Risk & Security
Sequence Wiki — General FAQs
Key terms on this page
What are the risks associated with using Sequence's algorithmic trading platform, and how can users mitigate them?
Investing in financial products, including our algorithmic trading system, inherently carries risks. Despite our algorithm's ability to withstand daily swings in the assets we trade, there is no guarantee of market price action. events or other unforeseeable circumstances can also result in losses.
It's crucial to keep in mind that past performance is not indicative of future results and investing in our system involves risks.
Each strategy has different risks. Please see the product page for a breakdown of each:
We recommend seeking advice from a financial advisor to determine if our service aligns with your investment goals and risk tolerance.
What happens if my exchange has an outage or breach?
If your exchange experiences an outage or security breach, it may temporarily impact the bot's ability to execute trades. Our signals rely on the exchange's functionality, so any disruption on their end is beyond our control.
Protocols:
In the event of a security threat, exchanges may update their API protocols or invalidate existing API keys as part of their safety measures. If this happens, we usually detect the issue and will request a new set of API keys from you to resume trading.
Important Considerations:
- Non-Custodial Approach: Sequence does not hold your assets. Your funds remain in your personal exchange wallet at all times.
- Security Measures: We recommend using strong passwords, enabling two-factor authentication (2FA), and monitoring your account regularly for any unusual activity.
- Exchange Support: In case of an outage or breach, please contact your exchange's customer support for assistance and the latest updates.
While we strive to optimize your trading experience, it's essential to ensure the security of your exchange account as part of your personal safety measures.
Are Sequence bots at risk of margin calls?
Spot strategies do not have margin calls, however, face the risk of a long duration trade.
strategy algorithmic trading risks:
⛔ Margin calls: Even when using low , margin calls can occur if the market reacts irrationally or unexpectedly, such as during a Black Swan event. If market conditions move beyond our predefined safety parameters, a margin call will be issued before additional margin is needed. For derivatives trading, we require 100% margin in either the base asset or USDT (preferred), to be held in a client accessible account. This helps mitigate risk when facing extreme market events.
⛔ Asset : Entering positions using derivatives contracts priced in USD while holding BTC as carries convexity risk. In simple terms, this means that as the price of BTC falls, so does the USD value of BTC. Meaning that while the value of 1 USD remains 1 USD, the price of BTC falls. This is why we prefer you to hold USD (USDT preferred) as collateral.
For derivatives, what does it mean when you recommend "always keeping 100% of the balance being traded on a separate wallet in case it's needed to push away risk during black swan events"?
The actively traded balance is the total whitelisted balance held on the account connected to the bot. The total funds in this account are at risk as they are used as "collateral" for the trades.
For example: if your bot is trading with 0.2 BTC then that is the full balance that the strategy is using at all times. This is the case, even if the trades that are placed look small. If the total balance of the account is 0.2 BTC, then you should keep 100% of that balance in a separate wallet. This would mean having 0.2 BTC in a separate account/wallet; or 0.2 BTC as the USDT amount (preferred). USDT is preferred due to the convexity issue of BTC described above.
This reserve acts as a backup in case of unexpected extreme market events ("black swan" events), giving you flexibility to respond or recover.
What happens if Sequence goes down?
Your funds are safe on your exchange. If our platform experiences downtime, trading simply pauses — no positions are opened or closed. Your existing positions remain on the exchange under your control. You can always trade manually or revoke API access at any time.
How do you protect my API keys?
API keys are encrypted at rest using industry-standard AES-256 encryption. We follow security best practices including regular audits, rate limiting, and monitoring. We also recommend enabling IP whitelisting on your exchange for an additional layer of protection.