Risk Disclosure.

01General trading risk

All financial markets are subject to fluctuation. Prices can move in any direction, at any speed, and for any reason — including reasons that have no rational connection to the asset being traded. Wars, central-bank decisions, surprise economic data, exchange outages, regulatory announcements, social-media posts, algorithmic trading errors, and pure chance can all move markets violently. There is no methodology, system, or person that can predict every move; anyone who claims otherwise is misrepresenting reality.

The most important fact about retail trading is its base rate of failure. Independent regulators consistently find that between 70% and 85% of retail forex and CFD accounts lose money over any meaningful time horizon. The numbers for futures, options, and short-term equity trading are similar. This is the field you are entering. Even with strong methodology, strong discipline, and adequate capital, a substantial probability remains that you will lose money. Plan and size your activity accordingly.

You should never trade with money you need for living expenses, debt repayment, retirement, dependants, or any other obligation. Risk capital is, by definition, money you can afford to lose entirely without altering your standard of living or your future plans. If you cannot draw a clean line between risk capital and essential capital, you do not yet have risk capital.

02Leverage and margin

Most retail trading products — forex, CFDs, futures, perpetual swaps — are leveraged products. Leverage means you control a position that is many times larger than the cash you have deposited as margin. A 100:1 leverage ratio, common in forex, means a 1% adverse move wipes out the entire margin you posted on that trade.

Leverage amplifies both gains and losses with absolute symmetry. The intuition that leverage merely "boosts" returns is wrong; it boosts variance. A trader using 50:1 leverage with a 60%-win-rate strategy will frequently encounter losing streaks that the same strategy at 10:1 leverage would absorb without consequence. Position sizing in the presence of leverage is the single most important risk-management decision a trader makes.

Margin calls and stop-outs

Brokers protect themselves — not you — by enforcing a margin maintenance level. When the equity in your account falls below this threshold, the broker has the right (and typically the obligation) to liquidate your positions automatically without further notice. This stop-out can occur during periods of low liquidity or rapid price movement at prices substantially worse than the maintenance threshold itself. You can be stopped out at the worst possible moment in a market move that, given a few minutes, would have reversed in your favour.

Negative-balance protection is not universal

Some retail brokers offer negative-balance protection, meaning the most you can lose is the amount in your account. Many do not. Futures, professional accounts, and offshore brokers commonly do not provide this protection. In an extreme gap event — a flash crash, a currency depeg, an exchange outage that prevents stop-loss execution — you can be left with a debt to your broker that exceeds your deposited capital. Understand precisely what protections your specific broker offers under your specific account type before risking capital.

03Discretionary & ICT trading specifics

DBN focuses on discretionary trading using the Inner Circle Trader (ICT) and Smart Money Concepts (SMC) frameworks. These methodologies emphasise reading market structure, identifying liquidity pools, detecting institutional order flow, and timing entries around session-based killzones. They are taught extensively in our Academy and supported by tools throughout the platform.

You should understand that ICT and SMC are interpretive frameworks, not deterministic systems. Two skilled practitioners looking at the same chart can reach different conclusions about market structure, fair value gap validity, or liquidity sweep completion. Performance with these methodologies depends substantially on the trader's individual skill, discipline, and pattern-recognition ability — all of which take years to develop.

The frameworks have not been formally validated by peer-reviewed quantitative finance literature. Internet communities and educational programs around them are large but uneven in rigour. Marketing claims circulating in those communities — "90% win rate", "$10k to $1M in six months", "guaranteed funded" — are almost always either survivorship-biased anecdotes, outright fabrications, or describe results that are not realistically achievable on a sustained basis. Do not let exposure to these claims calibrate your expectations.

The Lock and Decision Grade are coaching tools

DBN's Predictive Lock, Decision Grade, and behavioural scores are designed to help you make better decisions. They are not guaranteed predictors of profitability. A green Lock verdict does not guarantee a winning trade; a high Decision Grade does not guarantee a profitable account. The systems are statistical estimators of your historical alignment with sound process, computed from your own data. They improve your odds at the margin; they do not eliminate risk. Read the methodology white papers for the full mathematical specification of what each system does and does not claim to do.

04Paper trading limitations

DBN's Paper Trading and Backtesting modules let you practise execution, validate strategies, and develop pattern recognition without risking capital. Paper trading is enormously valuable as a skill-building tool. It is also materially different from live trading in ways that consistently inflate practitioner confidence.

