Currency Traders???
Discussion
Okay - I'm interested in investing with a boutique in NYC which seems to be generating some strong weekly returns, this has come about through a recommendation of a friend.
However before I go wading in I need some advice and I want to look at differnet companies and possibilities, maybe investing with someone based in the UK rather than US
Anyone involved with currency trading that might be able to help?
However before I go wading in I need some advice and I want to look at differnet companies and possibilities, maybe investing with someone based in the UK rather than US
Anyone involved with currency trading that might be able to help?
Investing in someone else's business is always risky. Investing in someone else's business that is based not only in another country but in another continent and then throwing in the unpredictability of foreign currency (not to mention international tax arrangements etc) would make this look like an EXTREMELY risky investment to me.
What form does your investment take?
A loan
Buying a shsare in the business?
Is their business a sole trader/partnership or incorporated?
What type of return are you expecting from your investment?
In what form would the return be paid to you - salary?, dividends?, interest on a loan?, a combination on some or all of these?
Will you want security on the investment?
Lots of things to consider - and I haven't even looked at currency fluctuations and tax.
What form does your investment take?
A loan
Buying a shsare in the business?
Is their business a sole trader/partnership or incorporated?
What type of return are you expecting from your investment?
In what form would the return be paid to you - salary?, dividends?, interest on a loan?, a combination on some or all of these?
Will you want security on the investment?
Lots of things to consider - and I haven't even looked at currency fluctuations and tax.
Eric Mc said:
So you are buying shares on a public stock exchange?
OMG - NO! FOREX is the Foreign Exchange market. Hence I was looking for advice/help specifically from any currency traders that may read PH.
Eric Mc said:
Have you been "tipped off" about an investment?
The US has very strong anti "Insider Trading" regulations.
What are you talking about? Please keep your insinuating remarks about illegal practices to yourself.
However, thank you for reminding me why soliciting for specific professional help on a public forum is largely waste of time.
Cheers
27tim
>> Edited by 27tim on Thursday 14th July 10:23
Sorry, I didn't want to insinuate anything and apologise if that is how it came across.
I do try to give people who raise questions "heads up" on problem areas that they may be aware of. If you were sitting with me in an office and we were discussing such matters I am sure you would not have assumed that I was accusing you of anything.
Let me rephrase the point I was trying to make then, namely that investing in a business which is owned, managed and run a long distance from where you can monitor what is going on is obviously going to be a riskier proposition from a similar business based locally to you. In addition to this, you will be less aware of the legal, tax and accounting matter pertaining to an overseas based operation than you would be for a UK one.
I largely agree with you that seeking professional advice on a public forum like this is not terribly satisfactory and, to be honest, I wouldn't expect that too many professionals would be wuilling to pass on sensitive and possibly lucrative advice freely over an open conduit.
By and large, however, I think my comments on such accounts and related matters are generally appreciated here on Pistonheads.
I do try to give people who raise questions "heads up" on problem areas that they may be aware of. If you were sitting with me in an office and we were discussing such matters I am sure you would not have assumed that I was accusing you of anything.
Let me rephrase the point I was trying to make then, namely that investing in a business which is owned, managed and run a long distance from where you can monitor what is going on is obviously going to be a riskier proposition from a similar business based locally to you. In addition to this, you will be less aware of the legal, tax and accounting matter pertaining to an overseas based operation than you would be for a UK one.
I largely agree with you that seeking professional advice on a public forum like this is not terribly satisfactory and, to be honest, I wouldn't expect that too many professionals would be wuilling to pass on sensitive and possibly lucrative advice freely over an open conduit.
By and large, however, I think my comments on such accounts and related matters are generally appreciated here on Pistonheads.
Be careful.
Forex is in no way regulated anyway, and most of the companies with amazing returns are shams.
If you really must do it this way, then just bear in mind, that if it is too good to be true, it probably is.
Anyone offering you over 40% return on your money per annum is probably talking crap.
Check the NFA (do a search for National Futures Association) for the firm (US).
In the UK check for companies registered under FSA.
Be very careful with parting with your money on these, as a lot of people get burnt.
I prefer to trade forex myself (looking at futures soon too, but liquidity worries so far put me off), and I've not come across anyone who has had good things to say about any company they have handed their money to for investment. That's not to say they don't exist, but I they seem rare. Finally, remember the old caveat "past performance is not necessarily indicative of future results" can be oh so very true.
