Frequently Asked Questions
Q. I would like to join a managed account? How to join?
Great, please Click Here to follow the Client Process
Q. What is a managed forex account service?
You open and fund an account in your name with one of our prefered and highly regulated brokers. This is your account and Not ours - only you have access to the funds. Our role is to assist you with administering your account, and our team of professional traders place trades on your behalf. Only you may process external deposits and withdrawals to and from a bank account in your name. Unlike a hedge fund, we do not accept client capital, instead you have access to your account to monitor live performance and all dealings are transparent...ever wondered how much institutions make with your retirement funds? With our service every transaction is fully transparent. Our goal is to generate capital gains and to build long term relationships. For this service, we are rewarded by a share of the profits.
Q. What documentation do I need to open an account at a brokerage?
A valid Proof of Residence (not PO Box / Private Bag) and a copy of a Government Issued ID or Passport. Preferably scanned copies as these can be uploaded during the application. If additional information is required by the broker, you will receive an email requesting the information. Account opening guide is provided on request.
Q. What is a PAMM or MAM?
MAM = Multi Account Manager
PAMM = Percentage Allocation Management Module
In brief: It is a facility that is offered by brokerages that allows an authorized Trader to manage multiple clients’ accounts simultaneously without having any access to those funds, apart from just being able to trade them on behalf of the account holder.
In more detail: A PAMM or MAM account is both a trading account and a financial investment tool. On a PAMM Account, all trades are made by an authorized forex trader, the "Manager." Investors connect to a Manager's PAMM Account by opening Managed Accounts, which represent their share in the PAMM Account as a whole. As the PAMM Manager, we have our own Managed Account, representing our personal investment in the same PAMM Account. On a PAMM Account, the profits or losses are distributed proportionally to individual Managed Accounts, based on each investor's level of investment. By pairing investors with a seasoned Forex trader, the PAMM Account makes the Forex market more readily accessible, including to those who don't have the time or the experience to trade independently. As a reward for successful trading, the Manager receives remuneration from each investor's share of the profits.
Q. Minimum investment duration?
Fortunately there is no fixed term for the investment. You may withdraw your funds in full whenever you wish. Withdrawals from your brokerage account usually get processed within 48hrs.
Q. What is a Performance Fee?
A performance fee is a percentage from the Investor’s profit, which the Manager receives when profit is distributed between the Manager and the Investor at the end of each month.
High-Water Mark: The highest Net Asset Value (NAV) of an account to date is known as the "high water mark". If the NAV of an account declines, no performance fee will be payable to the investment manager. If the NAV subsequently increases back to the high water mark (but no higher), it would be objectionable for the investor to be charged a performance fee on that increase because the investor has not yet made any return on the investment. Therefore, to address this concern, a performance fee is only charged on increases in NAV Over the high water mark. (No profit = No Fee)
Please understand that for the VIP trading, we are not negotiable with the fee.
Performance Fee Example:
Month 1: You deposit $1000 and we make 10% or $100 net profit in month 1, then we are paid $20, which is a 20% performance (perf) fee, and you keep $80. balance is now $1080.
Month 2: Starting balance is $1080, but we lose $50, so your balance is now $1030 at month end and of course we don't get paid.
Month 3: In month 3 we make $100 profit and your balance is $1130, but then they have to pay us the perf fee, which is calculated as 20% of profit, but Profit = $1130 - $1080 (which is the equity peak when we were last paid out in month 2...so we don't use month 3 balance, we use month 2 as it is worse and is the last time we were paid) = $50, so per fee = 20% of $50 = $10, which results in an end of month balance of $1130 - $10 = $1120
Month 4: Starting balance is $1120, but you also deposit another $1000, so balance is now $1120+ $1000 = $2120. We make $200 profit that month and your balance is $2320, but then they pay us the perf fee at 20% of $200 = $40, so your end balance is $2320 - $40 = $2280
Month 5: You start by withdrawing $280 and your balance is now $2000. We generate $100 and are paid 20% of $100 = $20 for that month.
and so forth.
As you can see it is done fairly and in no way are we ever paid from your changes in balance - only on NEW profits based on the previous high water mark. Of course if you deposit it is just a deposit, Not profit, so not considered in the calculation. And if we have consecutive losing months then you only start paying a perf fee again once we have made back all losses and more. Plus some of our managed accounts offer you a promotional incentive, which means we only start the perf fee after your account has generated the promotional net profit...so in the above example, with a 10% promotion, we would not have received a fee at end of month one, instead only for the first time at end of month 3.
Q. Explain Broker Commissions?
Since we have institutional agreements with the brokers, on most of the managed accounts we receive "Raw" spreads / prices. Raw prices refers to low-cost with no mark-up. If the broker did not charge us a commission, then they would lose money and it serves us to use brokers that are asset rich. We do not increase the commission for our own compensation and therefore we do not "churn" accounts in order to benefit from high volumes. Commission is a normal and small broker transactional cost of trading and is encorporated in each trade's profit & loss.
