PARAGON FX

In consideration of Paragon FX Enterprises, LLC or any of its affiliates (“Paragon”) agreeing to accept orders for over-the-counter (“OTC”) foreign currency contracts on your you acknowledge, understand and agree that:

Trading Is Speculative and Involves a High Degree of Risk. Trading in OTC foreign currency contracts is speculative and involves a high degree of risk. In particular, because your foreign currency trading will be conducted by use of margin (which covers only a small percentage of the value of the foreign currency traded), price changes in OTC foreign currency contracts may result in significant losses, which losses may under some circumstances substantially exceed the funds you may transfer to Paragon as margin. Therefore, foreign currency contracts are appropriate only for persons that (a) understand and are willing to assume the economic, legal and other risks involved in such transactions, and (b) are financially able to withstand losses significantly in excess of their initial margin funds and any additional funds transferred to Paragon to maintain their positions.

Currency Risks. Foreign currencies represent the legal tender of one or more foreign nations and normally are not linked to any intrinsically valuable commodity (such as precious metals). Any transaction involving foreign currencies, including OTC foreign currency contracts, involves risks not common to investments denominated entirely in a person’s domestic currency. Such enhanced risks include (but are not limited to) the risks of political or economic policy changes in a foreign nation, which may substantially and permanently alter the conditions, terms, marketability or price of a foreign currency. The profit or loss in transactions in foreign currency-denominated contracts (whether they are traded in your own or another jurisdiction) will also be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.

Effect of Spreads and Interest Charges. Prices quoted to you by Paragon will include a spread, mark-up, or mark-down when compared to prices that Paragon may receive or expect to receive in covering its transactions with you through an executing broker chosen by Paragon in its sole discretion. While dealing spreads are common in the foreign exchange markets, the total impact of spreads may be significant in relation to the size of the margin you post and may make it more difficult for you to realize a profit from your trading. In addition, in connection with the automatic roll of spot foreign exchange transactions that you do not close out, Paragon may impose an interest charge. You should carefully consider the effect of such interest charges along with spreads, mark-ups, or mark-downs on your ability to profit from trading.

Risk Reducing Orders or Strategies. The placing of certain orders (e.g., ‘stop-loss’ or ‘stop-limit’ orders) that are intended to limit losses to certain amounts may not always be effective because market conditions or technological limitations may make it impossible to execute such orders.

Obligation to Maintain Required Margin. Paragon’s margin policies require you to maintain at all times such margins as Paragon, in its sole discretion, may from time to time request. Paragon will exercise considerable discretion in setting and collecting margin. Without limiting the foregoing, you understand that, if the amount of margin credited to your account falls below the maintenance margin level established by Paragon for trading on the Paragon platform (which will be specified as a percentage of your initial margin requirement in regard to each currency pair available for trading), Paragon will call for additional margin to be deposited in the Account. Unless otherwise specified by Paragon, you will be required meet the margin call no later than the close of business on the day such request is received. Further, if you fail to provide additional margin within the time required by Paragon, Paragon may liquidate any or all of your open positions and you will be responsible for all losses resulting from such liquidation.

Margin Deposits. All funds you transfer for margin will be held by Paragon in deposit with such executing brokers as Paragon may choose to use in its sole discretion. Any interest accruing on the funds held in such accounts, and any similar benefit, will be retained exclusively by Paragon.

One Click Trading. The electronic system that Paragon is making available for your use for trading foreign currencies (the “Paragon Platform”) provides for transmission of your order once you enter the notional amount and click “Buy/Sell” with no ability to then re-confirm or alter the terms of your order. There is no “second look” before transmission, and market orders cannot be cancelled. This feature may be different from other trading systems. By using the Paragon Platform, you agree to the one-click system and accept the risk of this one-click transmission feature.

Electronic Trading. Trading in OTC foreign currency contracts through the Paragon Platform may differ from trading on other electronic trading systems as well as from trading in a conventional or open market. Customers that trade on an electronic trading system are exposed to risks associated with the system including but not limited to the failure of hardware and software and system downtime, with respect to the Paragon Platform, an individual executing brokers system(s), and the communications infrastructure (including, without limitation, the Internet), connecting the Paragon Platform with Paragon’s customers and executing brokers. As a result of any system failure or other interruption, orders either may not be executed according to your instructions or may not be executed at all, or you may not be able to place or change orders or view your trading positions or market data. Paragon will not be liable for any such failure of hardware or software, system downtime or communications interruption. Further, Paragon does not warrant that it (or any executing broker) will be able to maintain a continuous and uninterrupted link with the Internet and will have no liability for any such failure. Some or all of the essential components of the Paragon Platform may be provided or supported by one or more third parties under contract with Paragon, and the operation of the Paragon Platform may be dependent on such third parties.