What paper trading does not capture

• Slippage and spread. Paper fills assume idealised execution at displayed prices. In live conditions, particularly during news events or session opens, you will frequently get filled several ticks worse than the price you saw on the chart.
• Liquidity at size. A 0.1-lot paper trade fills perfectly. A 5-lot live trade in a thin pair at 04:00 UTC may move the market against itself and fill in segments.
• Psychological pressure. The single largest gap between paper and live performance is the emotional cost of real money. Hesitation, premature exits, oversized revenge entries, and FOMO chasing typically appear only when capital is genuinely at risk.
• Operational friction. Broker outages, platform freezes, internet drops, and order rejections happen rarely on a clean simulator and routinely in production accounts.
• Tax and fees. Real accounts incur commissions, financing charges, and tax consequences. Paper accounts ignore these, which can change a marginally profitable strategy into a losing one.

A trader who can produce consistent paper results for 100+ trades is not necessarily ready to trade live capital, but a trader who cannot produce consistent paper results is almost certainly not ready. Use paper trading as a hurdle to clear, not a guarantee of live success.

05Prop firm risks

DBN's Prop Challenge module simulates the evaluation processes used by retail prop trading firms (FTMO, FundedNext, The5ers, MyFundedFX, Topstep, E8, TrueForexFunds, Surgetrader, and others). It is a training environment. It is not affiliated with any prop firm, and passing a DBN simulation does not constitute, predict, or guarantee passing the equivalent live evaluation. The risks of paying for and participating in live prop firm evaluations rest entirely with you.

Capital exposure in prop evaluations

Most prop firms charge non-refundable evaluation fees ranging from $50 to several thousand dollars depending on account size. These fees are real money you spend regardless of outcome. The majority of evaluation participants do not pass. Industry pass rates published by independent reviewers consistently fall in the 5%-15% range, and even passing traders frequently fail to maintain payout eligibility once funded. Treat evaluation fees as a cost of education, not an investment with expected value.

Counterparty risk

Prop firms in this segment of the industry vary substantially in regulatory status, capitalisation, and operational integrity. Some operate as broker-dealers under recognised regulators; others are unregulated or operate from jurisdictions with limited investor protection. Several high-profile firms have collapsed, frozen withdrawals, or unilaterally voided trader accounts in the recent past. When you fund a prop evaluation, you are extending counterparty credit to that firm. Research the firm's track record, regulatory disclosures, and dispute history before paying.

What "funded" actually means

A funded account at a retail prop firm is typically a simulated account whose performance the firm mirrors with its own capital. You are not actually trading the firm's money; you are trading a demo account, and the firm pays you a percentage of the demo P&L. This structure is legal and common, but it has implications: the firm has every incentive to invoke fine-print rule violations to deny payouts, and you have limited recourse if they do. Read the consistency rules, news-trading restrictions, holding-period requirements, and termination clauses of any firm you fund before you start the evaluation.

06Cryptocurrency risks

DBN provides live cryptocurrency price data (BTCUSD, ETHUSD, SOLUSD, XRPUSD) sourced from public Binance feeds for educational and simulation purposes. Cryptocurrency trading carries every risk associated with traditional financial trading plus a set of risks specific to the asset class.

• Extreme volatility. 10% intraday moves are routine in major coins. 30% moves are not unusual. Smaller-cap coins regularly move 50-90% in a single day.
• 24/7 markets. Crypto never closes. Major price moves frequently occur on weekends and holidays when many traders are unavailable to manage positions.
• Custody risk. If you self-custody, you bear the full risk of key loss, phishing, and malware. If you use an exchange, you bear the credit risk of that exchange. Multiple major exchanges have collapsed (FTX, Mt. Gox, QuadrigaCX, Celsius, BlockFi); customer funds in those collapses were partially or wholly lost.
• Smart contract and protocol risk. DeFi protocols can be exploited, oracles can be manipulated, and stablecoins can de-peg. UST/LUNA wiped out approximately $40 billion of holder capital in May 2022.
• Regulatory uncertainty. The legal status of crypto assets, exchanges, and derivatives varies by jurisdiction and is changing rapidly. Trading you initiate today may become restricted, taxable in unexpected ways, or illegal in your jurisdiction in the future.
• Manipulation. Crypto markets remain less regulated than equity or futures markets. Wash trading, spoofing, and pump-and-dump schemes are common, particularly in smaller assets.

If you trade crypto, size positions on the assumption that any individual asset can go to zero overnight. Diversification within crypto provides limited protection because the asset class is highly correlated, particularly during stress events.

07Forex & CFD risks

Foreign exchange and CFD trading are leveraged, decentralised, and largely opaque to retail participants. The risks compound in specific ways that are worth flagging individually.

