Legal

Risk Disclosure

Last updated: May 9, 2025 · Read in full before trading. This disclosure does not cover every possible risk.

Important — Read Before You Trade Trading securities, options, and other financial instruments involves substantial risk of loss, including possible loss of your entire investment. PacaTrader is a self-directed software tool. We do not provide investment advice, trading recommendations, or risk guidance of any kind. All trading decisions are yours alone. If you do not fully understand the risks described below, do not trade.

1. General Trading Risk

Trading involves substantial risk of loss, including the possible loss of your entire principal investment. Past performance of any security, strategy, or trading approach is not indicative of future results. Markets are inherently unpredictable, and no tool, platform, analysis, or software — including PacaTrader — can predict or guarantee any outcome.

You should only trade with money you can afford to lose. You should not trade with funds required for living expenses, emergency savings, or financial obligations.

You can lose more than you invest. In certain account configurations (margin accounts, short positions, uncovered options) losses can exceed your initial investment. Make sure you understand the maximum loss potential of every position you open.

2. Self-Directed Decisions

PacaTrader is a self-directed software tool only. PacaTrader does not:

Recommend any security, options contract, strategy, or trade
Advise on position sizing, entry timing, exit timing, or risk levels
Review, validate, or approve any order before it is submitted
Warn you that a particular trade is unsuitable for your financial situation
Provide portfolio management, financial planning, or investment guidance

Every decision — what to buy, sell, hold, close, automate, or avoid — is made entirely by you. PacaTrader transmits the orders you direct it to transmit. The judgment, analysis, research, and risk management behind every order are solely your responsibility.

If you are unsure whether trading is appropriate for your financial situation, consult a licensed financial adviser before using this Service.

3. Equities Risk

Trading individual stocks and ETFs involves risks including but not limited to:

Market risk: Security prices can decline sharply due to market conditions, economic factors, or investor sentiment, regardless of company fundamentals
Concentration risk: Holding large positions in a single security or sector increases exposure to adverse price movements in that security or sector
Volatility risk: Prices can move rapidly and significantly, especially around earnings reports, economic data releases, or news events
Gap risk: Securities can open significantly higher or lower than the previous close, particularly after hours or over weekends, bypassing stop-loss orders
Delisting & halts: Securities may be halted, suspended, or delisted, preventing you from exiting a position
Illiquidity: Low-volume securities may have wide bid-ask spreads or insufficient volume to exit at your desired price

4. Options Risk

Options trading is complex and involves risks that may not be suitable for all investors. Options can expire worthless, resulting in a total loss of the premium paid.

Additional options-specific risks include:

Total loss of premium: Long options positions can expire worthless if the underlying does not move in the anticipated direction or magnitude by expiration
Unlimited loss potential: Certain short options strategies (e.g., naked calls) carry theoretically unlimited loss potential
Leverage: Options control large notional values relative to premium paid, amplifying both gains and losses
Time decay (theta): Options lose value as expiration approaches, even if the underlying does not move
Implied volatility risk: Changes in implied volatility can significantly affect options pricing independent of underlying price movement
Assignment risk: Short options positions may be assigned at any time, potentially requiring you to buy or deliver shares at unfavorable prices
Early assignment: American-style options may be exercised early, creating unexpected obligations
Pin risk: At expiration, options near the strike price may or may not be exercised, creating uncertainty in your net position
Liquidity risk: Options on low-volume underlyings may have wide spreads or insufficient liquidity to close at a reasonable price
Expiration risk: Failing to close or roll an expiring options position can result in automatic exercise, assignment, or worthless expiration

Options are not appropriate for all investors. Before trading options, you should read Characteristics and Risks of Standardized Options (the ODD) published by the Options Clearing Corporation, available at theocc.com. Options tools within PacaTrader require additional disclosures and eligibility approvals administered by Alpaca.

