Features

In June of 2012, a proposal by the National Futures Association requiring stricter regulation of PAMM accounts went into effect, sending many money managers and CTAs scrambling for PAMM account alternatives.

A PAMM account, or Percentage Allocation Management Module, is simply a way for investment management firms and CTAs to manage individual investor accounts more efficiently. Multiple individual accounts are aggregated into one “Master Account,” which is traded by the money manager or CTA. It is operated as one pooled account and the P&L is divided equally among the investors based on their equity in in it.

In April of 2012, James Bibbings, a former NFA supervising auditor, wrote a very informative post discussing the implications of the pending proposal. Appearing on SeekingAlpha.com, the post explained how the NFA felt PAMM accounts too closely resembled Commodity Pools, without being registered as such.

The points they brought up described multiple instances of structural problems. Issues with liquidity and margin were posing risks to investors and contributing to questions about the fairness of the division of P&L among sub-accounts. In the proposal, the NFA recommended the restructuring of PAMM accounts as a means of eradicating any dangers they could cause participating investors.
Bibbings also notes that PAMM scrutiny has reached the state level. Pennsylvania state security regulators saw the PAMM allocation system as a mechanism that was generating a “synthetic securities product.” This view made PAMM accounts subject to many additional securities laws and regulations in Pennsylvania, and could do so in other states, too.

At the time of Bibbings post, things weren’t looking good for PAMM accounts as they fell under intense regulatory scrutiny. Two months later, after the proposal took effect, “traditional” PAMM accounts began disappearing to make their necessary compliance changes. Some companies have seized the opportunity to create PAMM alternatives and others offer consulting services to help existing PAMMs comply with the new rules.   These instruments play an integral role in providing CTA’s and Money Managers with the key benefit of PAMM accounts: centralized management.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Have you been paying attention to the changing markets?

Once upon a time all the talk was about how stocks and the dollar traded in opposing directions. The chart below with weekly bars shows how that was definitely the case until the latter part of 2011 (S&P 500 left scale, blue plot; USD Index right scale, black plot). Since then, though, with the exception of a few months earlier this year, the two markets have been trending higher roughly in tandem.

That’s a bit of an illusion, though.

You see, the USD Index is very heavily weighted toward the euro. That means it trades very close to how EUR/USD trades. As a result, it doesn’t always provide a comprehensive view the way we’d normally expect from an index.

Here’s something a bit more representative. It’s the same weekly chart, but swaps out the USD Index and replaces it with AUD/USD. Here you can see a VERY close correlation between the two markets.

So why the difference?

Well, AUD/USD is a good proxy for the so-called commodity currencies. Other commodity-oriented pairs are NZD/USD, USD/CAD, and many of the emerging market pairs like USD/MXN and USD/BRL. These are economically sensitive currencies, so they have a strong link to the stock market. Thus the strong correlation.

The euro, on the other hand, has all sorts of stuff going on which influences its exchange rate. It’s not just a function of economic growth but also of monetary policy and general confidence. The same can be said about both the yen and the pound. Further, since the Swiss National Bank effectively has the franc pegged to the euro (it’s really a floor on EUR/CHF, but is acting like a peg), the CHF is basically trading the same as the EUR.

What this all means is that we can no longer just look at “the dollar” and its relationship to stocks, commodities, and interest rates. We have to account for the variance in the performance of different currencies depending on the influencing factors if our analysis can have any validity. We may get back to the point where EUR/USD and the S&P 500 close correlate as they have done in the past, but for now we need to focus on the likes of AUD/USD and USD/CAD in our inter-market analysis of stocks, commodities, and the greenback.

The prospect of having an investment industry genius strategically (and often aggressively) managing your asset allocations in an attempt to kill risk and crank out returns can be alluring. Add to that the current upsets throughout the global economy, and despite their stigmatic volatility, hedge funds are looking pretty tempting.

Unfortunately for many retail investors, the restrictions that determine who can access a hedge fund don't leave much in terms of acceptance. In order to invest in these managed funds, one must either be an accredited investor with $1 million plus in liquid assets and a $200,000+/year paycheck, or a qualified purchaser, who owns at least $5 million in investments already. This clearly narrows the investor diversity scope down a bit.