• Spread widening. Brokers can widen spreads dramatically during news events, session opens, or low-liquidity periods. A position with a 5-pip stop loss can be stopped out by spread widening alone, before any actual price movement against it.
• Slippage on stops. Stop-loss orders are not guarantees. Stops are converted to market orders when triggered, and in a fast or gapped market they can fill far beyond the stop price.
• Off-exchange execution. Most retail forex and CFD trades execute against the broker as counterparty. The broker may be hedged or unhedged, may have a financial interest in your loss, and may operate under a regulator with limited consumer protection.
• Swap/financing charges. Holding leveraged forex or CFD positions overnight incurs financing costs that can erode small-edge strategies into unprofitability over time.
• Currency intervention. Central banks occasionally intervene unilaterally in their own currency markets. The Swiss National Bank's January 2015 abandonment of the EUR/CHF floor moved the pair more than 30% in minutes and bankrupted multiple retail brokers along with countless trader accounts.

08Data & technology risks

DBN is a web-based platform delivered over the public internet. Like all web platforms, it can experience outages, slowdowns, data inaccuracies, and bugs. We make best efforts to maintain uptime and accuracy; we cannot guarantee either.

• Price data. DBN uses live Binance public market data for major cryptocurrencies and synthetic price generators (seeded random walks with regime overrides) for forex, metals, and indices. The crypto feed is unfiltered exchange data; the synthetic feeds are not real prices and must not be used for any decision involving live capital. They are visually realistic for educational purposes only.
• Calculator output. All calculators (position size, risk, drawdown, Kelly, Sharpe, etc.) are reference implementations that compute what they claim to compute. They cannot account for your specific broker fees, slippage, swap rates, or tax situation. Treat their output as guidance, not as a final figure.
• Storage and persistence. Trade journals, settings, and progress are stored partly in your browser (localStorage) and partly server-side. Browser storage can be cleared, exported, or lost; server-side data is backed up but not guaranteed against catastrophic failure. Export your journal regularly if it has long-term value to you.
• Outages and maintenance. The platform may be unavailable during scheduled maintenance, unscheduled outages, or third-party service failures (Cloudflare, Stripe, Binance, broker APIs). Do not rely on DBN as the sole monitoring or execution path for any active position.
• Third-party integrations. Where DBN integrates with brokers, partner firms, or external services, the reliability and accuracy of those integrations are subject to those parties' systems and are outside our control.

09Behavioural & psychological risk

The most consistent finding across decades of research into retail trader performance is that behaviour, not strategy, accounts for the bulk of underperformance. Traders who could in principle be profitable lose money because they oversize, revenge-trade, abandon plans under stress, chase missed moves, or refuse to take valid stops. The DBN Decision Grade and Behavioural Scores exist to make these patterns visible and tractable, but visibility is not a cure.

Specific behavioural risks worth naming explicitly:

• Overconfidence. A few profitable trades can produce a sense of skill that has not been earned. Sample sizes below ~50 trades carry essentially no information about true edge.
• Loss aversion. Losses hurt approximately twice as much as equivalent gains feel good. This asymmetry consistently leads traders to cut winners early and let losers run — the exact opposite of optimal play.
• Recency bias. The last trade, the last news headline, and the last drawdown all feel more important than they statistically are. Traders who anchor on recent events frequently overadjust their behaviour.
• Sunk-cost reasoning. Losses already taken should not influence the next trade. Many traders find this impossible in practice and continue to risk capital trying to "get back to even" on a closed account.
• FOMO and revenge trading. The two most destructive emotional states in trading. The DBN platform actively monitors for revenge-trading patterns and applies coaching prompts; these prompts are easily ignored.
• Confirmation bias. Once an opinion is formed about a market, contradicting evidence tends to be filtered out. This compounds the cost of being wrong.

10Is trading right for you?

The following self-assessment is not a regulatory suitability test, but it captures the considerations any honest financial advisor would walk you through. Before risking capital in any market, you should be able to answer "yes" to all of these:

• The capital I plan to risk is genuinely discretionary — losing all of it would not affect my ability to pay rent, debts, dependants, or retirement.
• I have at least three months of living expenses in liquid savings, separate from any trading capital.
• I have read and understood the leverage and margin terms of the specific broker or firm I plan to fund.
• I understand that 70-85% of retail traders lose money over time, and I am not relying on positive outcomes from this activity to meet any obligation.
• I have a written trading plan, including position sizing rules, daily loss limits, and a defined exit criterion if my account drawdown exceeds a specific percentage.
• I have at least 100 paper or backtested trades on the strategy I intend to use, with documented performance.
• I am emotionally stable enough to take a loss without making impulsive decisions to recover it.
• I am not currently dealing with addiction, severe financial stress, severe relationship stress, or untreated mental health conditions that could impair my judgment.
• I have a tax plan for the gains and losses I may incur.
• I have someone in my life who knows I am trading and how much I am risking.

