FAQs

Q?1.) How to I get started?
A.

Getting Started is quite simple. 1.) First you must complete a quick and simple pre-application form HERE. Based on the information you enter on the form, you will be provided a list of brokerages to chose from. Select the brokerage you would like to open an account at, and fund it. 2.) Sign an LPOA (granting our advisor trade authority to trade for you). 3). Start receiving trades instantly. If you require any assistance along the way please contact us at any time.

Q?2.) What is “Forex” and why is this an ideal asset class for diversification?
A.

For a detailed description on Forex please read this page. Our belief with the Forex market is that money is never really made nor lost, but only changes wallets. Diversifying heavily into one major asset class such as Forex, is in our view, one of the few markets that will work with this type of diversification strategy. Strategy diversification is important from one trader to another to take advantage of this concept. However, currency markets are unique in that they are the only asset class that has never experienced an across-the-board bear market, or even a boom or bust like real-estate markets. In our collective opinion, it is as close to “crash-proof” investing as one can come. This makes currencies a unique asset class for a diversification. When one trader is down, another is up. Experienced traders can always find a profitable trend to ride somewhere in the foreign exchange markets, as long as they completely understand the key factors that move world currencies.

Q?3.) What is a managed forex account, what are the benefits they provide, and how is a typical managed account traded?
A.

For a detailed description on managed forex accounts, please read this page.

Q?4.) What is available to satisfy my due diligence before I invest in one of your featured investments?
A.

Please read through each trading program’s profile carefully. We have included as much information as humanly possible to make it easy for prospective investors to make an informed decision. We have gone over an above to do something different in the FX market place and focus 100% on transparency! We offer detailed prospectuses, detailed performance analysis, 3rd party CPA audits, live forward test tracking and account verifications, and even interviews when appropriate. If there is anything more we can do, please contact us and we will be happy to help get you the comfort level you are looking for.

Q?5.) Surely to generate above average returns, there is great risk involved. Is this correct?
A.

Yes it is! Because our Managed Forex Accounts are Alternative Investments, they carry a high level of risk and may not be suitable for all types of investors (please see our Risk Disclaimer for more information). We believe the key to a successful investment is exposure to enough risk to generate a decent return, but not so much as to give rise to sleepless nights. A disciplined approach restricts the risk and reduces the exposure to volatility in the marketplace. Our Managed Forex Accounts have reduced the risk as much as we can possibly see fit, while still targeting consistent and above average returns. Rest assured though – the risk is still present! So do not use money that your family needs, or money that is needed to pay the rent. Not only is this simply ethically wrong, it’s illegal. You need to find your ideal “risk vs. reward ratio” before investing with any type of investment vehicle, and Managed Forex is no exception.

Q?6.) I don’t know much about self-directed Forex trading or Alternative Investments, can I still benefit from one of your featured investments?
A.

Yes. There is no need to be a professional trader yourself to successfully and safely invest in a managed account. This alone is one of the biggest advantages to a managed account. It allows the modern investor the ability to have their account traded by a professional money manager (who trades for a living).  Our firm does all of the back ground work and heavy lifting in terms of working with emerging traders, developing or testing automated trading systems, auditing performance, and conducting due diligence on any trading strategy or methodologies / automated systems of established traders. This combination paves way to great advantages for the prospective investor looking for good opportunities in the Forex arena. That being said, we always encourage prospective investors to educate themselves about Forex trading and different types of Alternative Investments in general. Our opinion is that the best investor is an informed one!

Q?7.) Are you the actual trader? Do you own these systems?
A.

This depends on the program you are referring to. Some of the companies doing the trading, we are primary stake-holders in, and have full discretion over the trading and management of the trade strategies. Other systems we are partial stake-holders, and other systems we enter into joint venture arrangements with the developers and/or owners of the systems to be able to offer these to our investor base.

Q?8.) What can I expect once I am invested in your systems?
A.

You can expect to see a combination of both winning and losing days, and winning and losing months. Usually our winning months far out number our losing months, but we do have to contend with the odd losing month from time to time. Those who let their funds compound over time and from month to month typically do very well and their investment grows at a nice and healthy pace based on our historical performance. You can expect monthly updates and commentary on our systems. You can expect recommendations from us on portfolio adjustments. You can expect full transparency and prompt communication. Most importantly you can count on having your accounts managed with proper risk management and being around for the long-term. This is the point that most people lose focus on in the Forex industry.

Q?9.) Does MFH test out these Managed Forex Accounts offered here with their own money?
A.

