Risk Disclosure Statement

KC Mastermind Pty Ltd Last Updated: January 15, 2026

Important Notice

PLEASE READ THIS RISK DISCLOSURE STATEMENT CAREFULLY BEFORE ENGAGING IN ANY TRADING ACTIVITY.

Trading securities, options, futures, and other financial instruments involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources, and other relevant circumstances.

BY USING THE EDUCATIONAL SERVICES PROVIDED BY KC MASTERMIND PTY LTD ("KC MASTERMIND"), YOU ACKNOWLEDGE THAT YOU HAVE READ, UNDERSTOOD, AND ACCEPTED THE RISKS DESCRIBED IN THIS DISCLOSURE.

1. General Trading Risks

1.1 Risk of Loss

Trading involves substantial risk of loss. You may lose all or more than your initial investment. Past performance is not indicative of future results. No trading system or methodology has ever been developed that can guarantee profits or prevent losses.

1.2 Leverage Risk

Many financial instruments involve leverage, which can magnify both gains and losses. Even small price movements can result in substantial losses exceeding your initial investment. You should not trade with money you cannot afford to lose.

1.3 Market Volatility

Financial markets are subject to rapid and substantial price fluctuations. Market volatility can result in significant losses in a short period, potentially exceeding your account balance and creating a debt obligation.

1.4 Liquidity Risk

Under certain market conditions, it may be difficult or impossible to liquidate a position quickly at a reasonable price. This can prevent you from limiting losses or realizing gains.

1.5 Systemic and Operational Risks

Technology Failures: Internet connectivity issues, platform outages, or technical malfunctions may prevent you from executing trades or managing positions

Data Delays: Price quotes and market data may be delayed, resulting in trades executed at unfavorable prices

Execution Risk: Orders may not be filled at desired prices or at all during periods of high volatility or low liquidity

2. Options Trading Risks

Options trading involves significant risk and is not suitable for all investors. The risks associated with options trading include, but are not limited to:

2.1 Short-Dated Options Risks

Short-dated options (options with expiration dates within days or weeks) present unique and amplified risks:

Accelerated Time Decay (Theta): Short-dated options lose value rapidly as expiration approaches, with time decay accelerating in the final days and hours before expiration. You can lose 100% of your investment even if the underlying security moves in your favor but not quickly enough.

Extreme Leverage: Short-dated options provide highly leveraged exposure to the underlying asset, meaning small price movements can result in disproportionately large percentage gains or losses.

Total Loss Potential: Options can expire worthless, resulting in a complete loss of the premium paid. This is especially common with short-dated options where there is limited time for the underlying security to move favorably.

Volatility Sensitivity: Short-dated options are extremely sensitive to changes in implied volatility. A decrease in volatility can cause substantial losses even if the underlying security moves in the anticipated direction.

Gap Risk: Overnight or weekend price gaps in the underlying security can cause dramatic losses, particularly for short option positions which may face unlimited loss potential.

Limited Time for Recovery: Unlike longer-dated options, short-dated options provide minimal opportunity for the underlying asset to recover from adverse price movements before expiration.

2.2 Complex Strategies

Options strategies (spreads, straddles, strangles, iron condors, etc.) involve multiple positions and can be complex. You should fully understand the mechanics, maximum profit/loss scenarios, and break-even points before entering any options strategy.

2.3 Assignment Risk

Option sellers face the risk of assignment, which may require you to buy or sell the underlying security at unfavorable prices, potentially resulting in substantial losses.

2.4 Early Exercise

American-style options can be exercised at any time before expiration, which may result in unexpected obligations to buy or sell the underlying security.

2.5 Margin Requirements

Selling options may require maintaining margin in your account. If your account falls below margin requirements, your broker may liquidate positions without notice, potentially locking in losses.

2.6 Expiration Risk

Options that are in-the-money at expiration may be automatically exercised, potentially resulting in unexpected stock positions and associated capital requirements.

3. Day Trading Risks

Day trading involves buying and selling securities within the same trading day with the goal of profiting from short-term price movements. Day trading presents specific risks:

3.1 Pattern Day Trader Rule (U.S. Markets)

In the United States, the Financial Industry Regulatory Authority (FINRA) requires traders who execute four or more day trades within five business days to maintain a minimum of $25,000 in their margin account. Falling below this threshold will result in restrictions on day trading activities.

3.2 Commission and Fee Impact

Frequent trading results in substantial commission costs, exchange fees, and other transaction costs. These costs can significantly erode profits or increase losses.

Example: A trader making 29 round-trip trades per day at $16 per trade would incur approximately $464 in daily commissions, or approximately $111,360 in annual commissions. This requires substantial profits just to break even.

