Dear Friends,
We hope that this update finds you well. Please find below our performance report for July 2014. We wanted to get a quick update out to you on the official performance on our programs in July, as well as a bit of a synopsis with regards to each one and some potential news coming down the tube.
Official Results (Gross) for July 2014 – Taken from Reference Accounts
Arc FX: + 0.32% (up +0.41% in Aug so far)
Stone Fund: + 3.28% (flat in Aug so far)
Eagle FX: - 2.08% (up 0.22% in balance in Aug so far)
Valor FX: + 9.45% (up 0.08% in Aug so far)
MONTHLY FOREX AVERAGE: +2.74%
You can view/download our combined monthly average gross performance since inception on the following PDF: http://www.managedforexhub.com/downloads/gen/ALL_SYSTEMS_PERFORMANCE_TABLE_MFH.pdf. This is a very important document, as it demonstrates that our portfolio approach to trading encounters very few average losing months.
Fortress Futures
As indicated in our previous newsletters, our Fortress Futures program is now in full swing as well, and we have traded our 4th month with live money and things are going very well. We will report these gains independently from our Forex portfolio.
Fortress Futures: +4.64%
Arc FX
Arc banked a slightly positive month in balance in July, however they carried over a floating equity drawdown of just over 6% in to the new month. We felt a little relief from the US NFP announcement, however the PMI news today was not in our favor and the trade is still down approx 6.8% at std risk. We need some relief for the Euro, and this trade should come around, and if not it will be managed accordingly. Patience is the name of the game!
Credential wise and experience wise this trader knows the markets better than any we have come across (he is also managing the most capital of all of our trade teams). But this trading program is best approached with a long-term mindset, and with the expectation of a few tough patches per year of course like most. They operate within an ANNUAL target range given to them and that is to achieve a gross annual return of 35%. They still have 5 months to achieve this.
Full detailed performance data (including myfxbooks) and any and all information can be found on Arc’s dedicated page here: http://www.managedforexhub.com/managed-fx/our-funds/arc-fx/.
Stone Fund
Stone Fund had a stable month and that equates to a good month! It banked 3.28% and all on auto-pilot, winning 33 out of 47 trades with the bulk of the gains coming from EURUSD but also a little coming from NZDUSD. Since July of last year the program has now banked a 72% gross gain, while keeping drawdowns under 4% (those who do not really know how this stacks up – it is jaw-droppingly good!)
The strategy is constantly getting updated, and in fact had a fairly significant update applied over the weekend, which is intended to again constantly improve performance.
This is our sole fully automated trading program in our portfolio (and it is a very integral piece), and in our collective opinion, it is one of the best in the market right now.
We always ask if anyone knows of a strategy trading with a better risk:reward profile, then please share it with us, because we do not know of any ourselves. Full detailed performance data (including myfxbooks) and any and all information can be found on Stone’s dedicated page here: http://www.managedforexhub.com/managed-fx/our-funds/stone-fund/
Eagle FX
Eagle FX was unfortunately our only negative program last month in balance (and also in equity), carrying a smaller EURUSD loss in to August much like ArcFX did.
We are not in the least bit concerned or even disappointed as this is the Eagle program’s first losing month this year, and after delivering an amazing first 6 months of WELL above average performance. Ideally (depending on the strategy) we anticipate 2-3 losing months per year from our trade teams. When losing months get up in to the 4-5 months per year (unless small and the winners are MUCH bigger), then we begin analysing things fairly closely. All of our trading programs are still well under this threshold.
Full performance data (including myfxbooks) and any and all information on Eagle can be found on its dedicated page here: http://www.managedforexhub.com/managed-fx/our-funds/Eagle-fx/.
Valor FX
Valor FX was the “trading champ” last month, and certainly is the “talk of the town” lately, producing a near perfect month winning 120 or 121 trades! The majority of the gains came from the GBPUSD pair. The team are however carrying over a basket of open trades in to Aug as well, with a small drawdown.