But, the shell of the hedge fund industry looks like it’s finally starting to crack. Recent findings of financial research firm Cerfulli Associates published in an InvestmentNews article last week demonstrated that money managers expect their allocations into alternative investments to increase by at least 50% over the next three years. Investors and financial advisors also have a growing desire to increase alternative investments to negate market downturns and create a divergence from the stock and bond market.

But what does this have to do with making the elusive world of hedge funds more mainstream? It seems the ripples caused by an overall increase in demand for alternative investments have reached the mutual fund industry in the form of something known as ‘alternative mutual funds’.

Funds of this sort fall into alternative sectors such as long-short equity (one of the more popular), currencies, precious metals, and commodities. Taking it to the next level, alternative mutual funds twisted and evolved a bit further into something very similar, known as hedge-like mutual funds (the two names are often even interchanged.) These funds have the potential to hedge risk and generate stronger returns using some of the same strategies and tools that hedge fund managers use.

The most attractive characteristic of investing in a hedge-like mutual fund is that now, average-income investors can access the advantages of hedge fund investing previously available only to those qualified to invest in a hedge fund. Because the SEC regulates them, hedge-like mutual funds preserve some amount of the conservatism and transparency that is demonstrated within traditional mutual funds. Unfortunately, this can also impact these funds negatively in that it restricts their flexibility and requires a greater level of liquidity.

Though these crossbreed mutual funds aren’t anything new and earth shattering, Cerulli predicts that within the next five years, their presence will increase to the point of comprising 10 percent of mutual fund assets - a 245+ percent surge. The fueling of their growth really comes down to one thing: education. Money managers who strive to educate financial advisers on their investment products are the ones seeing positive results. This is due simply to the fact that many advisers are not yet familiar with all of their options in alternatives available to them. And we all know how easy it is to fear the unknown.

The theme of taking an investment that was once unavailable to traditional investors and making it available to them is common across the alternative investing landscape. Hedge-like mutual funds have successfully done what Currensee is striving to accomplish by carrying out this theme. Just the way hedge fund management, tools, and strategies were only available to high net-worth investors at one time, not long ago the world currency market experienced the same inaccessibility. However, with the emergence of various types of trade replication software and autotrading, even those with no prior knowledge of currency trading can allocate a portion of their investments to this type of alternative.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Key Man insurance. Morbid, but quite necessary; especially when it comes to hedge funds.

In a press release published Monday by risk management and insurance advisory firm SKCG, an arising issue in the hedge fund industry was confronted: Over $600 billion of assets are currently allocated into hedge funds whose managers will cross the 60+ line within the next decade. Basically, though they may seem immortal, illustrious hedge fund managers are still in fact perishable.

David Parker, President of the employee benefits division at White Plains, NY SKCG explains how the uniqueness of hedge fund products can be seen in that the positive returns generated are usually a result of its manager’s intelligence and skill. In the event of this ‘key man’ passing away, a disorderly company dissolution is often just a few steps behind.

The biggest factor in the recent surge of key man insurance popularity is the appeal it has to investors. While conducting their due diligence, an investor seeing that a hedge fund manager has insurance of this kind will inevitably work in the managers favor. If something does happen to them, the investor will be left to deal with an unmanaged fund and all the complexities that accompany it.  Things like unwinding illiquid investments while maintaining needed cash flows are all realities that need to be considered, and key man insurance can come in clutch in this situation.

A recent report by KPGM and the Alternative investment Management Association entitled The Evolution of an Industry, demonstrates how the hedge fund sphere is experiencing an increase in demand from institutional investors calling for more transparency. After conducting 150 interviews with hedge fund management firms world wide, the report gathered that over half of their AUM come from institutional investors. The report also states that the amount of time managers spend handling due diligence questions from institutional investors has doubled since 2008.

With this strong of an influx in institutional investor allocations, complying with their demands would definitely be in a hedge fund manager’s best interest. So having one more requirement that they’re able to check off an investor’s due-dil list could mean the difference between getting a new sizeable allocation and not.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

This month, we were very excited to learn that Currensee would be featured in the magazine Alternative Latin Investor. This bimonthly publication covers the alternative investing industry in the Latin American region. The Latin American (LatAm) markets are among the fastest growing areas for the industry globally.