3.3 Slippage

During periods of high volatility or low liquidity, the price at which your order is executed may differ significantly from the expected price (slippage), resulting in larger losses or smaller profits than anticipated.

3.4 Stress and Psychological Pressure

Day trading can be extremely stressful and emotionally demanding. Rapid decision-making under pressure can lead to poor judgment, impulsive trades, and significant losses.

3.5 Lack of Diversification

Day traders often concentrate positions in a small number of securities, increasing exposure to individual security risk and reducing diversification benefits.

4. Statistical Evidence of Trading Difficulty

Academic research and empirical data consistently demonstrate that the majority of traders, particularly day traders, do not achieve profitability. KC Mastermind provides the following research for your consideration:

4.1 University of California Study (2014)

In a research paper titled "Do Day Traders Rationally Learn About Their Ability?", professors from the University of California studied 3.7 billion trades from the Taiwan Stock Exchange between 1992-2006 and found:

Only 9.81% of day trading volume was generated by predictably profitable traders

These predictably profitable traders constitute less than 3% of all day traders on an average day

The vast majority of day traders lose money over time

Citation: Barber, Brad & Lee, Yong-Ill & Liu, Yu-Jane & Odean, Terrance. (2014). Do Day Traders Rationally Learn About Their Ability?. SSRN Electronic Journal. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2535636

4.2 University of Oxford and University College Dublin Study (2005)

In an article published in the Journal of Applied Finance titled "The Profitability of Active Stock Traders", professors found that out of 1,146 brokerage accounts day trading the U.S. markets between March 8, 2000 and June 13, 2000:

Only 50% were profitable

The average net profit among profitable traders was $16,619

The other 50% experienced losses

Citation: Garvey, Ryan and Murphy, Anthony, The Profitability of Active Stock Traders. Journal of Applied Finance, Vol. 15, No. 2, Fall/Winter 2005. Available at SSRN: https://ssrn.com/abstract=908615

4.3 University of Texas Study (2003)

In an article published in the Financial Analysts Journal titled "The Profitability of Day Traders", professors found that out of 334 brokerage accounts day trading the U.S. markets between February 1998 and October 1999:

Only 35% were profitable

Only 14% generated profits in excess of $10,000

The majority experienced losses or minimal gains

Citation: Douglas J. Jordan & J. David Diltz (2003) The Profitability of Day Traders, Financial Analysts Journal, 59:6, 85-94, DOI: https://www.tandfonline.com/doi/abs/10.2469/faj.v59.n6.2578

4.4 Conclusion

At a minimum, these studies indicate that 50% or more of aspiring day traders will not be profitable. This underscores that consistently making money trading stocks and options is exceptionally difficult and that most traders lose money.

5. Educational Services Limitations

5.1 No Guarantee of Results

KC Mastermind provides educational services only. We do not guarantee that you will achieve profits or any specific results from applying the strategies, techniques, or information taught in our programs.

5.2 Not Investment Advice

The content and information provided by KC Mastermind are for educational and informational purposes only and should not be construed as investment advice, trading recommendations, or offers to buy or sell securities.

5.3 No Personalized Advice

KC Mastermind does not provide personalized investment advice tailored to your individual financial situation, objectives, or risk tolerance. You are solely responsible for evaluating whether any trading strategy is appropriate for you.

5.4 Hypothetical and Simulated Performance

Educational materials may include hypothetical or simulated trading results. Hypothetical performance results have inherent limitations:

They are prepared with the benefit of hindsight

They do not involve financial risk

They may not account for the impact of factors such as lack of liquidity, slippage, and market conditions that affect actual trading

Actual results may differ significantly from hypothetical results

No representation is being made that any account will or is likely to achieve profits or losses similar to those shown in hypothetical examples.

5.5 Moderator and Instructor Results

Results achieved by instructors, moderators, or featured traders are not typical and should not be considered representative of what you can expect to achieve. These individuals are experienced traders who have developed their skills over many years. Becoming an experienced trader requires substantial hard work, dedication, and time.

Instructors and moderators may:

Trade with larger capital than you have available

Execute trades at different times than announced

Use strategies that may not be suitable for your risk tolerance

Have access to tools, resources, or market information not available to students

Post both real and hypothetical trade results for educational purposes

We do not track the typical results of our students and do not have access to student brokerage accounts. We make no representation regarding the performance of our students.

6. Regulatory and Compliance Considerations

6.1 Pattern Day Trading Rule (U.S.)

If you trade U.S. securities, be aware of FINRA Rule 2130, which requires pattern day traders to maintain a minimum equity of $25,000 in their margin account. Violating this rule will result in restrictions on your trading activity.

