1. General Details and Conditions
2. Apply for Managed Account

General Information

Here are some basic guidelines that you can use in selecting a money manager:

1. Drawdowns: Simply stated a drawdown is a loss incurred by an account manager or fund during a given reporting period, e.g., month, quarter. When investors try to assess risk in a given fund or account managers trading methodology it is useful look at drawdowns for an indication of potential risk and to see how the managers risk management techniques have performed during various market conditions. Investors and introducing brokers analyze drawdowns in by using a number of different statistics such as the largest drawdown, largest peak to valley drawdown, and the average drawdown. It is also instructive to look at the number of consecutive drawdowns, as well as the length of time it takes for a manager to recover from a drawdown.
2. Risk Management: Every fund manager that an investor or introducing broker considers should employ a number of risk management techniques. Risk management systems help managers decide when and where to enter and exit the market as well as what and how much to trade. These decisions can be implemented through the use of stop, limit, entry, and market orders. Managers should always enter trades with preset goals for profit and loss. Trades should be weighted for projected profit potential, and profit targets may be monitored and adjusted for changing market conditions but stop loss, limits should be strictly adhered to. Trades that are viewed as having the largest profit potential should receive the largest capital commitment and those with the smallest commensurately smaller commitments. Weighting consideration should also be given to the volatility in the given currency pair, with currency pairs with higher volatilities being allocated less capital than those with lower volatility.
3. Benchmarks: When examining performance statistics for managers in foreign exchange it is important to have a reference point against which to measure performance. While it is most instructive to measure performance of one foreign exchange manger against that of another, foreign exchange as an asset class is typically included in an asset class referred to as an Alternative Investments or Alternative Assets. This is a group of managers that manage assets that do not fit neatly into the equity of fixed income group, the largest category of which is hedge funds. Hedge fund strategies encompass a wide variety of investing methodologies including foreign exchange, distressed debt, long/short equities. The most widely recognized benchmark for hedge funds is the CSFB/Tremont Hedge Fund Index, which measures performance within this asset class and against which foreign exchange managers are often compared. The Barclay Currency Traders Index measures an equal weighted composite of managed programs that trade currency futures and/or cash forwards in the inter bank market. In 2002 there are 49 currency programs included in the index. It is important to remember that risk parameters, levels of leverage, and investment objectives vary greatly for managers included in both of these benchmarks.
4. Non-Correlation of Returns: An important benefit of having funds managed in foreign exchange is that returns are non-correlated to the equity and fixed income markets. Non-correlation means that the performance of an account manager in foreign exchange is not linked to the performance of the equity of fixed income markets. Correlation or non-correlation of returns is measured against a benchmark index of another investment type (e.g. the S&P 500 or Dow Jones Industrial Average for equities, or the Lehman Brothers Treasury Index for fixed income.) A correlation of 1.0 indicates the highest level of correlation of returns between asset classes and a correlation of 0.0 indicates absolutely no level of correlation between asset classes. This is an important consideration for investors seeking to protect their assets by diversifying their asset base outside the fixed income and equity markets.
5. Leverage: The vast majority of managed account programs in foreign exchange employ some amount of leverage. When you are ask how much leverage an account manage uses, you are really asking the questions for each dollar the investor commits to the program how many dollars will my account manager commit to the market. The amount of leverage employed will vary not only from account manager to account manager, but individual account managers will adjust the amount of leverage the employ to reflect the underlying risk and profit potential in a given trade, or market conditions. Typically, account managers in foreign exchange employ leverage rates of between 2:1 and 8:1 and occasionally approaching 10:1. Any program that seeks to regularly leverage accounts at a rate of higher than 10:1 should be regarded a highly speculative and risky.
6. Trading Methodologies: While professional money managers employ a wide variety of different strategies or styles, most money managers can be classified into two main categories: trend following strategies, and range trading strategies. Funds that use systems classified as trend following seek to identify and participate in trends in the currency market. In general a trend following strategy trades a longer-term horizon than a range trading strategy, as they seek to capture larger moves in the market. Also typical of the trend following strategy is that these systems trade less frequently than those that seek trading ranges. Funds that seek to exploit ranging markets try to determine when the market is moving sideways (in a trading band) and to identify the tops and bottoms of these trading bands in order to buy low and sell high, or vice versa.

Keep in mind that even fund managers who are highly successful over the course of a year will incur losses some months as market conditions dictate the performance of trading systems employed by the money manager. Managers using a trend following system will not do well during the months when a market is moving sideways and a range trading system will perform poorly in months where the market is trending. Therefore the overall performance of any managed account must be viewed over 12 months (or the duration of the program).

Although all of the funds selected by FX Unigma allow investors to close or withdraw funds at any time, it is strongly advised you do not establish an account that you don't plan to maintain for the duration of the program due to short term declines which still lie within the parameters of the program. This will not allow you to fully benefit from your investment.

Apply for Managed Account