What was most interesting about the piece was the perspective put on Currensee, as it was being observed through the eyes of the LatAm investment industry.

Titled “Currensee: The Next Step in Forex Trading,” the article began by explaining a few aspects of foreign currency trading that are alluring to the LatAm investing industry. Characteristics like the massive size and liquidity of the world currency market, the speed and flexibility in which transactions can be executed, and being aware of the potential to generate returns during times of volatility are all attracting LatAm investors to Forex.

The ALI’s article discusses two aspects of this program have been particularly appealing to LatAm investors: transparency and diversification.

Because Currensee began as a social network for Forex traders to collaborate, communication has always been an integral component of how Currensee operates. Though today the focus has shifted more towards the Trade Leaders program, communication is still there and it equates to a high level of transparency.

“What’s unique is that our customers can give one another permission to view their actual trading activity and performance… There’s a level of transparency beyond any alternative investment I know of,” says Currensee CEO Dave Lemont.

LatAm investors are also drawn to the program’s ability to achieve “double diversification.” What this means is that as an investor in the Trade Leaders Investment Program, investors benefit from asset class diversification in the Forex market as well as diversification in their individual accounts by choosing from a variety of Trade Leaders. This new method of diversifying is an exciting development for the world of investing.

The article drives home the points around diversification for all investors and the proof is in the numbers – the fact that from 2000-2010, the S&P 500 has dropped a cumulative 3.7%. That means if you’re one of the many who had been adhering strictly to the general 60% stocks/40% bonds rule of thumb, you ultimately lost out.

Lemont says: “The stock market is manipulated by big players and algorithmic traders on a daily basis. The foreign currency market is so much bigger: US$4 trillion a day, with 24-hour trading. We’re not going to get together and move the euro today. But we could get together and move the price of a small-cap stock.”

So although collaborating and trying to move the euro is not likely something investors can achieve, keeping a diversified portfolio is. Keep cool and keep it diversified.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

After more than a decade of poor returns, the print media has turned decidedly bearish on the stock market.  The front page of USA Today on May 7 for example, contained a center column with the gloomy headline, “Invest in stocks? FORGET ABOUT IT.”

The column’s opening left the reader under no illusion as to its downbeat view on equity investing.  It read, “On Main Street these days, investing in the stock market is about as popular as watching a scary movie on a 12-inch black-and-white TV.  Wall Street’s long-running story about how stocks are the best way to build wealth seems tired, dated, and less believable to many individual investors.”

USA Today is not alone in its skeptical views on the merits of equity investing, as similarly-themed pieces have featured across the entire spectrum of the print media, including the Financial Times.  Not to worry, say the bull market cheerleaders, who believe that such commentary is an important contrary indicator that could well spell better times for equity investors in the months and years ahead.

The bullish interpretation appears to stem from the infamous cover story, entitled, “The Death of Equities,” which featured in Business Week on August 13, 1979, and concluded with the lines, “Today, the old attitude of buying solid stocks as a cornerstone for one’s life savings and retirement has simply disappeared. Says a young U.S. executive: Have you been to an American stockholders’ meeting lately? They're all old fogies. The stock market is just not where the action's at.”

According to the uber-bulls, the article’s publication coincided with an important inflection point in the equity market’s fortunes.  They say that it marked the end of a prolonged period of poor stock market returns that began in the mid- to late-1960s, and the birth of an extended upward trend in the major market averages that persisted until the summer of 2000.

The perennial optimists are undoubtedly correct in their assertion that the negative opinions expressed in newspaper stories, both in the late-1970s and now, are remarkably similar.  However, the ultimate conclusion that this is an unequivocal bullish development is premised on myth and wishful thinking rather than sound analysis; the bullish interpretation is simply not supported by historical fact.

Turn back the clock to August 13, 1979 and the S&P 500 closed at 107, a level it first reached more than a decade earlier in November 1968.  Adjusted for inflation, the market average’s performance was far more disturbing with the price index giving up all the capital gains generated since the summer of 1955 – a dismal run that pushed valuations to generational lows of just eight times trend earnings.

