify and assess a risk doesn’t mean either that that risk will materialize or that the way it is assessed represents the full impact that each client may feel upon an eventual risk materialization. The risk identification and assessment means only that we feel compelled to inform our clients for the risks present, independently of their likelihood or unlikelihood, and that those risks are identified and assessed according to the best of our knowledge and our own experience, at the time of the assessment. The mitigation measures are also not to be considered as bullet-proof solutions that can eliminate risk. As they are called, they aim to mitigate the risk to a manageable level, and not to eliminate them. As everything in life, there aren’t zero risk situations, as for more risk-free an endeavor might seem, there is always an amount of risk present that should be assessed and managed. Risk-free is actually an illusion.

We advise you also to read carefully also your broker’s risk disclaimers, as well as contracting documents.

Please contact us if you feel you need more information to be able o make your own risk assessment, in order to determine if subscribing one of our plans would be appropriate for you.

RISK ASSESSMENT


A RISK ASSESSMENT AND RISK MANAGEMENT PLAN AS WE SEE IT

RISKS INHERENT TO ODYSSEIA CAPITAL’s STRATEGIES

TECHNOLOGICAL RISKS

MARKET RISKS

BANKING AND BROKER RISKS

GENERAL RISKS AND DISCLAIMERS

 

 

 

RISK:

Poor strategy performance

RISK TYPE: 

Risks inherent to Odysseia Capital’s strategies

WORST CASE SCENARIO: 

Loss of the total account equity (deposits +/- profits / losses)

DESCRIPTION: 

The investment strategies can experience temporary periods with negative returns. If a client opens an account at local equity maximum, following a period of good returns, and in the following months the strategy yields negative returns, it is possible that the client sees its equity decrease and, in an extreme scenario, the totality of the deposited funds and eventual accumulated profits could eventually be depleted.

Please see our proposed mitigation measures, to reduce this risk to a manageable level.

MITIGATION MEASURES:

A. TIME TEST THE STRATEGIES – Odysseia Capital’s strategies are time tested both by back and forward testing and no strategy is deployed to customers without solid evidence that it has potential of generating a return/risk ratio that stands above a predefined attractiveness hurdle. A strategy showing good a robust results over time is the first step to expect (but not guarantee) good future performance.

B. DRAWDOWN LIMIT TARGET – Furthermore, each strategy has a predefined “drawdown” maximum limit, meaning that at any time, for any new coming investor, the maximum temporary loss should ideally stay within a certain range. This maximum drawdown limit is always set far away of a situation in which an investor would lose all is capital deposited in the brokerage account. The portfolio is then regularly optimized and rebalanced to keep the results within the maximum drawdown limit defined, which are in fact publicly announced in each strategy product page.

C. DIVERSIFICATION – The strategy is based in a diversified portfolio of long term profitable strategies and results whether negative or positive, are made of a myriad of different views on the market. This means that, in normalized markets, a scenario where an investor is surprised to see a sudden a drastic equity decrease, beyond the defined drawdown limit for each strategy, appears to be unlikely, allowing the investor to adjust its positioning towards the strategy, whether to stay or leave or to increase, hold or decrease its exposure to the strategy.

D. LOW IMPACT PER TRADE – No trade will ever make or break the strategy. This means that each trade is typically programmed to have incremental impact in the strategy. In normal market conditions, a negative outcome of a trade should produce a moderate impact, typically not more than 2% of total account balance.

E. REMOVE FUNDS PERIODICALLY – Follow Odysseia Capital’s recommendations to remove part of profits periodically from your account (this service is a part of ADVANCED plan). By setting aside part of the profits regularly, this routine allows the investor to secure the profits achieved with the strategy and remove those funds from being exposed to this risk.

