Frequently Asked Questions

This seems like the right thing to do. We have the knowledge why not share it freely? We believe it will come back to us. We can save people money. Money’s important, not as important as good health, but still we can have a positive impact on peoples’ lives doing this, so we do. It fits in well with the mission of our company. I’m still a capitalist.

And my response, good info in here:

You do sound like you’ve been doing your homework - excellent questions. I like that you want exposure to FX but prefer to have somebody else trade for you - I feel the same way. As for Ponzi schemes - that’s why I prefer managed accounts. Then you can have the brokerage send your money back anytime, it isn’t locked up like a fund would be, and the trader can’t run off with your money, though there is risk of the brokerage running off. There is also transparency - you get statements every day and can log in to your account as well. I like PFG as they are big, next door to me, privately held, they take small initial accounts and I know the owners. They have over 500 million on deposit. You know that the managers are acutally trading as PFG isn’t going to give money away, and you see the trades and PnL each day. FXCM is also a big name FX brokerage with strong capitalization. There is always going to be risk on that side. One way to mitigate it is to keep some of your funds at your bank and use margin on the funds at the FCM. I’m looking for guys who will be continually consistent - but I agree with you - you need to stay on top of the game and keep adding new ones, pushing the ones that are good while they are good, and quick to cut the bad ones, and the ones that go bad. There are groups that make consistent money, but often they are closed to new investors or have very high minimums. I can answer questions for you and I will watch your accounts for you as well to make sure they are being traded properly and keep mistakes to a minimum. I’ve written up a booklet on what to look for, I’m putting the finishing touches on it, I’ll get it to you when I’ve finished it.

You open an account with a Forex broker, also known as an FCM.  Once the account is opened, you fund it.  Then you sign a Power of Attorney giving the trader(s) you choose the authority to trade your account for you.  Then you sit back and watch the trading over time.

You first open a trading account at a forex and/or futures firm.  Once your account is opened and funded, you give power of attorney to one or more money managers to trade your account(s) for you.   Then we watch and monitor the trading in your account(s).

You have full transparency meaning you can log in to your account any time and watch the trading in your account and monitor the risk if you'd like.  You also have full liquidity, menaing there is no lock-up period and you can have your money sent to you within 24 to 48 hours.  Also favorable tax treatment and many other advantages including potential to make money regardless of the stock market.

We prefer to start small with our own money and our client money as many of these programs in our experience don't work out.  The smaller you start, the less pain if you are wrong.  On that note, we also prefer and seek out managers with very low drawdowns relative to their returns.  If a manager has say a 5% max drawdown and a 20% annualized return, that is a 4:1 ratio, and we are interested.  If the manager runs a 20% max drawdown and does 10% per year, we don't think that is worth it.  We want to risk as little money as we can to make as much as possible.

We like managers to use low leverage, the lower the better.  To us this generally signals lower risk.

We are also partial to daytraders as it reduces overnight risk and you generally find out if the trader is profitable more quickly.

This is the million dollar question.  I wish I could say  I'd never been scammed but I can't.  One thing that is essential is to easily and willingly get account statements from the manager.  If they hem and haw that's a bad sign.  Another good one is audits though those are rare for smaller emerging traders.  A third item and maybe the best is referrals from people you know that have done well with them, or referrals they provide.  Decent though sometimes biased to high volume, high commission paying traders is employees at brokerages, they can sometimes vouch for a trader as they can see the statements.  Ultimately the only way to really know is to have your own money with a manager for a period of time and watch the trading to make sure they do as they say, use leverage as they stated, and actually make you money in a similar fashion to their track record.  A lot to this game, it isn't easy.  Please always feel free to contact us and ask us before investing in anybody - we have a list of known cheaters in the industry that we can share with you if you ask.  They like to sue us if we post it and we aren't in the fighting business.

What is the perfect manager?  If I could have everything I asked for in a manager, they would:

1. Have very low drawdowns relative to their annual performance.  3:1, 4:1, 6:1 or better.

2. Strict risk control.  Place exit stops every time they place a trade.  Do not add to losers.  Have daily or weekly risk control meetings with a trading partner or trading group.

3. Be a daytrader.  Hold positions a short time, be flat or near flat each evening and over the weekend.  Thus avoiding price shocks, global altercations, systemic risks.

4. Have an audit done on their track record by a reputable firm.

5. Have at least 18 months, the more the better, of solid returns.

6. Be experienced, 15, 20, 30 years in the markets.

7. Generous, easy to get along with managers and marketing folks that I enjoy dealing and working with and can trust.

8. Scalable system.

9. Low or very low use of leverage, the lower the better.  If you can make 15% using 2% margin or 50% margin - all else being equal I’ll take the 2% margin guy every time - that much less risk.

10. Leveragable - if I can put up 50k and have it traded as a million - terrific.  Again, less capital risk in terms of FCM risk. (i.e. Refco, Tradex)

11. Solid back office based within a large firm.

12. Small minimum for a test account.

 13. Simple, understandable trading methodology and edge that makes sense and seems sustainable.

14. Partial systematic, part discretionary so the traders can adapt to market changes.

15. Have good friends and a good reputation in the indstry.

16. Work with big names, large institutions.

17. Have allocations from big names.

18. Have a top-ranked trader on staff.

19. Over, or well over, 20 million under management

It costs nothing to work with us and take advantage of our expertise.  The managers and the brokerage firms pay us, and the rates are the same whether you go direct or through us.  Sometimes rates can actually be better through us.  Makes no difference, so may as well use our help to show you the managers making us money and the ones who have lost for us in the past.  Or not, up to you.