Despite the compelling valuation, equity investors were still not out of the woods, as the appointment of Paul Volcker to the helm of the Federal Reserve one week prior to the article’s publication, was accompanied by a radical change in monetary policy that was designed to bring an end to the era’s runaway inflation.  The new direction for Fed policy was issued Saturday evening, October 6, 1979, when the discount rate was raised by a full percentage point to twelve per cent, and other special measures were implemented to rein in the money supply.

The Volcker Fed’s appropriately-named ‘Saturday Night Massacre’ triggered an immediate response from financial markets; the major stock market averages registered a six percentage point decline in the trading week that followed, while the yield offered on ten-year Treasuries jumped above ten per cent for the first time.  Further weakness was to follow as the economy slid into recession, and stock prices continued their descent until the spring of 1980.

The ‘Saturday Night Massacre’ was only the beginning of the six-foot, seven-inch Fed chairman’s anti-inflation crusade.  Following a brief lull during the 1980 downturn, Volcker began to tighten interest rates even more once that year’s presidential election was over.  Ten-year yields soared to more than fifteen per cent during the autumn of 1981, while stock prices entered a steep decline, as the economy suffered its deepest recession since the 1930s.

Almost three years after the publication of Business Week’s article and the stock market finally hit bottom on August 12, 1982.  In the intervening years, investors in the S&P 500 appeared to suffer only a relatively modest decline, as the index dropped from 107 to 102.  However, the elevated inflation rates at the time meant that the erosion of purchasing power was far more serious.  Indeed, the capital loss in real terms approached thirty per cent as the inflation-adjusted price index re-visited levels first seen more than eight decades earlier during the spring of 1901.

Uber bullish investment strategists are salivating over the prospects of solid multi-year stock market gains following the publication of several articles in the print media that are eerily similar to Business Week’s “Death of Equities” in 1979.  However, the positive spin demonstrates not only a complete lack of knowledge of the period in question, but also fails to mention that the price multiple on trend earnings is more than ten points higher today.

Should investors act on the advice of such perennial optimists?  FORGET ABOUT IT.

 

www.charliefell.com

 

 

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Unless you’ve been comatose for the past week, it's likely news of the infamous Smith/Goldman love letter has permeated your conscious in some way or another. If, however, you have been out of service and missed out on all the excitement, here’s a quick recapitulation of the recent drama:

Greg Smith, former London-based executive director of Goldman Sachs US equity derivatives business, decided this past Wednesday he’d just about had it with the company. So, he did what any employee with pent up negative emotion would do and… went out with a bang. Upon resigning,  Smith composed one heck of a “tell ‘em how you really feel” letter that was published op-ed in the New York times. In it, he expressed how he felt the culture of the firm had grown increasingly “toxic” since his early days there.

After carrying on in great detail about how Goldman couldn’t care less for the well being of their clients, he mentions a few times the crippling effect this environment is likely having on the younger employees working at the firm. This got me thinking about a different aspect of the most recent Goldman media storm aftermath: what about those individuals at the organization who are working hard to conduct genuine business?

What about the people there who worked their tails off to hold a position at one of the worlds most illustrious investment banks, and continue to do so every day? Contrary to popular belief, these types do exist within the Goldman culture and they truly do care about their clients. Each day, they make advising them on how to manage money in a way that will help their future, as well as the future of their families, a priority. To them, this is a truly fulfilling career.

Now, after another Goldman media mess, I honestly feel for the good-at-heart employees that are left to deal with the wrath of nasty public scrutiny and defend a career they’ve worked hard to attain. It’s kind of bitter sweet to see this once highly revered institution who’s very name evoked thoughts of prestige and integrity, turn into something quite different thanks to a few bad decisions made by a few certain people.

It’s especially unfortunate for the junior analysts Smith references throughout his piece who’s most common question about derivatives is “how much did we make off that client?” as they observe those higher-ups discuss them as apathetically as they do.

Hopefully one day the recent college graduates who find themselves fortunate enough to successfully fight their way through the grueling interviews and land themselves a position at the firm, can once again be proud to say “I work at Goldman Sachs.”