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RISK:

Connectivity loss to Odysseia Capital’s trading engine

RISK TYPE: 

Technological risks

WORST CASE SCENARIO: 

Loss of the total account equity (deposits +/- profits / losses)

DESCRIPTION:

The trading setup involves a number of technology elements interconnected to carry on and bridging the trading activity between Odysseia Capital’s trading engines and client’s brokerage accounts. These technology elements include software, trading platforms, servers & computers and of course the internet. If one of these elements fails, that could lead to trades being suspended of being managed by Odyssseia Capital’s and be left orphan until someone taking charge of them or failing element is reinstated and control by Odysseia Capital’s is resumed. In an extreme scenario this could lead to losing trades and lost funds and in a very extreme scenario, if trades are left orphan for long periods or coincidently a “Black Swan” type of event happens in between.

Please see our proposed mitigation measures, to reduce this risk to a manageable level.

MITIGATION MEASURES:

A. CLIENTS SHOULD USE A VPS TO HOST BROKER ACCOUNTS – The first step to drastically reduced this risk is to use a Virtual Private Server. VPSs are located in very high availability data centers, meaning that the trading platform supplied by your broker, and thus the Odysseia Capital’s trading client application, will enjoy and benefit fully from the VPS availability and internet connectivity. This means virtually no loss of internet connectivity and thus connection to Odysseia Capital’s trading engine. We can help you in selecting a reliable VPS service, or if you prefer you can also subscribe our ADVANCE service pack and transfer all the VPS setup work and respective costs to our side.

B. HIGH AVAILABILTY ALSO ON ODYSSEIA CAPITAL’s SIDE – Odysseia Capital’s trading infrastructure is also located in high availability datacenters from top providers in the market, thus enjoying the same availability and connectivity robustness mentioned above.

C. BE ATTENTIVE TO YOUR EMAIL – Be very attentive to your email inbox to any messages coming for either your VPS provider, your broker or Odysseia Capital. VPS providers and Brokers usually inform clients about major events that can affect the availability and connectivity or of your  infrastructure. On the other hand Odysseia Capital will also communicate with you via email, whenever a problem is detected that may affect the normal functionality of the infrastructure.

D. INSTALL YOUR BROKER PLATFORM IN YOUR OWN COMPUTER OR MOBILE DEVICE – Additionally to the broker platform installed in the VPS, install also an instance of your broker platform in your computer and/or mobile device. This will allows you to check the status of your trading account with independently of that happens with the VPS and ultimatly allow you also to close trades manually in case of need.

E. SET UP A MYFXBOOK.COM ACCOUNT – A Myfxbook.com account (or any other similar service) completes a three tier assess structure to your trading account, that allows you to easily check your trading results, open trades and a numbr of other stats and, importantly, if the account installed at the VPS is alive and kicking!

This three tier assess structure for maximum security is then comprised by the following elements:

1. Broker trading platform installed at VPS – main hosting spot for your broker account and ideally where Odysseia Capital’s trading client will be installed.

2. Broker trading platform installed at your computer or mobile device – allows you to check you trading account independently of the availabilty of your VPS and allows you ultimately to close eventual orphan trades that, by some reason, are not being managed by Odisseia Capital’s trading engine anymore.

3. Myfxbook.com account setup and connected to your VPS broker account – allows you to check and asses via browser to your account stats and “live” status from anywhere in the world and from any device that supports an internet browser.

Please contact us if you need help in building this setup-

F. REMOVE FUNDS PERIODICALLY – Follow Odysseia Capital’s recommendations to remove part of profits periodically from your account (this service is a part of ADVANCED plan). By setting aside part of the profits regularly, this routine allows the investor to secure the profits achieved with the strategy and remove those funds from being exposed to this risk.

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RISK:

“Black Swan” type of events

RISK TYPE: 

Market risks

WORST CASE SCENARIO: 

Loss of total account equity (deposits +/- profits / losses) or losses to exceed deposited funds

DESCRIPTION: 

Certain drastic unforeseen events can cause severe price movements in the markets. During these periods, that can last only for seconds or few minutes, is normal that market liquidity (supply of buyers and sellers to the market) decreases suddenly and spreads increase drastically. This can cause that the protections embedded in our strategies for normal market times (such as stop losses orders) are no longer effective (due to lack of liquidity to satisfy the order at the stop loss price or due to sudden price gaps) and open orders can be left at the mercy of the price movements.