Q. Explain your approach to Risk Management?
VIP trading:
- This style has an extremely high profit probability, so when a trade is opened it is 90%+ likely to be profitable in a very short period of time. There is no hold and hope. If we get it wrong, this is evident immediately and we exit without delay, so there is no time to allow for an equity drawdown.
- How much leverage we use depends on the probability of the trade and the liquidity available from the broker. The higher the pre-determined probability the higher the leverage.
- Stop loss is based on a percentage allowable loss for all positions. This can vary between 1% and 10%. 10% is reached every couple years. The worst peak to valley drawdown since 2009 on a client account was about 14%.
- Trading is infrequent and we may wait weeks for the right opportunites.
- Brokers are mostly FSA or FCA UK regulated. Therefore its similar to placing funds in a FSA regulated bank account, apart from the fact that we use it as margin in order to trade and generate profits.
Q. How secure are my funds with a FSA & FCA UK regulated and authorised broker?
Your funds are segregated from the broker's funds. In the unlikely event of liquidation the first 50,000 GBP is insured by the Financial Services Authority (FSA) and the Financial Services Compensation Scheme (FSCS) in UK. This is the most secure offering available. Full details on request.
Q. Why that broker, can you not manage at my broker?
We have been trading since 2005 and there are very few brokers that we haven't used and tested extensively. Our preferred brokers are carefully selected to ensure safety of ours and your funds. Along with funds security, we need the right trading conditions for optimum performance and VIP trading is the ultimate test of any broker. VIP trading has different requirements to the Portfolios and therefore the broker is different. Your choice of manager is much more important than geographical location, base currency or saving on the small cost of transfering to one of our brokers.
Q. What about managing accounts in other currencies?
The VIP trading account may be in any of the major currencies that the brokers offer, as we trade it separately from other accounts. Whereas the Portfolios are traded using a MAM facility. In order to be able to provide you with the best possible fee structure, we keep the number of MAMs to a minimum. We would consider another base currency if an Investor offers a substantial deposit to justify the additional expense of trading another MAM. To reiterate - your choice of manager is much more important than geographical location, base currency or saving on the small cost of transfering to another broker.
Q. May I contact you to keep up-to-date with the performance results?
Yes you may contact us at any time; however you will have access to your account and will be able to view the performance whevever you wish. You will also receive a monthly performance update, which is emailed to all Clients.
Q. How will I be able to monitor my managed account?
Depending on the broker and managed account option, you will receive an account number and password. Most brokers have a back-office where you will be able to download live statements, request withdrawals and deposit funds. In most cases we will setup a personal website link that will take you directly to a detailed statistics webpage that shows you all your trading account activity.
Q. What is your preferred method of contact?
Emails are usually responded to within 4 hours. We are online most of the time and you should get a very quick response during European Hours.
Q. Is your business registered with the FSA, FCA, NFA, CFTC, FSB etc?
No, we are an international business and therefore registering with any or all of them serves us no purpose. Every prospective Client around the world would like us to be registered with their local body, its just not possible to please everyone and not worth the bureaucracy. If that were the case we would rather not offer our services as we do well enough with just our own funds. Please understand that we are Not a fund, don't accept Client funds and don't offer financial advise, therefore we do not have to be registered. Instead we use highly regulated and asset rich brokers that provide you with the REAL funds security that you are after, and that many smaller regulatory bodies cannot compare with. By partnering with such brokers, we are automatically forced to comply with their regulatory requirements.
Q. Where is your office or where are you based?
We are traders, not administration staff. We trade and sleep in between. Our trading hours are determined by the market. Therefore our offices are in our homes. Very few professional traders travel to an office. Ours is an international business with Clients from many countries - it is not possible for us to please everyone by having an office in each country. We only charge a performance fee and not a manage fee, therefore we cannot justify the cost of a public office and the administration staff to run it.
Q. Address?
Our team members are located in various countries around the world. We are a global business. Our Clients and Traders are from all around the world and our Company is setup offshore as it best serves our business and provides huge tax and administrative incentives. Large investors should also consider an offshore corporate structure.
Q. Phone number?
We only provide a direct telephone number to our Clients with over $100,000 in deposits. If you would like a phone call, then please provide a telephone number and a time of day that is convenient for you and we will call asap. We prefer to communicate directly with Clients in order to make sure they receive accurate information, instead of hiring administration staff to pass it on. Providing a direct telephone number to our trading desk would disturb us during trading and sleeping hours and ultimately affect our performance and therefore our income. We are traders - we aren't interested in employing administration staff. If we are unable to respond to emails in a timely manner, then we will stop accepting Clients. Emailing is most efficient and allows us to respond to everyone in a timely manner. We hope you can understand our position in this regard.
Thank you for taking the time to read these FAQ. |