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

This past Wednesday, London based Goldman Sachs Executive Director Greg Smith stepped away from his 12 year relationship with the firm. Upon his departure, Smith composed a very personal and revealing resignation letter which was published Op-ed in the New York Times. In it, Smith expresses how deeply disheartened he’s grown with the direction the company’s carried itself throughout the years; particularly in the manner it’s clients are being treated.

“I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief,” Smith says in his letter.

In fact, it was this drastic change in Goldman’s culture that prompted him to sever ties to the establishment that gave him his start. When Smith first began as a summer intern while attending Stanford, the company’s morals centered around a completely different ideal: putting the interest and well being of the client before all else.

“It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients' trust for 143 years,” reflects Smith.

Today, he observes that not a trace of that culture exists in the firms current environment. A few key realizations culminated Smith’s opinions on Goldman, which essentially led him to his final decision. One of these revelations came when he reached the point where he could no longer look students in the eye and honestly tell them what a great place it was to work.

The next was when he watched the facet of Goldman advising that he was once proud to embody – directing clients in a way most beneficial to them – reach its untimely demise. Smith explains how the notion of counseling clients in such a way, even if it meant making less money for the firm, was quickly declining in popularity.

His final thought on the company revisits in depth the focal point of his piece, which is of course the former executive directors dismay with the way clients are treated.

“I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It's purely about how we can make the most possible money off of them,” Smith states.

He goes on to explain the way clients are currently regarded amongst the company’s inside culture and compares it to how it was when he began. During this time, Goldman advisers made it their job to get to know their clients, determine how they defined success, and work to help them achieve it.

One of Smith’s lines says it best: “If clients don't trust you they will eventually stop doing business with you. It doesn't matter how smart you are.”

This proves true in any business and Goldman Sachs apparently is no exception. Perhaps Smiths letter will contribute in some way to restoring the culture of one of the worlds leading investment banks back to what it once was.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

If you’re anything like me, you like to be in control. Maybe it’s my type A personality. Maybe it’s because I'm a middle child. Maybe it's my background in finance. But, I like to be in control – especially when it comes to my investments. The challenge with many of the financial instruments we invest in, such as mutual funds, ETFs, managed accounts and hedge funds, is that we have to hand over complete control to someone else – a money manager, a portfolio manager – someone else calls all the shots.

Well, I’m happy to tell you about a pretty cool new feature set that we’re releasing to investors in the Trade Leaders program. As you probably know, the Trade Leaders program is different because it’s built to help investors achieve success and profitability in the foreign exchange market – all while giving them complete transparency and control. Here’s the scoop on the new feature set we call “Advanced Controls.”

Today, investors in the program have the ability to control their Trade Leaders portfolio by easily changing, deleting and modifying allocations by Trade Leader. So, at any time if an investor decides they don’t want to follow a particular Trade Leader, they can end the relationship and we automatically close any positions that Trade Leader had open for the investor. Likewise, if an investor wanted to change an allocation in a particular Trade Leader, say, from 30% to 50%, they can do that as well in the click of a button.

The Advanced Controls features take allocation to another level and give the investor the ability to control leverage and drawdown. Don’t want to bother with adjusting these levers? No worries. You don’t have to make any changes. These controls are for those active investors looking for more of a hands-on experience and for fund managers and asset managers who have specific drawdown limitations and leverage caps in their strategy or investment policy guidelines.

What can you do with the new Advanced Controls features?  So glad you asked.

  • Think a Trade Leader has tight risk controls and want to set your Drawdown Protection to something other than 30%? You will now have the ability to set Drawdown Protection by Trade Leader. Now you can decide how much risk you are willing to tolerate and can set this control anywhere between a 1% and 90% limit on draw downs.
  • Concerned about the maximum level of drawdown that can happen across your entire account? You can see the Account Level Drawdown Protection, calculated based on Leader by Leader Protection and unallocated capital.  This feature shows the maximum drawdown that the account could realize. It takes into account any unallocated capital and is based on the overall account balance.
  • Decided that you would like to invest in a Trade Leader but want to scale down on risk? You will be able to set a Leverage Multiplier on a Trade Leader, which allows Investors to reduce the amount of risk on an individual investment.  The Leverage Multiplier may be set to take any level between 10% and 100% of the Trade Leader’s leverage; a 50% multiplier will give you half of the Trade Leader's leverage level on each trade.
  • Worried about over-leveraging and want to limit the leverage that may be taken by your account at any given time? You will have the ability to set a Leverage Cap on the account of up to 5000% (50:1 leverage).  Trades which would put you over this leverage amount will not be taken, but you will start trading again once your leverage is reduced beneath this level.

