BTC Inverse

⛔ Even when using low leverage, due to the risk of asset convexity, one has to contend with liquidation risk when markets react in irrational ways - e.g. a Black Swan.

🟢 Entering positions using derivatives contracts priced in USD while holding BTC as collateral carries convexity risk. While there is a small probability that any extra margin will be necessary while in an upward market trend, we always recommend keeping aside 100% of the balance being traded on a separate wallet in case the market goes against your trade, and out of our predefined safety net. A Margin Call will be sent soon before this extra margin is needed to push away risk when facing black swan types of events.

⛔ Bank Runs: As with the collapse of FTX, sudden withdrawals by clients can create extreme situations for any exchange with muddy custody practices
⛔ Thin order books: Smaller exchanges sometimes struggle with liquidity and trading volumes - this creates an inefficient marketplace
⛔ Personal Security: Hackers and scammers are getting more sophisticated. Personal operational Security (Opsec) is critical to the crypto industry

Mitigations:
🟢 Proof of reserves: we only work with exchanges that do end-to-end Merkle-Tree proof of reserves, 1:1 backing of customer funds and are highly regulated.
🟢 Order volume + liquidity: The exchanges we work with have exceptional liquidity and trading volume - this gives the trading system the best chances of executing buy and sell orders
🟢 Top security: all our exchanges employ bank grade security. We recommend you use 2FA on all your exchange accounts and email account. We use SHA-256 HMAC cryptographic encryption with your critical data.

⛔ Nascent Digital Assets: Crypto is new and highly volatile. It is after all, one of the reasons why we are trading these types of assets. The volatility is our friend :) That said, substantial protocols have been known to fail or encounter the heavy hand of legislation.
🟢 Trade only blue chip assets: Sequence only trades some of the top digital assets, with solid fundamentals and long trading histories. We believe in the asset class, however there is always the risk that the traded pair (BTC) goes to zero in USD terms.

⛔ Touching the algo: Rule one of Sequence is to not touch the trades...
🟢 Valid API connection: So long as we have a valid API connection do not touch the trades! The system is designed to be programmatic and therefore automated. If you want to trade yourself, then you must do this on another account. Our team is always tracking to make sure the connection is valid and will be in touch if there is any issue.