System Unavailability

System Unavailability

Use of Schwab's online trading systems.

Schwab has devoted several million dollars to developing, maintaining, and upgrading its technology systems. The result is a customer investing, research, and trading platform that is one of the most sophisticated in the financial services industry.

Schwab rigorously and regularly monitors its system capacity and plans for its future capacity needs. Nonetheless, as with any computer system, there is a risk that the system will be congested, experience technical difficulties, or be unavailable at a given time for one of many reasons, including reasons beyond Schwab's control. An unscheduled slowdown or system failure may result from many causes, including but not limited to your computer system, your Internet service provider, a third-party system in the transaction process, or due to system difficulties at Schwab. No one can guarantee complete reliability of a computer system under all circumstances.

When you open an account with Schwab, you agree to use alternate means to communicate with Schwab whenever necessary. If you are unable to execute a trade online, the risks to your portfolio can be significant. In the event of a system failure, you should take advantage of the other means available to you to contact Schwab in order to take action on your account. These include calling Schwab by Phone™ or TeleBroker®, or visiting one of our representatives at a local Schwab branch.

Educate yourself.

Before investing online, take advantage of the resources available on to educate yourself about investing in general, as well as investing online at Schwab. Buying and selling securities entails risks, and if you employ riskier trading strategies, like trading options or purchasing stocks on margin, it is even possible to lose more than your original investment. Before you decide to invest in the stock market, you should fully understand all of the risks that are involved, as well as the consequences if your investments drop in value.

Trade execution is not instantaneous.

When you enter an order online or with a representative, your order is sent to the market by Schwab for execution. Although execution of your order typically occurs only seconds after being sent to the market, sometimes orders can be delayed due to high volume, or stocks with very low liquidity. Prices can change very quickly, and even where the order is executed in seconds, you may not always receive the quoted price you last saw before placing your order. One way to minimize the risk of trades being executed at a price significantly higher than the last quote you received is to enter a limit order. A limit order allows you to set a maximum purchase price, or a minimum sale price for your order. With a limit order, your transaction will not be executed if the price at the time of execution falls outside of the boundaries you have set with your limit order.

Schwab provides investors with valuable information and resources to help you manage, control, and execute your investments. But with those resources comes an important responsibility to understand investing risks, how online investing works, and how to effectively manage your portfolio. Schwab will continue to provide you with the resources you want to strive for your investing goals and to be a successful investor.