If an open order is at the “wrong” side of the price movement and if the price gaps too much it’s possible that the margin of the account is suddenly consumed and margined out. At that moment the account should be frozen by the broker, but at a point where the loss exceeds the amounts that were deposited in the account because the margin protection mechanisms implemented by the broker could not act in due time, when in face of a “Black Swan” type of event.

In certain conditions, certain brokers can demand that the client deposit new funds to eliminate the outstanding loss.

Such described “Black Swan” events can include situations such as severe geopolitical developments, nuclear accidents, severe natural catastrophes or other events that by its gravity and impact in the market, are prone to cause very severe price movements.

Please see our proposed mitigation measures, to reduce this risk to a manageable level.

MITIGATION MEASURES:

A. BROKER SELECTION – Select a broker with a negative balance protection policy. Luckily the industry has a good range of brokers offering brokerage services compatible with Odysseia Capital’s strategies. Some brokers in the industry are conscientious of “Black Swan” types of events and put in place risk control systems aiming a two tier protection scheme to cover this risk.

The first layer of this scheme is to prevent a situation of a loss larger than deposits from even occurring. More advanced and disciplined brokers have in place risk control mechanisms to prevent trading positions with losses higher than the collateral of each customer can support.. Please bear in mind that a situation of losses going beyond collateral capacity is a very risky situation for brokers as well as for each client trade, they have a contract with a counter party to which they are bound to answer.

In past Black Swan market events there was a number of brokers with good risk control mechanisms who were able to withstand those extreme scenarios and protect also their clients from a “loss exceeding funds” situation.

The second layer is a “negative balance policy”. Opening an account in a broker with a “negative balance” protection means that the broker will zero out the outstanding negative balance, in the unfortunate and rare event of a major market instability that causes sudden losses beyond collateral supplied by the equity available at the account.

B. USE OF STOP LOSSES – Typically, Odysseia Capital’s trades are planned and programmed with Stop Losses. Even if in certain market scenarios Stop Losses may eventually not be totally effective, they are there to act as a first level of protection in case of sudden market movements against an open position.

C.  OVERTRADING AVOIDANCE – Odysseia Capital’s trades are planned to only use a very small part of the collateral. This means that we have a strict money management policy that doesn’t allow the total exposure (meaning the total size of opened trades at each moment in time) to market in each strategy to exceed a certain conservative limit. Therefore, in the face of a sudden market movement, the collateral cushion provided by a conservative sizing acts a very effective first layer of capital protection. We are aware that our monthly profits are not over the moon when compared with other vendors, but we are here for the long run, and definitely favor a sustainable, risk conservative, approach over sky-rocketing short lived profits.

D. REMOVE FUNDS PERIODICALLY – Follow Odysseia Capital’s recommendations to remove part of profits periodically from your account (this service is a part of ADVANCED plan). By setting aside part of the profits regularly, this routine allows the investor to secure the profits achieved with the strategy and remove those funds from being exposed to this risk.

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RISK:

Broker default or broker fraudulent activity

RISK TYPE: 

Risks associated with brokers

WORST CASE SCENARIO: 

Loss of the total account equity (deposits +/- profits / losses)

DESCRIPTION: 

A broker is a financial institution to whom a trader or investor transfer its funds to be traded/invested in a specific strategy or a portfolio of trading strategies.

Normally all brokers are required to segregate their own accounts from clients’ funds and have strict requirements to protect clients’ funds even in case of broker default or inability to proceed its normal activity. Therefore, even in such default or bankruptcy scenarios, brokers should normally be able to return all client’s funds because the funs of the broker firm are maintained in total isolation of clients’ funds.

However, from one’s own risk assessment one should not exclude the possibility, as small as it may be, that the broker is not in fact complying with the funds segregation requirements or even to have a voluntary fraudulent intent or action, aiming to avoid or postpone the access of clients to their own funds.

Another aspect to take into account is the default or insolvency risk of the bank where your funds are deposited by the broker.

Please see our proposed mitigation measures, to reduce this risk to a manageable level.

MITIGATION MEASURES:

A. SELECT A BROKER WITH STRONG REGULATION – Select reliable brokers located in jurisdictions with strong regulation, such as the Financial Conduct Authority (FCA) in the UK and protected by a trustworthy public fund compensation scheme such as the Financial Services Compensation Scheme (FSCS) in the UK.