If you cannot truthfully say yes to all ten, address the gaps before risking real capital. Use DBN's paper trading, academy modules, and journaling tools to build the habits and evidence base you need.

11Past performance disclaimer

Any backtest result, historical trade chart, simulated equity curve, win rate, R-multiple, profit factor, Sharpe ratio, or other performance metric you encounter on the DBN platform — whether your own, another user's, or one published by DBN itself — is for informational purposes only. Past performance is not indicative of, and does not guarantee, future results.

Backtests are particularly susceptible to optimistic distortion. The most common sources are:

• Look-ahead bias. Using information not available at the time of the simulated trade.
• Survivorship bias. Testing on a universe of instruments that excludes those that delisted, defaulted, or collapsed.
• Curve fitting. Adjusting parameters until they fit the historical sample, with no out-of-sample validation.
• Slippage and fee omission. Treating execution as costless.
• Selection bias. Reporting only the strategies that worked from a portfolio that was tested.

Treat all backtest output as upper-bound, hypothetical, frictionless performance. Live execution will, on average, deliver worse results than the backtest suggests.

12Not investment advice

DriveByNumbers is an educational, decision-support, and simulation platform. Nothing produced by, hosted on, or generated through the platform is investment advice, financial advice, tax advice, legal advice, or a recommendation to buy, sell, or hold any financial instrument. This includes — without limitation:

• Lock verdicts (green/amber/red), Decision Grade scores, behavioural scores, and rating values
• Strategy outputs from the AI Strategy Engine, Strategy Builder, or Backtester
• Trade signals from the AI Trading Assistant
• Killzone alerts, session intelligence, and market scanner output
• Daily ICT markups, charts, and commentary
• Academy lesson content, white paper material, and forum discussions
• Calculator outputs of every kind
• Communications from DBN staff or representatives

You are solely responsible for your trading decisions. If you require personalised investment, tax, or legal advice, you must consult a qualified professional licensed in your jurisdiction.

13Tax considerations

Trading profits are taxable in essentially every jurisdiction. Trading losses may or may not be deductible depending on your jurisdiction, the instrument traded, your tax residency, and your status as a private investor or professional trader. The treatment of forex, CFDs, futures, and crypto varies substantially.

DBN provides reporting tools (CSV export, position-level history, daily P&L) for your convenience. These are not tax filings. They are a starting point you can hand to a qualified tax professional in your jurisdiction. Tax authorities expect accurate self-reporting of trading activity; failure to report or under-reporting can result in penalties, interest, and in some jurisdictions criminal liability.

Some specific considerations:

• Wash-sale rules in the United States may disallow loss claims if you re-enter substantially similar positions within 30 days.
• Capital gains tax rates frequently differ from income tax rates and depend on holding period.
• Crypto-to-crypto trades are generally taxable events, not just crypto-to-fiat.
• Prop firm payouts are typically classified as ordinary income, not capital gains.
• Spread bet wagers (in the UK) are taxed differently from CFDs on the same underlying.

Consult a tax professional before your first profitable year, not after.

14Regulatory & jurisdictional notes

Financial regulation varies dramatically by country. Specific instruments, leverage levels, and account features that are legal in one jurisdiction are restricted or prohibited in another. It is your responsibility to determine whether your participation in any market activity is legal and appropriate in your jurisdiction.

A non-exhaustive list of jurisdictional considerations:

• European Union (ESMA): Retail leverage capped at 30:1 on major forex pairs, 20:1 on minors and indices, 10:1 on commodities, 5:1 on individual equities, 2:1 on crypto. Negative balance protection is required. Binary options are banned for retail.
• United Kingdom (FCA): Similar leverage limits to ESMA. Crypto derivatives are banned for retail. Spread betting is permitted and tax-treated differently from CFDs.
• United States (CFTC, NFA, SEC, FINRA): Forex leverage capped at 50:1 on majors, 20:1 on minors. CFDs are largely prohibited for retail. Pattern day trader rule requires $25,000 minimum equity for accounts making four or more day trades in five business days.
• Australia (ASIC): Retail leverage limits broadly aligned with ESMA since 2021.
• Singapore (MAS): Retail leverage on forex 20:1, on indices/commodities 10:1.
• Other jurisdictions: Some jurisdictions (notably parts of the Middle East and Asia) have effectively no retail derivatives regulation. Trading is permitted but no consumer protection applies.