Yes, typically a member from our team will test out all of our featured investments that don’t directly belong to us, with our own live money first before offering them to our investors. In some cases where we want to be really cautious and the system does not belong to us, we will negotiate with the trader or developer to let us monitor their live trading with read only access first. After this we go live with our funds. If it passes our live tests, we roll it out to our investor base once we have the comfort we are looking for, and the transparency we are seeking.

Q?10.) How do I get started investing with your Managed Forex Programs?
A.

Please visit the profile page of each of our featured Managed Forex Programs for detailed due diligence information on the specific program. You can find this at: http://www.managedforexhub.com/partnerships/our-funds/overview/ .  If after learning about a specific program, you would like to participate in one, simply email us and we will work with you to ensure you receive the proper forms to get started.

Q?11.) Do you guys only deal with currency traders? Or do you have other traders trading other asset classes as well?
A.

We work with traders of almost every asset class. Although we specialize in foreign exchange trading, we have no problems adding in any type of trader or investment which is profitable and satisfies our due diligence. We look for a lengthy and profitable track record first, and then for responsible and proper risk and money management practices, and full transparency into the trading strategy and history. As far as trading goes, the asset class can come second as there are great traders who specialize in each and every one.

Q?12.) I know (or am) an amazing trader that you (or I) might be interested in being listed as a feature investment of yours.
A.

MFH is constantly seeking, reviewing, and working with professional money managers and emerging traders. We have more than enough high potential traders coming across our desk right now, to the point that it is almost overwhelming. For most of these traders, after our initial due diligence has been met, we like to watch or test their trading ability with read only access or a real money account for quite a while before approving them as an actual investment opportunity for our company. If things work out, we may look to offer them to our investor base. This is based solely on their experience, their track record, their performance, their transparency, and their risk profile. Interested parties are urged to contact us via our contacts page. This component of MFH is a full-time job in itself, so please – serious inquiries only. We won’t look at any money managers without a 9 month long (absolute minimum) track record or trade history.

Q?13.) How do you and the traders make money?
A.

For most of our investments, this typically comes from a profit share in terms of a transactional commission and/or a performance or “incentive” fee, as it is often called. What this means, is that at the end of each trading month, the trader will deduct a commission from the profits made on the investor’s account. This commission is also shared with the MFH team. For example, if your account had a GROSS positive gain one month of +10%, and the performance fee was 30% (this is how the trader makes money for managing your account), then the NET return to the investor would be +7%.

Q?14.) What do you mean when you say a trader takes an incentive fee on returns received of “New High Water Mark” profits?
A.

A High Water Mark, is a common approach to the calculation of incentive fees. It means that incentive fees are paid only on NET new rises in asset value. If a temporary decline occurs, it must be recouped before new incentive fees are paid. This ensures that investment managers receive a performance fee only when the account value exceeds its previous high.

Q?15.) How do I know the results you publish are real?
A.

We are always transparent in the results we publish and will never publish a result without at the very least a statement to back it up.  We will inform you whether the results are live, demo, historic, of something different.  We do not expect any person to “take our word for it”.  Most of our long-term clients whose trust we have earned do, but for other people, logically, we do not expect this. Typically, for our results, we have them either audited by a 3rd Party CPA, or we publish verified forward tests with social trading utilities (i.e., myfxbook, mt4i, fxstat etc…)

Q?16.) Do you accept clients of any size or from any jurisdiction?
A.

Some of our Managed Forex Programs may have various restrictions imposed on them in terms of the minimum investment amount or the person/entity’s domicile or jurisdiction. This varies from one product to another so please inquire if there are any questions or concerns on this matter. Our firm reserves the right to refuse any client/entity from participation. Typically we do not work with retail clients from the USA, unless our brokers were to accept and approve them, or unless they are classified as ECP (eligible contract participants) which is a designation for an accredited investor or high net worth individual. You can view a the definition of an ECP here.

Q?17.) What is the difference between a closed trade (balance) drawdown and a floating open trade (equity) drawdown?
A.

This is important to understand, as this is a rather confusing topic in FX trade reporting and statistical analysis which varies considerably from one broker to another, and also from one FX software program to another. As an example, a very common and popular platform known as the Metatrader platform, does not track equity drawdowns historically (i.e., open floating drawdowns) without the use of custom scripting. So when looking at historical trades, one can only derive drawdown statistics based on closed trade balances. This may be somewhat misleading to some people if they do not understand this properly.