5. Multi-Leg & Spread Strategy Risk

Multi-leg options strategies (spreads, straddles, strangles, condors, butterflies, etc.) involve multiple simultaneous positions and carry additional risks beyond single-leg options:

Leg-out risk: In volatile markets, one leg of a spread may fill while another does not, leaving you with unintended naked exposure
Assignment on short leg: Early assignment on the short leg of a spread can close the spread prematurely and leave the long leg with diminished or no value
Maximum loss: Defined-risk strategies cap losses at a specific level but do not guarantee that the maximum loss will not be reached
Margin requirements: Multi-leg strategies may have complex margin requirements that change as the underlying moves
Execution risk: Complex multi-leg orders may not fill at your expected prices, particularly in fast-moving or illiquid markets
Complexity: The risk/reward profile of multi-leg strategies can be difficult to model accurately. Unexpected outcomes can occur near expiration or around corporate actions

You are responsible for understanding the full risk profile of every multi-leg strategy you initiate through PacaTrader.

6. Margin & Leverage Risk

If your Alpaca account has margin privileges, trading on margin amplifies both potential gains and potential losses:

Losses can exceed your account balance: Margin positions can result in losses greater than the funds in your account, creating a debit balance you owe to the broker
Margin calls: If your account equity falls below required maintenance levels, Alpaca may issue a margin call requiring you to deposit additional funds or liquidate positions — potentially at unfavorable prices and without prior notice
Forced liquidation: Alpaca may liquidate your positions at any time to satisfy margin requirements, potentially at significant losses to you
Interest charges: Margin borrowing incurs interest charges that can erode returns or increase losses

PacaTrader does not manage your margin usage, monitor margin levels, or issue margin warnings. You are solely responsible for monitoring your margin exposure and maintaining adequate equity in your account.

7. Automation Risk

PacaTrader allows you to create and run user-defined automation rules that can submit orders to your live brokerage account without manual confirmation. Automations operating on a live account carry significant risk:

Unintended orders: Bugs, logic errors, misconfigured parameters, or incorrect rule design can cause Automations to submit orders you did not intend
Rapid order submission: Automations can submit many orders quickly, potentially accumulating large positions or losses before you can intervene
Market condition sensitivity: Automations designed for one market environment may behave unpredictably in different conditions (e.g., high volatility, gap opens, illiquid periods)
API and connectivity failures: Automation triggers or order submissions may fail silently, resulting in missed trades or incomplete positions
No backtesting guarantee: If you test Automation rules, past simulated performance does not predict future live performance
Compounding errors: An error in one Automation can trigger further rules, compounding losses or creating unintended positions

You are solely responsible for every order submitted by your Automations. You must monitor your active Automations at all times and disable them immediately if they are not behaving as intended. PacaTrader's safety controls are software tools — they are not a substitute for your active oversight and do not guarantee protection against losses.

8. Paper Trading vs. Live Trading

PacaTrader supports paper trading (simulated trading on Alpaca's paper environment). Paper trading does not replicate real trading conditions and should not be treated as a reliable predictor of live trading performance:

Paper fills assume idealized execution at quoted prices; live fills may be at worse prices due to slippage, liquidity constraints, or market impact
Paper trading does not reflect real bid-ask spreads, depth of market, or queue position
Paper trading does not account for fees, commissions, or margin costs
Paper trading does not replicate the psychological pressure of trading real capital, which significantly affects decision-making
Automation rules that perform well in paper trading may perform differently in live conditions

Transitioning from paper trading to live trading introduces real financial risk. Positive paper trading results do not guarantee positive live trading results.

9. Market & Liquidity Risk

Markets may be subject to extreme volatility, circuit breakers, trading halts, or other conditions that affect your ability to open or close positions. Specific risks include:

Liquidity risk: During periods of low liquidity (pre-market, after-hours, news events), spreads widen and fills may occur at significantly worse prices than expected
Market impact: Large orders relative to a security's average volume can move the market against you
Trading halts: Exchanges may halt trading in individual securities or across the market as a whole, preventing order submission or execution
Extended hours risk: Extended-hours trading has lower liquidity, wider spreads, and greater price volatility than regular session trading
Corporate actions: Dividends, splits, mergers, spin-offs, and other corporate actions can affect your positions in ways that are difficult to predict and may trigger unexpected Automation behavior

10. Order Execution Risk

Orders placed through PacaTrader are routed to Alpaca for execution. PacaTrader does not control order routing, execution quality, or fill prices. You acknowledge:

Market orders may execute at prices significantly different from the price displayed at order submission, especially in fast-moving markets
Limit orders are not guaranteed to fill and may not execute if the market does not reach your specified price
Stop orders become market orders when triggered and are subject to the same slippage risks as market orders
Orders may be partially filled, delayed, rejected, or canceled by Alpaca or the exchange without notice
Duplicate order submissions (e.g., due to connectivity issues) may result in unintended multiple executions
PacaTrader is not responsible for the quality, timing, or price of any order execution

11. System & Technology Risk

PacaTrader is software running on internet-connected infrastructure. Technology failures can affect your ability to monitor positions, submit orders, or manage risk:

PacaTrader downtime: PacaTrader may be unavailable due to maintenance, software bugs, server outages, or infrastructure issues
Internet connectivity: Loss of internet connectivity on your end can prevent you from accessing PacaTrader or submitting orders
Browser or device issues: Local device failures may prevent access to the Service
Data latency: Market data and account data displayed in PacaTrader may be delayed or temporarily inaccurate
Security incidents: Despite security measures, cyberattacks, unauthorized access, or data breaches could affect the Service

Never rely solely on PacaTrader to manage your open positions or orders. You must maintain independent, direct access to your Alpaca account and be prepared to manage your positions directly through Alpaca's own platform at all times.

12. Alpaca Platform Risk

Brokerage services are provided by Alpaca Securities LLC or Alpaca Crypto LLC, which are independent of PacaTrader. Alpaca platform risks include:

Alpaca's API may experience outages, rate limits, degraded performance, or errors that prevent order submission or account access through PacaTrader
Alpaca may change its API, terms of service, trading rules, or supported features at any time without notice to PacaTrader
Alpaca may restrict, suspend, or close your brokerage account at its discretion under its own terms
Regulatory actions, business changes, or insolvency at Alpaca could affect your ability to access or trade your account

PacaTrader has no control over Alpaca's platform, policies, or decisions. PacaTrader is not liable for any disruption, loss, or harm caused by Alpaca's platform, API, or business decisions.

13. Regulatory & Legal Risk

Your trading activity may be subject to securities laws, tax laws, exchange rules, and regulations in your jurisdiction. You are solely responsible for:

Ensuring your trading activity complies with all applicable laws and regulations
Understanding and complying with pattern day trader (PDT) rules if applicable
Understanding wash-sale rules and other tax implications of your trading
Complying with any short-sale restrictions, position limits, or reporting requirements
Not engaging in prohibited trading practices such as market manipulation, insider trading, or front-running

PacaTrader does not monitor your trading activity for regulatory compliance and does not provide legal, tax, or compliance advice. Consult qualified legal and tax advisers regarding your specific circumstances.

14. No Guarantee of Availability

PacaTrader is provided on an "as available" basis. We do not guarantee that the Service will be available at any specific time, including during market hours. We may perform maintenance, updates, or emergency fixes at any time. Service disruptions may occur without advance notice.

You should never place yourself in a situation where continued access to PacaTrader is required to manage risk on open positions. Always maintain the ability to manage your account directly through Alpaca independent of PacaTrader.

15. Acknowledgement

BY USING PACATRADER, YOU ACKNOWLEDGE THAT: (A) YOU HAVE READ AND UNDERSTOOD THIS RISK DISCLOSURE IN FULL; (B) YOU UNDERSTAND THAT TRADING INVOLVES SUBSTANTIAL RISK OF LOSS, INCLUDING POSSIBLE LOSS OF YOUR ENTIRE INVESTMENT; (C) YOU ARE MAKING ALL TRADING DECISIONS INDEPENDENTLY AND WITHOUT RELIANCE ON PACATRADER FOR ADVICE OR GUIDANCE; (D) PACATRADER IS A SOFTWARE TOOL ONLY AND IS NOT RESPONSIBLE FOR ANY TRADING LOSSES, ORDER ERRORS, AUTOMATION MALFUNCTIONS, OR OTHER FINANCIAL HARM ARISING FROM YOUR USE OF THE SERVICE; AND (E) YOU HAVE INDEPENDENT ACCESS TO YOUR ALPACA ACCOUNT AND DO NOT RELY SOLELY ON PACATRADER TO MANAGE YOUR POSITIONS.

If you have questions about this Risk Disclosure, contact us before trading:

PacaTrader — Legal

Email: legal@pacatrader.com

Website: http://PacaTrader.com