It’s important to note that for a retail investor, capital up to 50.000 GBP is protected by the FSCS compensation fund, against broker default or fraud leading to the inability of clients to retrieve their funds from the broker. If the inability of the client to recover the funds lies in the default of the bank where the funds were deposited by the broker, this protection covers up to 75.000 GBP as this is considered as a deposit.

When opening an account, it’s also important to verify in which jurisdiction of the broker are you contracting an account. Some brokers have offices in the UK and as well as in other jurisdictions, and when opening an account online, it can happen that, in fact, you are opening an account with a branch of the broker located somewhere else, other than the UK.

Make your own due diligence and please visit the FCA website for regulation information, namely to verify if your broker is regulated in the UK: Financial Conduct Authority

Please visit also the FSCS website for information about the compensation scheme and retail investor capital protection: Financial Services Compensation Scheme

We advise our customers brokerage accounts under the FCA and FSCS because we see this regulation as one of the best and effective in the world, but do not discourage clients to seek other brokers in other jurisdictions with equally effective regulation arena. In the end, the important is that the investor’s capital is protected against broker and bank default/fraud.

In our plans PLUS and ADVANCED, we can help you navigate through the broker selection, account opening and account setup.

You can also visit our selected broker’s page and find more information about the brokers we are recommending.

B. REMOVE FUNDS PERIODICALLY – Follow Odysseia Capital’s recommendations to remove part of profits periodically from your account (this service is a part of ADVANCED plan). By setting aside part of the profits regularly, this routine allows the investor to secure the profits achieved with the strategy and remove those funds from being exposed to this risk.

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  GENERAL RISKS AND DISCLAIMERS

 

A. RISKS ASSOCIATED WITH FOREX AND OTHER LEVERAGED FINANCIAL INSTRUMENTS TRADING

Trading foreign currencies or other leveraged financial instruments can be a challenging and potentially profitable opportunity for investors. However, before deciding to participate in this kind of markets, clients should carefully consider their investment objectives, level of experience, and risk appetite. Most importantly, clients should not invest money they cannot afford to lose.

There is considerable exposure to risk in any leveraged financial product. Any transaction involving such instruments involves risks including, but not limited to, the potential for changing political and/or economic conditions that may substantially affect the price or liquidity of the instrument in the market. Investments in foreign exchange or other leveraged instruments speculation may also be susceptible to sharp rises and falls as the relevant market values fluctuate. The leveraged nature this type of trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against the investor you as well as for the investor. Not only may investors get back less than they invested, but in the case of higher risk strategies, investors may lose the entirety of their investment. It is for this reason that when speculating in such markets it is advisable to use only risk capital. Trading foreign exchange or other leveraged instruments on margin carries a high level of risk, and may not be suitable for all investors. Clients should be aware of all the risks associated with the trading of foreign exchange or other leveraged instruments, and seek advice from an independent financial advisor if any doubts remain. 

Past performance is not indicative of future results.

B. LEVERAGE

Leverage allows traders the ability to enter into a position worth many times the account value with a relatively small amount of money. This leverage can work with you as well as against you. Even though the Forex market offers traders the ability to use a high degree of leverage, trading with high leverage may increase the losses suffered. Please use caution when using leverage in trading or investing.
Hypothetical Results Disclaimer 

C. PUBLISHED RESULTS, PAST RESULTS AND SPECIFIC CUSTOMER RESULTS

The results shown in this site are all from existing real accounts that are being trader in real financial institutions and with real money. They are therefore real-world accounts, in opposition of demo accounts or such other simulation or testing environments.

However, no representation is being made that any account will or is likely to achieve profits or losses similar to those that may be shown. Past performance is not indicative of future results. Individual results vary and no representation is made that clients will or are likely to achieve profits or incur losses comparable to those that may be shown. 

Please bear also in mind that some results published in this site may require manually input or semi-automatic update and therefore can carry errors, imprecisions, or omissions. Please contact us if you need any additional information about published results.

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