Risk Notice
Risks Associated with Algorithmic Investing
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Algorithmic investing, is a method that employs computer algorithms to make trading decisions in financial markets. While it can offer several advantages, it is crucial for clients and prospective clients to recognize that there are inherent risks associated with this investment approach. Ames Investment Systems wishes to emphasize that it is not liable for any sustained loss resulting from algorithmic investing. Past performance should not be seen as a guarantee of future results.
1. Market Volatility
Algorithmic trading systems rely on historical data and predefined rules to make investment decisions. However, they may struggle to adapt to sudden market shifts or unexpected events. Clients should be aware that market volatility can lead to substantial losses, as algorithms may not react quickly enough to protect investments.
2. Technical Failures
Algorithmic trading systems are dependent on technology and infrastructure. Technical glitches, hardware failures, or software errors can lead to incorrect trading decisions or disruptions in the trading process. These issues can result in significant financial losses.
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4. Over-Optimization
Developers of algorithmic trading systems may attempt to fine-tune their algorithms to historical data, a practice known as over-optimization. While this can lead to impressive back-tested results, it may not perform as well in real-market conditions, potentially leading to poor investment outcomes.
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5. Model Risk
The effectiveness of our algorithmic trading systems is based on the quality of the underlying models, the internal strength of our AI, and calculated assumptions. If these models fail to capture market dynamics accurately, the product may yield subpar results.
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6. Liquidity Risk
Algorithmic trading strategies can sometimes struggle to execute trades efficiently, particularly in less liquid markets or with large order sizes. This can lead to unfavorable execution prices, which may result in losses.
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7. Regulatory and Compliance Risks
Algorithmic trading is subject to various regulatory and compliance requirements, which can change over time. Non-compliance or failure to adapt to new regulations can lead to legal issues and financial penalties.
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8. Emotionless Decision-Making
While algorithms are designed to make rational, unemotional decisions, they may not always consider all factors that a human trader would. This may result in suboptimal trading decisions under certain market conditions.
Ames Investment Systems emphasizes that clients and prospective clients should have a thorough understanding of the risks involved with algorithmic investing. They must acknowledge that past performance does not guarantee future results, and sustained losses are possible. It is essential to carefully assess your risk tolerance and investment objectives before engaging in algorithmic investing. Ames Investment Systems is not responsible for any losses incurred through this investment approach, and clients are urged to seek professional advice if necessary.
All Products: Not FDIC Insured • No Bank Guarantee • May Lose Value
Ames Investment Systems is dedicated to providing an innovative Software as a Service (SaaS) solution that enhances your investment experience. It is important to clarify that Ames Investment Systems is not officially partnered with Alpaca Markets; however, we are currently in Beta and use Alpaca Markets to host all of our software and system products. Alpaca Markets is a regulated entity, registered with the SEC, a member of the SIPC, and adheres to FINRA regulations, offering protection up to $500,000 per client.
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At Ames Investment Systems, we operate exclusively as a technology provider, and our primary focus is on delivering advanced software solutions to our users. We do not engage in financial transactions, nor do we accept monetary deposits. Consequently, we are not required to obtain broker-dealer licensing in our current jurisdiction. Our software solutions are designed to empower investors with powerful tools and capabilities, facilitating a seamless and efficient trading experience.
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We want to assure our clients and prospective clients that we have taken appropriate measures to ensure compliance with all relevant federal and state regulations. We operate with a strong commitment to legal and regulatory standards to protect your interests and data. For further information on financial regulations and related matters, we encourage you to visit sec.gov, where you can find comprehensive resources to better understand the regulatory landscape in the financial industry. Your trust and security are paramount to us, and we are dedicated to providing you with the highest level of service and innovation.