As an example, as soon a single trade is opened, you will automatically incur some drawdown – even momentarily – due to paying the spread to your brokerage. That trade in this example may then dip down to -10% in floating equity. At that point however, it may retrace slightly and make up 5% bringing it to a new position of -5% in floating equity. If you were to close the trade at that exact moment, the recorded (realized) drawdown would be recorded by the software as -5%, EVEN THOUGH during the trade’s lifespan, it floated as low as -10%. On “the books”, it realized a loss of -5% only. This discrepancy may also cause problems when CPAs perform an audit. Some may require to verify any open positions at midnight server time from the brokerage, while others may not. Some brokers can provide this, others cannot (or will not). The Kinetick, and Ninjatrader platforms can track historic floating drawdowns to a certain degree, and various other custom FIX platforms used by many brokers can only track daily PnLs. The vast majority of our MAMs are traded on the MT4 “Multi-Terminal” platform, so our historic statements do not factor in floating equity at month end. It is for this reason that we typically carry any floating trades into the subsequent month in our analysis. As an example, if we had a closed trade profit for one month at +5%. But there was an open trade that was in -1% drawdown at the end of the month at midnight server time, we would calculate our monthly returned based on the closed trades only for the given month (so it would be +5%) and the negative open trade carry’s into the following the month. Most of our programs are usually flat during month end so this is not much of a concern for us, but some of our programs, such as our old P-FX program, were known to trade longer-term and carry open trades from month to month. This may also be the reason why a CPA audit may have slightly different month end performances than our in house analysis.

Despite the discrepancies from broker to broker and platform to platform, we feel that the true Maximum Drawdown statistic should be the greater of the two – the closed trade (balance) and open trade (equity) drawdown. Perhaps someday this will be standardized across all brokerages and trading platforms and software’s.

Q?18.) What Brokerage/FCMs do you trade at?
A.

This is constantly changing, and may depend on the size of your investment and the jurisdiction you are resident in. We typically trade at very reputable brokerages in the UK, Australia, Dubai, and New Zealand, and we also are part stake holder in a brokerage, which is our preferred choice and where we offer reduced rates to our clients who participate there. Our futures program trades ONLY at at TradeStation Securities in the US. After submitting your pre-application here you will be presented with the various brokerage options based on your input on the pre-application form.

Q?19.) Why do my returns not match your posted returns?
A.

Please remember that if your returns for a given month do not match our posted returns in our performance report, take note that our numbers are from the 1st of each calendar month, to the last trading day of the calendar month. If you have invested in the middle of the month, your numbers may not match ours and could vary significantly. In addition to this, if we have open trades at month-end, we calculate our return on the current balance (closed trades) that day at midnight server time, NOT the floating equity.  So open trades which have not realized their PnLs yet will be carried into the next month.  This may vary from broker to broker or compared to how CPAs or various analytical software compile this data. It is rare for us to carry trades over from month to month, as the vast majority of our strategies are intra-day.

Also please keep in mind that we are trading our programs at more than one brokerage firm. It is not uncommon and in fact normal to have discrepancies between different brokers no matter who they are and how we place the trades. Different brokers have different price feeds, different spreads, different markups, different software and different costs.  Sometimes commissions are marked up externally (as a round turn transactional cost), and sometimes they are marked up in the spread. This can create discrepancies in performance. We also have different latencies between brokers and master accounts which cause discrepancies. This will often create a different net result. Another consideration is that unfortunately technical problems may occur at a given brokerage (rarely, but they do occur and need to be dealt with from time to time), which may account for a discrepancy in performance between one brokerage and another.

While we do have discrepancies occasionally, usually all of our accounts at all brokers are within a pretty tight range from one another. Again this varyies from broker to broker. MFH shall always do their best to ensure reporting is as accurate and as standardized as possible, however when working with multiple brokerages, the odds of having discrepancies occurring between them increases exponentially in relation to the number of brokerages being used. The reference accounts we use to report our returns from are the longest running accounts we have on file and are considered our “baseline” accounts for reporting.

Q?20.) Why do some of your live tracking accounts not show open trades?
A.

This varies from one program to another. Some of our program managers do not wish to have their trades visible to the public for privacy reasons. Others do not mind. Ultimately this is a personal decision which we respect for each of our program managers. All invested clients however do receive full real-time access to their live trades at all times.

Q?21.) Why do you not have live tracking accounts for as long as the history in your performance reports?
A.