Forex is in no way regulated anyway, and most of the companies with amazing returns are shams.
If you really must do it this way, then just bear in mind, that if it is too good to be true, it probably is.
Anyone offering you over 40% return on your money per annum is probably talking crap.
Check the NFA (do a search for National Futures Association) for the firm (US).
In the UK check for companies registered under FSA.
Be very careful with parting with your money on these, as a lot of people get burnt.
I prefer to trade forex myself (looking at futures soon too, but liquidity worries so far put me off), and I've not come across anyone who has had good things to say about any company they have handed their money to for investment. That's not to say they don't exist, but I they seem rare. Finally, remember the old caveat "past performance is not necessarily indicative of future results" can be oh so very true.
Just to clarify the relationship, they are an investment manager and you're handing over capital for them to manage, right?
Keep in mind that Forex is not an "investment" in the sense that ownership of a bond, share or deposit is. Investments finace economic activity and therefore tend to create wealth (e.g. interest payments, capital growth, dividends). Money on deposit guarantees you a return. Bond ownership on average pays you a risk premium on top of what you'd get from a deposit, and shares in turn pay you a slightly higher return above bonds. On average forex trading pays you nothing. It is a zero sum game and, worse still, if you are a small player (i.e. not a major bank) you have to trade through a broker who will be taking a fee one way or another.
Your investment managers therefore have to be able to consistently beat the odds if they are going to make money trading forex. That is a very tall order.
There are so many ways that you could structure a forex investment vehicle, that it isn't really possible to give any general opinions beyond saying, as with any investment, you need to assess the cost, risk and potential return. I'd also be very keen to know how stable the firm is and how your money is segregated from theirs .... e.g. if they go bust, does your investment get returned to you, or does it get used to pay off their creditors?
For the sake of comparisson, hedge funds usually charge a managment fee of 2% per annum of the capital being managed plus 20% of the profit generated. A rough and ready way of assessing a fund's balance between risk and reward is to take their performance figures from the last few years and divide it by the volatility of their funds. You do need to check how a fund is quoting its volatility, but you can use that simple ratio to make a basic comparisson between different types of funds.
Keep in mind that Forex is not an "investment" in the sense that ownership of a bond, share or deposit is. Investments finace economic activity and therefore tend to create wealth (e.g. interest payments, capital growth, dividends). Money on deposit guarantees you a return. Bond ownership on average pays you a risk premium on top of what you'd get from a deposit, and shares in turn pay you a slightly higher return above bonds. On average forex trading pays you nothing. It is a zero sum game and, worse still, if you are a small player (i.e. not a major bank) you have to trade through a broker who will be taking a fee one way or another.
Your investment managers therefore have to be able to consistently beat the odds if they are going to make money trading forex. That is a very tall order.
There are so many ways that you could structure a forex investment vehicle, that it isn't really possible to give any general opinions beyond saying, as with any investment, you need to assess the cost, risk and potential return. I'd also be very keen to know how stable the firm is and how your money is segregated from theirs .... e.g. if they go bust, does your investment get returned to you, or does it get used to pay off their creditors?
For the sake of comparisson, hedge funds usually charge a managment fee of 2% per annum of the capital being managed plus 20% of the profit generated. A rough and ready way of assessing a fund's balance between risk and reward is to take their performance figures from the last few years and divide it by the volatility of their funds. You do need to check how a fund is quoting its volatility, but you can use that simple ratio to make a basic comparisson between different types of funds.
27tim said:
Okay - I'm interested in investing with a boutique in NYC which seems to be generating some strong weekly returns
Have to laugh.... I thought you meant investing in a boutique; hair, nails etc! I thought that was rather an odd thing to go across the pond to invest in.... I'll go back under my pebble.
>> Edited by aceparts_com on Thursday 14th July 23:35
Ninja, ATG,
Thanks for taking the time to reply, I appreciate it.
I am trying to temper my greed with those very caveats about being too good to be true etc.
The company in question claims to be generating 60% annual returns for the last 2+yrs and a trading history for over 5yrs, I have looked at weekly trading reports of some friends that have very deep into a 6digit sum on acct with them and it all looks very promising. I know some pretty basic facts about their trading strategy and it all seems very plausible and risk adverse as do the guys running the show. The promote themselves as a small dynamic boutique.
However being the miserable, pessimistic chap that I am I'm tempted to think that some secretary is making the reports up from the Cayman Islands if you get what I mean. None of my friends have actually drawn back any of their initial capital as yet.
