Our business model is based on providing individuals with the opportunity to trade in the cryptocurrency markets, in exchange for fair and proportionate commissions. It is a well-known fact that trading successfully is difficult, and most speculative traders tend to lose. However, we do not typically benefit from trading losses that an unsuccessful client may experience.
Under most circumstances, our clients’ position’’ offset with each other. For example, if client A longs one Bitcoin contract and client B shorts one Bitcoin contract, both sides of the trade are covered. This means SnapEx is not exposed to the profit or loss of either client. Instead, we make our money via the commissions that each client pays to trade.
Sometimes, a large majority of clients will trade in one direction. When this happens, we will protect our exposure to risk by hedging in the underlying market or derivates markets. For example, if client A and client B both long Bitcoin contract, we may buy actual Bitcoin or long Bitcoin futures. This then covers the amount we will pay out if both clients are successful.
However, under certain circumstances, the price trends of future markets and SnapEx (weight average from current market) may not be perfectly correlated in short term. Consequently, the hedging strategy implemented by SnapEx may not be fully effective. Therefore, SnapEx will reserve certain percent of the revenue to establish a Risk Reserve Fund to ensure clients can always to realize their profits.
Under some rare and extreme market conditions, to ensure clients’ profitability and manage SnapEx risk exposure, SnapEx might temporarily suspend clients from opening new positions in a single direction until the risk is reduced to a safety level. The purpose is to protect clients’ investment income by always enable them to realize unearned profit upon liquidation.