No Guarantee of Payment. Foreign currency trading with Paragon is not conducted on a regulated market or exchange. There is no clearinghouse and no guarantee by any other party of Paragon’s payment obligations to you. You must look only to Paragon for performance on all foreign currency contracts in your Account and for return of any margin. The insolvency of Paragon or a default by Paragon could cause you to lose the value of your Account and to suffer additional losses from open positions.

Paragon is not an Adviser or a Fiduciary. Paragon, in its sole discretion, may make available market information. Any such market information does not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell, any foreign currency contracts, nor is it intended to be advice or a recommendation of any kind. Each decision by you to enter into a foreign currency contract with Paragon and each decision whether a foreign currency contract is appropriate or proper for you is an independent decision by you. Paragon is not acting as an adviser or serving as a fiduciary to you. You should obtain advice from your tax, financial, legal, and other advisors and only make trading decisions on the basis of your own objectives, experiences, evaluation, and resources. You agree that Paragon has no fiduciary duty to you and no liability in connection therewith and is not responsible for any liabilities, claims, losses, damages, costs and expenses, including attorneys’ fees, incurred in connection with your use of market information provided by Paragon.

Account Managers. In the event that you grant trading authority or control over your Account to a third party (“Account Manager”), whether on a discretionary or non-discretionary basis, Paragon will in no way be responsible for reviewing your choice of such Account Manager or for making any recommendations with respect thereto. Paragon makes no representations or warranties concerning any Account Manager; Paragon will not be responsible for any loss to you occasioned by the actions of the Account Manager; and Paragon does not, by implication or otherwise, endorse or approve of the operating methods of the Account Manager. If you give the Account Manager authority to exercise any of your rights over your Account, you do so at your risk. Although you grant authority to Account Manager, you should be diligent and closely scrutinize all account activity.

Quoting Errors. Should a quoting error occur due to a mistype of a quote or a misquote given by electronic means (including responses to your requests), Paragon is not liable for any resulting errors in your Account and reserves the right to make necessary corrections or adjustments with respect to the Account involved. Any dispute arising from such quoting errors will be resolved on the basis of the fair market value, as determined by Paragon, in its sole discretion, of the relevant foreign currency at the time such error occurred. In cases where the prevailing market represents prices different from the prices Paragon has posted on our screen, Paragon will endeavor to execute trades on or close to the prevailing market prices, if available, or at prices that Paragon deems to be reasonable. These prices will be the prices that are ultimately reflected on the reports to you. This may or may not adversely affect your realized and unrealized gains and losses.

Slippage. Paragon aims to provide clients with the best pricing available and to get all orders filled at the requested rate. However, there are times when, due to an increase in volatility or volume, orders may be subject to slippage. This most commonly occurs during fundamental news events.

The volatility in the market may create conditions where orders are difficult to execute, since the price might be many pips away due to the extreme market movement. Although the trader is looking to execute at a certain price, the market may have moved significantly and the order would be filled at the next best price or the fair market value. Similarly, increased volume may also result in slippage if sufficient liquidity does not exist to execute all trades at the requested rate.

Once a stop is triggered, it becomes an At Best market order, and there is no guarantee it will be filled at any particular given price. Therefore, stop orders may incur slippage depending on market conditions.

Paragon has obtained close relationships with some of the most aggressive price providers and clearing brokers. Having multiple price providers and executing brokers is especially important in volatile markets, when one or two providers may post wide spreads, or simply avoid quoting any price at all. With so many major providers quoting prices to Paragon, Paragon is generally able to offer competitive spreads and fills, even during market-moving news events.

Reset Orders. Market volatility creates conditions that make it difficult to execute orders at the given price due to an extremely high volume of orders. By the time orders are able to be executed, the bid/ask price at which an executing broker is willing to take a position may be several pips away.

In cases where the liquidity pool is not large enough to fill a Market Range order, the order will be rejected. For Limit Entry or Limit Orders, the order would be rejected and reset until the order can be filled. Paragon offers the At Best order type for traders who wish to avoid this situation.

Widened Spreads. Paragon strives to provide traders with tight, competitive spreads; however, there may be instances when spreads widen beyond the typical spread. During news events spreads may widen substantially in order to compensate for the tremendous amount of volatility in the market. The widened spreads may only last a few seconds or as long as a few minutes. Paragon strongly encourages traders to utilize caution when trading around news events and always be aware of their account equity, usable margin and market exposure. Widened spreads can adversely affect all positions in an account.