I checked on NFC and they don't appear to be listed, how prevalent is membership to the association would most reputable firms be listed for sure?
Are there any other avenues for checking them out on the 'net? Apart from their own website there appears to be no other info or pages linking to them on a basic google search.
Are consistent 60% returns totally unheard of in the market place? I’m totally new to FOREX and know very little about it which is dangerous thing and puts me in the position that I can’t ask any particularly pointed or accurate question to assess the validity of the claims. :-/
Anyways, as I said thanks for taking the time to reply.
Cheers
Tim
Thanks for taking the time to reply, I appreciate it.
I am trying to temper my greed with those very caveats about being too good to be true etc.
The company in question claims to be generating 60% annual returns for the last 2+yrs and a trading history for over 5yrs, I have looked at weekly trading reports of some friends that have very deep into a 6digit sum on acct with them and it all looks very promising. I know some pretty basic facts about their trading strategy and it all seems very plausible and risk adverse as do the guys running the show. The promote themselves as a small dynamic boutique.
However being the miserable, pessimistic chap that I am I'm tempted to think that some secretary is making the reports up from the Cayman Islands if you get what I mean. None of my friends have actually drawn back any of their initial capital as yet.
I checked on NFC and they don't appear to be listed, how prevalent is membership to the association would most reputable firms be listed for sure?
Are there any other avenues for checking them out on the 'net? Apart from their own website there appears to be no other info or pages linking to them on a basic google search.
Are consistent 60% returns totally unheard of in the market place? I’m totally new to FOREX and know very little about it which is dangerous thing and puts me in the position that I can’t ask any particularly pointed or accurate question to assess the validity of the claims. :-/
Anyways, as I said thanks for taking the time to reply.
Cheers
Tim
I have no idea how you can check out if the firm is legitimate other than by asking who their regulators are and then checking up on what that regulation actually entails.
It is quite possible to make 60% returns for a couple of years. Question is, was it just a fluke or is it sustainable and how much risk are they taking to generate that return?
The markets can take on patterns of behaviour that can be exploited if you spot them. Let's say whatever market you are trading moves up or down 2% every day. If you could anticipate all of that movement you could earn without any gearing ... 14000% return per year (2% compounded for 250 trading days). You certainly don't need to be able to anticipate all of the movement in the market to make a huge return.
Key thing is to see if the returns they earn are consistent. For a two year period, I'd say it was reasonable to look at their monthly returns. If they have hugely volatile returns (maybe plus or minus 20% from month to month) then 60% per annum could be explained entirely by good luck. If they grow consistently at 5% per month, then give me their phone number.
One thing to bear in mind is that the patterns that might be spotted and exploited can't be expected to last for ever. The market usually has a few big themes that tend to drive it for perhaps a few years. A trading strategy that has worked really well for a couple of years may simply stop working if the market's attention switches to something new.
It is quite possible to make 60% returns for a couple of years. Question is, was it just a fluke or is it sustainable and how much risk are they taking to generate that return?
The markets can take on patterns of behaviour that can be exploited if you spot them. Let's say whatever market you are trading moves up or down 2% every day. If you could anticipate all of that movement you could earn without any gearing ... 14000% return per year (2% compounded for 250 trading days). You certainly don't need to be able to anticipate all of the movement in the market to make a huge return.
Key thing is to see if the returns they earn are consistent. For a two year period, I'd say it was reasonable to look at their monthly returns. If they have hugely volatile returns (maybe plus or minus 20% from month to month) then 60% per annum could be explained entirely by good luck. If they grow consistently at 5% per month, then give me their phone number.
One thing to bear in mind is that the patterns that might be spotted and exploited can't be expected to last for ever. The market usually has a few big themes that tend to drive it for perhaps a few years. A trading strategy that has worked really well for a couple of years may simply stop working if the market's attention switches to something new.
Well, if you are so worried about their credibility, hop on a plane to NYC and visit them. Virgin flights are only about £300 return - a worthwhile expenditure if you are concerned about the company.
By the way, if you re-read you initial post there is very little to indicate that you are requesting forex advice - you mention investment & boutique, which is probably why Eric thought you were considering buying in to an actual trading business.
By the way, if you re-read you initial post there is very little to indicate that you are requesting forex advice - you mention investment & boutique, which is probably why Eric thought you were considering buying in to an actual trading business.
Gassing Station | Business | Top of Page | What's New | My Stuff