DriveByNumbers is provided as a global educational service. We do not solicit business in jurisdictions where doing so would require us to be registered as an investment adviser, broker-dealer, or similar regulated entity. If you reside in such a jurisdiction, you may use DBN as an educational and simulation tool only.

15Mental health & problem trading

Trading shares meaningful psychological similarities with gambling. Both involve uncertain outcomes, variable reinforcement schedules, the thrill of potential gain, and the pain of loss. Both can become compulsive. Problem trading is a real and recognised condition, and the same risk factors that predict gambling addiction also predict trading addiction.

Warning signs that trading may be becoming problematic for you:

• You trade larger than you intended, or hold positions longer than you intended, to recover losses.
• You trade money that is earmarked for essential expenses.
• You hide your trading activity from your partner, family, or friends.
• Your sleep, work performance, or relationships are suffering because of trading.
• You have tried to stop or reduce and have been unable to.
• You feel agitated, restless, or low when you are not trading or thinking about trading.
• You are borrowing or selling assets to fund trading.

If any of these apply to you, please stop trading and talk to someone. National helplines for problem gambling generally support problem trading as well, and the underlying treatment approaches are similar.

• United States: National Council on Problem Gambling, 1-800-GAMBLER
• United Kingdom: GamCare, 0808 8020 133
• Australia: Gambling Help Online, 1800 858 858
• EU: Local resources via the European Gaming & Betting Association

DBN's Lock and Decision Grade systems include behavioural monitoring intended to surface emerging patterns of compulsive or revenge-driven trading. These tools are coaching aids, not clinical diagnostics. If you suspect you have a problem, the appropriate first step is to stop trading and speak with a qualified human, not to consult a software tool.

16Limitation of DBN liability

To the maximum extent permitted by applicable law, DriveByNumbers, its directors, officers, employees, contractors, and affiliates accept no liability for any loss, cost, expense, or damage of any nature whatsoever arising from your use of the DBN platform or your participation in any trading activity. This includes — without limitation — direct losses, indirect losses, consequential losses, lost profits, lost opportunity, and emotional distress.

You acknowledge that:

• You alone make trading decisions and bear their consequences.
• DBN does not control any third-party broker, prop firm, exchange, or service provider you choose to use.
• DBN's tools, calculators, signals, scores, and content are provided "as is" with no warranty of accuracy, fitness for purpose, or uninterrupted availability.
• Any indemnification, dispute resolution, or limitation of liability provisions in our Terms of Service apply alongside this Risk Disclosure.

Nothing in this section excludes any liability that cannot lawfully be excluded, including liability for fraud or for personal injury caused by negligence.

17Cooling-off & account closure

You may cancel your DBN subscription at any time. Cancellation takes effect at the end of your current billing period, and you retain access to paid features until that date. Refunds for partial periods are not standard but may be granted at our discretion in cases of platform failure, billing error, or compelling personal circumstances. To request a refund or escalate a billing issue, contact billing@drivebynumbers.com.

You may delete your DBN account entirely from the Account page. Account deletion is irreversible and removes all data we hold about you, subject to legal retention requirements (typically tax records for 6-7 years depending on jurisdiction). Deleted journal entries, custom strategies, and rating history cannot be recovered. Export anything you wish to retain before deletion.

If at any point you feel unable to make sound trading decisions, the most useful action is to walk away from the screens for a fixed period — at least 24 hours, ideally a week or longer — and use that time to rest, talk to someone, and reassess. The market will still be there when you return. The capital you preserve by stepping back is worth more than any trade you might miss.

18Acknowledgement summary

By using the DBN platform, you confirm that you have read this Risk Disclosure in full and that you understand:

• Trading carries substantial risk of loss, up to and including 100% of your trading capital, and in some products beyond.
• Most retail traders lose money, regardless of methodology or platform.
• DBN is an educational and decision-support tool, not a financial adviser, not a broker, and not a guarantor of outcomes.
• Paper trading does not equate to live trading; results in one do not predict results in the other.
• Prop firm evaluations are paid challenges with low pass rates and counterparty risk.
• You are solely responsible for the legality, suitability, and tax consequences of your trading activity in your jurisdiction.
• You should seek independent professional advice for any decision involving your personal finances.
• If trading is harming your mental health, finances, or relationships, you should stop and seek support.

This disclosure will be updated quarterly or whenever material new risks emerge. The current version is always published at drivebynumbers.com/risk-disclosure.html. Material changes will be summarised in the platform changelog.