6.2 Small Account Limitations

Trading with accounts under $25,000 (in U.S. markets) or insufficient capital significantly increases risk and limits your ability to implement certain strategies effectively.

Attempting to trade with insufficient capital can lead to:

Inability to properly size positions

Forced liquidations due to margin requirements

Inability to withstand normal market fluctuations

Pattern day trader violations and account restrictions

6.3 Tax Consequences

Trading activities may have significant tax implications, including:

Short-term capital gains taxed at higher rates than long-term gains

Wash sale rules that may disallow loss deductions

Mark-to-market accounting requirements for certain traders

Reporting requirements for large numbers of transactions

You should consult with a qualified tax professional regarding the tax treatment of your trading activities.

6.4 Regulatory Oversight

Trading is subject to oversight by regulatory authorities, including:

United States: Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), Commodity Futures Trading Commission (CFTC)

Australia: Australian Securities and Investments Commission (ASIC)

Other Jurisdictions: Relevant securities regulatory authorities

You are responsible for understanding and complying with all applicable laws and regulations in your jurisdiction.

7. Risk Mitigation Recommendations

While no strategy can eliminate risk, the following practices may help manage risk:

7.1 Risk Capital Only

Only trade with money you can afford to lose. Do not trade with funds needed for living expenses, retirement, education, debt repayment, or other essential purposes.

7.2 Position Sizing

Limit the size of individual positions to a small percentage of your total capital (commonly 1-2% risk per trade) to avoid catastrophic losses from any single trade.

7.3 Stop-Loss Orders

Use stop-loss orders to limit potential losses, though be aware that stop orders do not guarantee execution at the stop price, particularly during periods of high volatility or market gaps.

7.4 Education and Practice

Thoroughly educate yourself about trading, markets, and specific instruments before risking real capital. Consider practicing with paper trading or simulators, while recognizing that simulated trading does not involve the emotional and psychological challenges of real trading.

7.5 Professional Guidance

Consult with licensed financial advisors, tax professionals, and legal counsel to ensure that trading is appropriate for your financial situation and that you understand the legal, tax, and regulatory implications.

7.6 Continuous Learning

Markets evolve, and strategies that worked in the past may not work in the future. Commit to ongoing education and adaptation.

7.7 Emotional Discipline

Develop and maintain emotional discipline. Avoid revenge trading, over-trading, and deviating from your trading plan due to fear or greed.

8. Specific Disclaimers

8.1 No Typical Results

The results experienced by any instructor, moderator, or student featured in testimonials are NOT typical. Your results will vary and likely differ materially based on numerous factors including:

Your trading experience and skill level

The amount of capital you have available

Your risk tolerance and emotional discipline

Market conditions during your trading period

The specific securities and strategies you employ

Your ability to execute trades efficiently

Time commitment and focus

8.2 No Track Record

KC Mastermind does not track the typical results of students. As an educational provider, we do not have access to student brokerage accounts or trading records. Therefore, we cannot substantiate any claims about typical student performance.

8.3 No Endorsement of Strategies

Discussion or demonstration of any trading strategy, security, or technique does not constitute an endorsement or recommendation by KC Mastermind. All strategies have risks, and suitability depends on individual circumstances.

8.4 Third-Party Tools and Data

Educational materials may reference third-party trading platforms, data providers, or tools. KC Mastermind does not control these third parties and is not responsible for their accuracy, reliability, or availability.

9. Acknowledgment and Acceptance

By using the educational services of KC Mastermind, you acknowledge and confirm that:

✓ You have read and understood this Risk Disclosure Statement in its entirety

✓ You understand that trading involves substantial risk of loss

✓ You understand that most traders, including most day traders, lose money

✓ You understand that results achieved by instructors and featured traders are not typical

✓ You understand that KC Mastermind provides education only, not investment advice

✓ You are trading solely at your own risk and with money you can afford to lose

✓ You accept full responsibility for your trading decisions and results

✓ You have consulted with financial, tax, and legal professionals as appropriate

✓ You release KC Mastermind from any liability for losses you may incur

IF YOU DO NOT ACCEPT THESE RISKS, DO NOT ENGAGE IN TRADING AND DO NOT USE KC MASTERMIND'S EDUCATIONAL SERVICES.

10. Contact Information

If you have any questions about this Risk Disclosure Statement, please contact:

KC Mastermind Pty Ltd

Email: [email protected]

Address: PO Box 1006, Sanctuary Cove QLD 4212, Australia

This Risk Disclosure Statement is an integral part of the Terms and Conditions of KC Mastermind. For complete terms, please review our full Terms and Conditions document.

Last Updated: January 15, 2026