Many of these controls are customizable per Trade Leader you follow. So, for each Trade Leader in your portfolio, you can set a variety of leverage and drawdown controls based on your appetite for risk. Once again, if you don’t want to set them, you can simply use the pre-set values we’ve determined for you based on the Trade Leader’s strategy and risk management profile.

We’d love to hear from you as you start to use some of these nifty new controls. How is it improving your Trade Leaders experience?

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

We had the opportunity to talk with the smart folks over at the The Fiscal Muse about Currensee and the Trade Leaders Investment Program. They asked our CEO, Dave Lemont, a bunch of questions – some of which we are asked pretty regularly. So, I thought…why not post them here to our blog so everyone can share in the answers. I present….all the things you wanted to know about Currensee and Trade Leaders but didn’t have the chance to ask. Enjoy!

Thank you John Trivett and David Gregory. Read the full article below or click here to view it on The Fiscal Muse.

Currensee is the alternative investment service that puts the power of world currency markets in the hands of every investor. With the Currensee Trade Leaders™ Investment Program, investors build their own automated trading portfolios of Trade Leaders, top foreign currency traders hand picked from the over 8,000 members of the Currensee social network, who trade over $50bn USD annually.

The Fiscal Muse managed to secure an exclusive interview with their CEO to discover what exactly Currensee has to offer the complex world of the foreign exchange markets.

Greetings …

Q1) Currensee sounds like an interesting undertaking. Can you tell our readers more about the whole project in general and what you hope to achieve with it?

I’d be delighted to. Currensee launched the first Forex trading social network in 2009 just as social media was beginning to change the entire trading and investing landscape. What made Currensee different and continues to set us apart is that our social network is comprised of “real” Forex traders, meaning traders who use real money to trade and who link a live trading account when they sign up with us. We all know that it’s one thing to trade in a demo account and quite another to put real money on the line when making trade decisions. We were the first to deliver this trust and transparency to the Forex market, which are two of the key cornerstones of our company. We aim to ensure that the fast growing Forex market is open to everyone, in a clear way. We have already seen encouraging growth and with the launch of our Trade Leaders program, we are confident that investing in Forex will become easier for investors.

Q2) What do you think are the main benefits of combining foreign exchange trading with social media?

The Currensee Forex trading social network was launched to bring Forex traders from around the world together to share trading ideas and strategies and to deliver trust and transparency to the Forex market. Our company created a new way for traders to collaborate and work together to make trading decisions using social media, and we take great pride in being first to the market.

As we launched our new Trade Leaders platform, we took the idea of a Forex social network one step further. We combine the power of social networking with social investing, creating the next generation of online investment services. The Trade Leaders program is the first social trade automation program that allows anyone – regardless of their knowledge of Forex – to take advantage of the Forex market. The program provides trust, transparency and control by allowing investors to follow and automatically execute the trades of the Trade Leaders, in their own trading account. Unlike other trade automation services that serve to increase trading volume and customer churn, Currensee delivers an auto trading product that strives to make our investors profitable, while giving them complete control and visibility to every trade.

Forex social networks are providing new opportunities for investing, as they’re opening new asset classes such as Forex to the “average investor.” Social networks allow members to share trades by real traders in real time. Using social networks, investors can leverage the expertise of advanced traders by following and automatically executing their trades. Members know that sharing real trades and positions can often lead to new insights and new ideas that can help make more informed trading decisions.

The major benefit of investing with Currensee is that we put the Forex market opportunity into the hands of every type of investor. Now, for the new Forex trader or perhaps a savvy trader who is ready to leverage the trading expertise of experienced and professional traders, we have the Currensee Trade Leaders™ Investment Program. For the investor who may know very little about the Forex market, but who is looking for a way to diversify and take advantage of foreign currency investing, the Trade Leaders program is a new way to access the market.