Sometimes it is not practical to use accounts inside of our block (MAM account) for reference and performance tracking. These are subject to high watermark performance fees, mam multi-terminal balance adjustments, overflow credits, and constant withdrawals and deposits, all of which have an effect on pure performance tracking to some degree. Likewise some of our trade histories have been with other brokers which we no longer trade at, or they belonged to a self-directed trading account before being moved to a money manager account. It is for these very reasons that we have recently structured a performance only tracking account which trades separate to our block (MAM accounts). We will add more of these over time (live and demos), however all are fed by the same master trading signal broadcasting to each MAM – just without the MAM calculations on them (i.e., straight performance only). Most of our trade histories from other brokers are in the form of trade statements or verified CPA audits which we can provide upon request.

Q?22.) Do you charge transactional fees?
A.

Please visit this page for details. MFH profit shares with their brokers on an increased transactional fee either in the form of a round turn dollar or per million cost, or alternatively on a spread markup.  Average spread markups vary per program and per brokerage and range from 0 – 2 pips (or $0-$20 per 100K standard round turn lot). All performance figures reported on the site are gross performances before any performance fees and net of any transactional fees. Please contact us for further clarification if required.

Q?23.) How do you manage drawdowns?
A.

Drawdowns unfortunately in this business are as inevitable as taxes and death. However it is not quite as gloomy as those two. We determine a set of drawdown metrics for each strategy, and simply work to ensure our trade teams stay within those metrics. We leave them to focus on the markets while they remain in the confines of their parameters.

In 2015 we have also implemented the institutional style of drawdown management, which is fully track-record-centric. This is based on a per-month-basis. Example: if the Max Anticipated Absolute Drawdown is suggested as -10%, then if this level were ever reached in any given calendar month, the positions would be closed down and trading would cease for the remainder of the month, not starting again until the following month. If this happened on day 2, they are done for the month until the following month. This helps manage expectations for everyone. This does vary per program, and it is best to read each program’s specific drawdown management protocol.

Q?24.) If performance starts to lag or go stale in any of your trading programs, what happens then?
A.

As part of our on-going analysis, if programs go stale, or break their historical lows, we may look to change the program up to something more profitable, with the consent of, or even at the request of investors. Typically for this to happen there is a lot for us to consider such as the history with the program manager, the cause of events leading to these considerations, and market conditions. We try to be very careful when making changes, as it is very natural for programs to go through periods of ups and downs, and typically after a draw down period there is usually a nice recovery period.

However, be it as it may, there may be times when we need to change a program out. We will never allow a program to continue forever with non-optimal performance on our and our clients accounts. What we usually look for in this kind of situation is historical drawdowns being breached, 3-4 losing months back to back, or a drastic unexplained change in trade strategy. We are in a very fortunate position whereby we receive many traders sending us their resumes and trading performances/histories – daily! So much that we have a team dedicated to sifting through and analyzing trading statements full time in our trade lab, so this gives us quite a bit of choice, and lots of opportunity to view the general talent in the marketplace should we need to make any changes.

Q?25.) How important is it to keep the recommended minimum balances?
A.

This is quite important. We have no way to enforce it, however the recommended minimum balances are in place as a safety feature to ensure that accounts get filled with the proper contract sizes based on the program being traded, and the broker being used. This varies per program and per broker, however if a balance dips below the recommended minimum balance the account may encounter an increased risk profile.

Q?26.) Are you licensed or regulated, and are the brokers you work with licensed or regulated?
A.

Yes, we are an Introducing Broker to a regulated financial service provider and are permitted to provide managed accounts via LPOA to our clients in a trade advisor structure. Please visit our About Us page for more details. We also belong to a dispute resolution scheme for our members. We work with highly regulated and well capitalized brokers regulated by ASIC in Australia, the FSB in South Africa, the FCA in the UK, and by the Central Bank of Abu Dhabi in the UAE.

Q?27.) Why would I want to add Forex or Alternatives in general to my portfolio?
A.

For a detailed description on alternatives, including Forex investments, please read this page.

Q?28.) Can I fund and keep my account in any base currency?
A.

Unfortunately all of our Managed Accounts currently trade in USD. This means that when you fund your account, if you fund it from a different currency other than USD, it will get converted in to USD at your bank’s rate, or our brokers bank’s exchange rate, before being connected to our Managed Account for participation in USD. For those sending larger deposits or who do not want a bank exchange rate https://transferwise.com/, http://www.hifx.co.uk and http://divisamoney.co.uk/ are all excellent exchanges for “better than bank” rates. Most of our clients exchange at the bank rate however.