Initial balance – risk tolerance = maintenance balance
Risk tolerance
If a risk tolerance level is hit the maintenance balance is activated and the allocation is automatically liquidated on or before the next settlement.
Clients can set their risk tolerance at any level but it should be realistic. In 2025 with the benefit of hindsight, diversification and optimization a capable analyst with access to 6,200 Programs, Hedge Funds and Advisors could optimize actual or hypothetical performance and produce an allocation where there are no losing months over a 10 year period.
If a risk tolerance isn’t defined by the client, all allocations have one that’s built in, they’re disclosed on the performance page to the right of the maximum month-on-month drawdown.
Summary
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- Initial investment – risk tolerance = maintenance balance
- Should the account fall below the defined maintenance balance as of the settlement on any trading day our team will automatically liquidate all positions on or before the next settlement and report back to you.
- Example, Initial start balance $100,000, maintenance balance $70,000, should the settlement valuation of the account fall below $70,000 all positions would be liquidated on or before the next close, the final liquidation valuation might be higher or lower than the defined $70,000 maintenance balance but all positions are guaranteed to be liquidated prior to the next open.
- If we fail to liquidate on or before the next settlement we would liable for any losses from that settlement forward.
- Trading Authorization is automatically revoked.
- Any new positions would be deemed unauthorized and transferred to the Asset Investment Management (AIM) error account immediately.
- You can adjust your maintenance balance at any time by completing a new Risk Control Agreement
If you have questions or comments send us a message or schedule an online review
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