Loss limits are designed to provide warnings to clients holding crypto that have seen significant losses. Each client will have their own unique loss limit based on answers to the in-app mandatory risk survey. This helps us understand your financial situation and your comfort with risk.
If your account approaches or exceeds your loss limit, we will notify you by email about your account’s performance. This is to help ensure that you are aware that there have been losses within your account. While we can’t give you investment advice, we want you to know how your account is performing, and to consider whether your crypto investments are still in line with your financial goals.
How are loss limits calculated?
Loss limits are unique to each individual account. They take into account several factors including:
- Net assets
- Prior crypto experience
- Prior investment experience
- Risk tolerance
When calculating losses to determine if you are approaching your loss limit, we use the following equation: Cumulative Lifetime Portfolio Gains/Losses(PnL) = Cumulative Realized Gains/Losses + Unrealized Gains/Losses
- Cumulative Realized Gains/Losses update when you sell or withdraw an asset
- Average Cost Basis for each crypto asset updates when your buy or deposit an asset
- Unrealized Gains/Losses are calculated daily based on Average Cost Basis.
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