Over the years investors have been brain washed into expecting low returns on their money. If we are told that if we get more than 10% pa we should be happy and delighted. These low returns are the product of a passive investment management process. There are some good fund managers out there but in general most are not actively moving your money around. The basic formula is to divide investors’ money into percentages as per the pie chart shown in the brochure. Their research shows that allocation by percentages into certain asset classes produce acceptable returns over a 10-year time frame. Other managers are more concerned with tracking the index for a particular asset class.
So, your money pretty much just sits there subject to the rise and fall of the markets. All the emphasis is on the front end – sales and marketing of their product. They don’t actively manage your investment by buying low and selling high. Occasionally they may hold a bit more in cash if they feel the market is due for a correction but overall it’s a fairly passive method of management. Because most of these managed funds are doing pretty much the same thing real choice is an illusion. There is very little available in terms of outperformance and the investor does not really have anywhere else to go. The passive model works very well for fund managers but doesn’t do much for you.
By contrast we are offering a real alternative. We actively trade the markets most days to generate better returns.
Fund managers can and do lose money. They sometimes take big risks with your funds and you don’t usually find out about this till after the event. See:
We aim to make 30% + per annum on a regular consistent basis. When we take a Buy or Sell position in a particular currency or commodity we do not expect to take a full loss and when we make a profit we expect to receive more than 1.4 times the amount we risked. We use highly technical and sophisticated money management processes involving trailing stop losses, moves to break even, partial exits etc. to maximize our gains and minimize our losses. On average we would expect to lose maybe 0.7 of the risk on the table. About 50% of our trades are losers, but because our winners are often more than twice as big as our losers the risk to reward ratio can provide handsome profits. In the table following we illustrate how this works harnessed with the power of simple compounding.
You will notice from the performance graph above that it is not all wine and roses. There are lots of times when your account goes backwards. We do not know too many investments that don’t have their ups and downs. You will see in the performance table above that you could expect your balance to drop by 11% in any 12-month period. This is called equity draw down. Whilst we maintain stringent controls and review our processes on a continual basis we are not overly concerned by short term drops in equity.
You may notice from the report above that is quite possible for us to have around 7 losses in a row. This number could be even bigger if we bought or sold two different currencies and they both went backwards at the same time. Normally, we expect that if one trading system is under performing the other is doing well, but it's important to keep in mind that things don't always go as smoothly as we would like. When it comes to losers, some highly profitable trading systems make 80% of their profits on only 20% of their trades, so it's important to maintain the right perspective; We don't need to win all the time to stay profitable.
With traditional fund managers we get a report on performance at the end of the year. With currency trading you get a report at the end of each day! Psychologically, if we go through a period where we are having a string of losses this type of daily reporting makes us more anxious than we need to be. Draw downs are inevitable but getting notified on a daily basis doesn't really help. Every type of investment goes negative at some time and we take that in our stride because it is not brought to our attention all the time. We suggest that you do not focus on the daily reports and review your investment performance on a monthly or quarterly basis.
With any type of investment one may encounter events that are somewhat cataclysmic and unforeseen in nature, vis a vis the Stock market crash of 87, Property market crashes, and the more recent Global financial crash. The impact of these events is not something we can factor into investment performance or give advice on, other than to suggest that you diversify your asset classes so that you are not over-exposed to currency investing. We find that most people are already heavily invested in property and shares, your home and super fund being prime examples. So, whatever amount you invest via this option it's unlikely to represent a significant portion of your total portfolio of investments.