Trading and investing in crypto assets can lose money, including all of the capital you commit. Automation does not change that. This page explains where the risk comes from and what you can do about each part of it.
We would rather you read this page and decide not to proceed than skip it and be surprised later. Each section describes a risk in ordinary words, gives an example of how it can show up and suggests one thing you can do. None of it is a reason to be afraid of markets, but all of it is a reason to be informed.
General warning. Crypto assets are volatile, can fall sharply and quickly, and are generally not covered by CDIC or CIPF. Past results do not predict future results. Only use money you can afford to lose, and speak to an independent financial adviser if you are unsure whether this is right for you.
Eight kinds of risk
Each one has a plain explanation and a practical step. Together they are the reason we ask every client to speak to an account manager before depositing.
1. Market risk
Prices of crypto assets and other financial instruments can move sharply within minutes. A position that is profitable in the morning can show a loss by the afternoon, and a long run of small losses can add up to a large one. The algorithm tries to follow market patterns, but patterns that held yesterday may not hold tomorrow.
Leverage, where it is offered, magnifies both gains and losses, and a market can gap past the level at which a protective rule was meant to act. Even a well-diversified account can lose value when many assets fall together, which is common in crypto.
What to do: decide in advance how much loss you can accept and size your capital to match.
2. Liquidity risk
Liquidity is how easily an asset can be bought or sold at a fair price. In thin or fast markets, an order may fill only partly or at a worse price than expected, a difference known as slippage. This is most likely for smaller assets, at night, and during sudden news.
When many participants rush to sell at the same moment, buyers disappear and spreads widen. An order that looked cheap on screen can cost noticeably more by the time it is executed, and costs of this kind are not shown as a fee because they are a feature of the market.
What to do: prefer strategies that trade widely used assets, and expect that real fills can differ from displayed prices.
3. API and integrations
The platform talks to your exchange through an API key. Connection errors, wrong settings, a key that expires or a key with the wrong permissions can stop orders from being placed or cancelled as intended. A leaked key is also a security risk, because someone who holds it may be able to act in your exchange account.
Exchanges also change their interfaces without much notice, apply rate limits and sometimes switch features off during busy periods. A strategy depends on all of these working at the same time, so a small mismatch can have a visible effect.
What to do: use read and trade permissions only, never withdrawal, and check the connection status regularly.
4. Counterparty risk and custody
Your assets sit with third parties such as exchanges and payment providers, not with us. If one of them is hacked, suspends withdrawals, becomes insolvent or changes its rules, you could be delayed or lose access to funds. We do not control those organizations and cannot guarantee how they will behave.
Regulators in Canada and elsewhere treat crypto custody differently from bank deposits. If a platform fails, customers may rank behind other creditors, and recovery can take years or not happen at all.
What to do: choose established providers, avoid keeping more on an exchange than you need and spread your exposure.
5. Operational risk
Software has bugs, servers fail and connections drop. A technical fault in our systems, in the exchange or in your internet connection can delay an order, repeat an action or stop a strategy at a bad moment. We test and monitor the platform carefully, but no system is flawless.
Errors can also be human: a wrong setting, a mistyped amount or a misunderstood instruction. This is why onboarding is done on the phone and why the dashboard shows costs before you confirm a change.
What to do: check your reports regularly instead of assuming everything has worked.
6. Cybersecurity and phishing
Criminals target people with crypto and trading accounts through fake emails, cloned websites and phone calls. A stolen password or a 2FA code given away can lead to unauthorised access and loss of funds. Account protection is shared: we secure our side, and you secure your devices and credentials.
Attackers are patient. They may build trust over weeks, then ask for a small favour such as a code, a screenshot or remote access to your device. Treat any unexpected request as suspicious, whoever it appears to come from.
What to do: follow the security guidance and never share codes or keys.
7. Models and automation
Algorithms, bots and automated strategies are built on past data and rules. They can misread unusual conditions, react too slowly or too late and keep trading through a trend they do not understand. Protective mechanisms may pause trading in extreme volatility, but they do not prevent losses and cannot promise any outcome.
A model that performed well over one period may have simply been suited to those conditions. Market behaviour changes when regulations, interest rates or investor mood change, and an automated system will not know it has been wrong until the results show it.
What to do: treat automation as a tool you supervise, and ask your manager how each strategy behaves in stress.
8. Service availability
The platform may be unavailable for maintenance, upgrades, technical faults or reasons outside our control, such as a problem at a hosting provider. While it is unavailable you may not be able to view your account, change settings or withdraw.
Markets keep moving while the platform is unavailable, and open positions are not frozen. If you need to act urgently, contact your account manager, who can use other channels where possible.
What to do: do not rely on a single moment to act, and keep your account manager's contact details to hand.
Before you start
Four steps take ten minutes and make every later decision easier.