On some of our PAM accounts, we started the strategy at approximately half risk to ease in to the updated strategy, but increased it up to full risk near the end of the month. Clients in those accounts will have a slightly lower return (approx. +4% gain), but still a near flawless return with even decreased risk exposure.
This strategy has one of the most eye catching track records we have come across to date, in terms of monthly gain and risk:reward which you can view here: http://www.myfxbook.com/members/ManagedFXHub/valor-fx-20/945716.
Full performance data on the new and improved strategy (including myfxbooks) and all information can be found on Valor’s dedicated page here: http://www.managedforexhub.com/managed-fx/our-funds/valor-fx/.
Fortress Futures
We are chugging away with our Fortress Futures Program, and it has been doing everything it should (despite a small loss last month).
As we mentioned previously, to be completely candid – this program is set to be one of the most stable, long-term, robust, scalable, and profitable trading strategies available on the market today in our humble opinion. Its extremely well diversified, automated with manual upkeep, and the underlying core strategy and methodology is developed by a financial genius. This pretty much checks ALL the boxes for us. This program is perfect for those who have the minimum required capital (100K USD minimum) and are looking for diversification outside of forex.
Full performance data and all information can be found on Fortress Future’s dedicated page here: http://www.managedforexhub.com/managed-fx/our-funds/fortress-futures/.
Portfolio Drawdowns
The recent drawdowns on ArcFX and Eagle at the same time, have been fairly drawn out given the slow but casual deterioration of the Euro in July. Sometimes we would almost rather have the band aid ripped off fast then the slow gradual decline. But this is where we really need to practise patience.
One of the most frustrating things for us is when our diversification is weakened, and our correlation is strengthened across our programs. This is the polar opposite of what we are trying to achieve with our portfolio. Our portfolio is designed to counter this and balance equity swings out, however there will be times, especially when certain pairs get seriously overbought or oversold where our portfolio moves from being hedged to being more one sided.
We are seeing this now with a few of our programs all on the buy side of a strong dollar. Despite this, all traders are still within their predefined risk tolerances and parameters (we will have a more detailed posting about this later in the month). We try not to bat an eye until their historic or pre-defined drawdown metrics have been exceeded. Until then we allow them to work within these tolerances.
Our friend Jason McKay explained it better than anyone else we know; just like death and taxes … you can’t escape drawdowns. The only way you can avoid death is not being born. Silly but true. The only way you can avoid taxes is never making, or spending, any money (or moving to a tax haven). Silly but true. The only way you will never encounter a drawdown is by never trading. These all seem silly, but they are true.
Our natural tendency is to stop that which is causing us pain (drawdowns), and so a human’s fundamental and natural inclination is to quit a system when it’s in a drawdown because it “just doesn’t feel comfortable.” Separating novice from experienced investors is the ability to overcome this very basic human instinct by making it all about the statistics and thinking mechanically, anticipating the cyclical nature of good and poor performance, and most importantly understanding the recovery period following them.
All markets are cyclical, meaning ups and downs – then repeat. The goal of any successful trader is simply a matter of banking more ups than downs over an extended period of time – then repeating that process.
Super Fund (a multi-strategy all of our strategies combined)
Many of you have asked for it, and now we are planning on delivering it. One of the most impressive aspects of our portfolio is when you look at the average return of all of our strategies. As mentioned above you can see the average on the right hand column of this document: http://www.managedforexhub.com/downloads/gen/ALL_SYSTEMS_PERFORMANCE_TABLE_MFH.pdf.
This is a little complex to achieve in a managed structure, but we are working on a way to simply have all 4 of our programs balanced automatically each month end so that client’s total portfolio return is always equally diversified to receive the average of the combined strategies each month.
This keeps focus on the combined portfolio and the average much more vs each program individually. This will also make things very easy for an investor in that all of the balancing gets taken care of on our end. We are still working through the final details but hope to have this as an option very soon.
Please do let us know if you have any questions or concerns and as always we would welcome a conversation with any of you at any time to discuss anything in further detail.
Sincerely,
The team at Managed Forex Hub