Hanging Orders. Paragon provides its clients with No Dealing Desk execution. Paragon utilizes an STP (straight through processing system) whereby client orders are sent through to executing brokers and filled in a near-instantaneous fashion. During periods of high volume, hanging orders may occur. This is a condition where an order sits in the "orders" window after it has been executed. Generally, the order has been executed, but it is simply taking a few moments for it to be confirmed by the executing broker. During periods of heavy trading volume, it is possible that a queue of orders will form. That increase in incoming orders may sometimes create conditions where there is a delay from the executing broker in confirming certain orders. Depending upon the type of order placed, outcomes may vary. If this is a Market Range order and the order cannot be filled within the specified range, or if the delay has passed, the order will be rejected. If it is an At Best order, every attempt will be made to fill the order at the next best available price in the market. Depending upon the order type, the position may in fact have been executed, and the delay is simply due to heavy internet traffic.

Keep in mind that it is only necessary to enter any order once. Multiple entries for the same order may slow or lock your computer or inadvertently open unwanted positions.

Holiday/Weekend Execution.

Paragon Platform Hours

The quoted hours for the Paragon Platform are from Sunday [_____] PM (EST) through Friday [_____] PM (EST). The open or close times may be altered by the Paragon Platform because it relies on prices being offered by banks and financial institutions that provide liquidity for Paragon.

Outside of these hours, most of the major world banks and financial centers are closed. The lack of liquidity and volume during the weekend impedes execution and price delivery.

Prices Updating Before the Open

Shortly prior to the open, the Paragon Platform refreshes rates to reflect current market pricing in preparation for the open. At this time, trades and orders held over the weekend are subject to execution. Quotes during this time are not executable for new market orders. After the open, traders may place new trades, and cancel or modify existing orders.

Liquidity

Please be aware that during the first few hours after the open, the market tends to be thinner than usual until the Tokyo and London market sessions begin. These thinner markets may result in wider spreads, as there are fewer buyers and sellers. This is largely due to the fact that for the first few hours after the open, it is still the weekend in most of the world.

Gapping

Sunday's opening prices may or may not be the same as Friday's closing prices. At times, the prices on the Sunday open are near where the prices were on the Friday close. At other times, there may be a significant difference between Friday's close and Sunday's open. The market may gap if there is a significant news announcement or an economic event changing how the market views the value of a currency. Traders holding positions or orders over the weekend should be fully comfortable with the potential of the market to gap. One of the great things about trading at Paragon is that outside of announced major holidays, the trading hours routinely close only once a week on the weekends, which corresponds with the hours of major banks and financial institutions. In contrast, most stock exchanges close five times each week, and can gap significantly on each day's open.

Order Execution

Limit orders are often filled at the requested price. If the price requested is not available in the market, the order will not be filled. If the requested price of a stop order is reached at the open of the market on Sunday, the order will become a market order. Limit Entry (LE) orders are filled the same way as limit orders. Stop Entry (SE) orders are filled the same way as stops.

Weekend Risk

Traders who fear that the markets may be extremely volatile over the weekend, that gapping may occur, or that the potential for weekend risk is not appropriate for their trading style, may simply close out orders and positions ahead of the weekend.

Chart Pricing vs. Prices Displayed on the Platform

It is important to make a distinction between indicative prices (displayed on charts) and dealable prices (displayed on the Paragon Platform). Indicative quotes are those that offer an indication of the prices in the market, and the rate at which they are changing. Market watchers, such as S&P and eSignal, compile indicative quotes as a proxy for the market's actual movement. These prices are derived from a host of contributors such as banks and clearing firms, which may or may not reflect where Paragon's liquidity providers are making prices. Indicative prices are usually very close to dealing prices. Indicative quotes only give an indication of where the market is. Equity and futures traders dealing through a broker will see indicative quotes. Executable quotes ensure finer execution and thus a reduced transaction cost. Equity and futures traders are used to prices being the same at any given time, regardless of which firm they are trading through or which charting provider they are using and they often assume the same holds true for forex. Because the forex market is decentralized, meaning it lacks a single central exchange where all transactions are conducted, each executing broker may quote slightly different prices. Therefore, any prices displayed by a third party charting provider, which does not employ the executing broker's price feed, will reflect "indicative" prices and not necessarily actual "dealing" prices where trades can be executed.