Q3) Would you say that Currensee is aimed more at Trade Leaders or at Traders themselves

Both. Without either, Currensee’s unique selling point wouldn’t exist! We encourage Trade Leaders to apply for the program as it allows successful Forex traders an innovative and easy way to leverage Currensee to boost their profile and their Forex trading business. We are very selective about who we approve to become Trade Leaders and spend a good deal of time assessing performance and risk management. We aim to provide our investors with the best Trade Leader choices possible. We also spend a significant amount of time talking to new investors and cultivating relationships with existing investors. We are excited to see existing investors continue to deposit and allocate new money into the program and we have had great traction building our investor accounts and assets under management. At the end of the day, we need both Trade Leaders and investors to help the site flourish.

Q4) Currensee currently has 7,000 active members. Is this predominantly traders or trade leaders? Can you give us a breakdown of how many members and participants you hope to attract in the coming year?

Actually, we have over 8,000 members of our social network and membership is growing every day.

Q5) According to internet sources Currensee recently raised $8m from investors. What do you hope to achieve with this? Will you be expanding into new markets, or updating infrastructure?

Our latest round of funding was $4M for a total of close to $17 M USD and will be used to develop new decision-making, collaboration and portfolio management tools for investors, and to make currency investing even simpler and more transparent. It will also be used to fortify the Currensee technology infrastructure including data center expansion and enhancements to the Currensee Intelligent Trade Replication Technology™, a sophisticated trade automation engine that precisely manages the timing and round-turn execution of trades. The funds will also drive further international development, including the expansion of the Currensee sales teams in the United Kingdom and Europe, as well as new global partnership deals in Asia and Europe.

Q6) Aside from foreign exchange trading can you see Currensee diversifying into other financial markets or products?

For the moment, we are primarily focused on the foreign exchange market. However we are looking carefully at adjacent asset classes that will continue to give our customers a true alternative investment to the stock market. We will continue to revolutionise the financial services industry and the social investing category. We aim to stand out in whichever marketplace we compete in rather than just fit in.

Q7) What do you think sets Currensee above its competitors?

There are some pretty significant differences between Currensee and our competition. First off, our Trade Leaders are all real traders with real Forex trading accounts. We do not allow any back testing or demo accounts. These are professionals-level traders who have been trading for many years and who have passed our rigorous review process and been tested as a Trade Leader before being added as a selection for investors. We review our Trade Leaders on a weekly basis and make changes as necessary to keep the top traders in the program and provide the best possible choices for our investors.

We are also different than our competition because the success of our investors is our top priority. We see investor profitability as our top goal and we work tirelessly to make it happen. We have a simple and transparent fee structure that focuses on investor success, rather than trade volume, which is how most of our competition charges fees. It ends up that the investor pays for many trades that don’t make them money and it becomes near impossible to make money in most of the other auto trading programs.

As our social network grew, we launched the Trade Leaderboard™, Forex’s first Leaderboard ranking top Forex traders based on historical performance along with a proprietary performance authority and risk index. The Leaderboard shows annual returns, historical and real-time performance along with risk scores for the top traders in the network. Traders are ranked against the Currensee Trader Authority Index™, a proprietary algorithm that combines performance, risk and experience into a single number. Any type of investor can participate in Forex by creating diversified portfolios that mirror the trades of our elite group of expert Forex traders. As the Leaderboard started to catch fire with traders, many members of our social network began asking us how they could “follow” the trades of some of the top traders on the list. We discovered that we had a unique value proposition for traders and investors looking to follow the trades of top traders because our traders had months of real performance, and we could easily report that performance through the Leaderboard feature. We began to hand-pick those top traders, our Trade Leaders, and vett and analyze their performance and risk management across a variety of strict criteria. For us, less is more. We’d rather provide our investors with fewer Trade Leaders, but who are of much higher quality. We also believe that fees should be very straightforward, which is why we have a simple model of a 2-percent service fee and a 20-percent success fee. We do not charge transaction fees and the Trade Leaders are compensated for success – not trading volume. We also deliver a variety of account controls to our investors, which provide the ability to modify or delete Trade Leaders from your portfolio at any time.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.