Foreign Currency Trading

The objective of the MST system is to provide an investment trading option that:  1) provides a consistent rate of return while effectively managing risk, 2) uses a disciplined approach that eliminates the effect human emotion, and 3) provides significant liquidity.

What is FOREX?

Currency trading in the Foreign Exchange Market is a bi-product of international commerce and trade.  In early times, products and services were bought and sold in a somewhat universal manner using precious metals such as silver and gold.  Over time various stable governments issued paper currency that was representative of gold and was worth an actual amount of gold that was held and vaulted by that government.  This was known as the Gold Standard.  In 1944, the Bretton Woods accord fixed the US Dollar to 35 US Dollars per ounce of gold and other currencies to the US Dollar.  Then in 1971, the fixed price to gold was dropped and the US Dollar became a generally observed mark for measuring the value of a currency.  Today, the Foreign Exchange Market has a daily volume in excess of $3 Trillion US Dollars and is open to trading 24 hours a day, 5 days a week. 

Why FOREX?

Regardless of which instrument you are trading - be it stocks, municipal bonds, treasurys, agricultural futures, foreign exchange, or any of the countless others – the attributes that determine the viability of a market as an investment opportunity remain the same. Namely, good investment markets all possess the following characteristics: liquidity, market clarity, low transaction costs, and fast execution. Based upon these characteristics, the spot FX market is the ideal market to trade.

Liquidity:

Currency spot trading is the most popular FX instrument around the world.  It is estimated that spot FX trading generates in excess of $3 trillion a day in volume, making it the largest and most liquid market in the world.  FX Liquidity has its advantages. Thin stock and futures markets can easily be pushed up or down by specialists, market makers, commercials, and locals. Spot FX on the other hand takes real buying/selling by banks and institutions to move the market. Any attempted manipulation of the spot FX market usually becomes an exercise in futility.

24-Hour Market:

Unlike In stock and futures trading, currencies do not get halted, ensuring true 24-hour trading and the ability to trade during virtually any important event.  The round-the-clock nature of the foreign exchange market ensures that there will be minimal gaps in the market; in other words, there is little potential for the market to close one day and reopen the next day at a drastically different price.  The seamless continuity of the foreign exchange market ensures that the market is liquid at all times, thus helping to manage the risks associated with market gaps and illiquidity.

Market Clarity:

One of the biggest advantages of trading foreign exchange online is the ability to trade directly with the Interbank or various liquidity providers. A reputable FOREX broker will provide traders with the rapid execution of prices.  Although online trading has reached equities and futures, prices represent the LAST buy/sell and therefore represent indicative prices rather than executable prices. Furthermore, trading online directly with the market maker means traders receive a fair price on all transactions.  Online trading capabilities in FX also offer more efficiency and market clarity by providing real time portfolio and account tracking capability, Traders have access to real time profit/loss on open positions and can generate reports on demand, which provide detailed information regarding every open position, open order, margin position and generated profit/loss per trade.

Lower Transaction Costs than Equities and Futures:

The FX market is able to offer lower transaction costs because there is no centralized exchange for trading such as the NYSE or the CBOT, Therefore, clients would not have to pay any exchange of clearing fees. Costs are further reduced by the efficiencies created by a purely electronic market place that allows clients to deal directly with liquidity providers, eliminating both ticket costs and middlemen. Because the currency market offers round-the-clock liquidity, traders receive tight competitive spreads both Intra-day and night.

Ability to Go Long or Short with Equal Ease:

The FX market is considered by most traders to be the most flexible as its vast size and international presence allows room to diversify investments in various currencies. This makes FX a very "trader friendly" environment with little restrictions impeding the average trader, Due to market limits, currency traders, unlike their equity and future counterparts do not need to waste valuable time waiting for conditions to change before executing a trade.

Higher Leverage:

The FX market allows traders to customize their risk exposure through the usage of leverage. The FX market is one of the most popular markets for speculation due to its enormous size and liquidity, and it allows traders to moniter trends in the market. Most market makers allow positions to be leveraged 200:1.  Traditional lot sizes are 100,000 units.  This means that without leverage, traders would have to put up $100,000 per lot that they buy or sell. With 100:1 leverage, traders who want to participate in the FX market would only need to put up $1,000 per lot that they buy or sell.*

Risk Management:

While the MST system operates completely independently in a market subject to a wide range of economic fundamentals, geopolitical events, unnamed turmoil and other such uncontrollable factors, it does allow for quantitative manual intervention to which can assist in maintaining trading opportunities and manage risk in these types of special circumstances.  In addition, there is sufficient and distinct data to allow specially trained operators to take advantage of trading opportunities, and help risk with risk management during such event(s) or in the normal course of market performance.

Limited Trade Volume:

Contrary to common trading techniques implemented in the FOREX world, the MST system implements a minimal number of trades.  This is due to the systematized evaluation of pricing and the necessity of specific price fluctuations that must be identified in order for a trade to be recommended.

Single Trade Exposure:

This system results in exposure to one trade opportunity at any given time.  The given trade may potentially increase or decrease in volume based on certain events.  However, exposure to multiple currencies would not occur.

Defined Exit Points:

As each trade is enacted, a sale or buy alert is identified through the automated system which exits the price if a maximum loss is realized or if the best available market price is reached. This target is adjusted as trade opportunities are realized in order to manage risk.

Maximum Drawdown:

In order to limit portfolio exposure trading will cease in the event of a (50%) loss of capital.

How Can Trading Opportunities Be Realized?

Unlike other investment vehicles that rely on a product or service, the management of a company, or a specific commodity, currency trading depends only on price movement. In other words, a trade involves the exchange of one currency for another with the goal of realizing the trading opportunities from the movements in the currencies, whether that price movement is up or down. The use of leverage can enhance these returns.* Skilled supervision of all trading functions provided by the robotic software supports the opportunity to make external adjustments in the operating system.  No quantitative system should operate unattended from the standpoint of a final decision for execution or simply overall risk management relating to unexpected events.  As master technicians, Monarch’s objective is to act upon the information dictated by the system and then perform consistently during a particular trade event.

*Without proper risk management, this high degree of leverage can lead to large losses as well as gains.

Other Benefits:

A Systematic Disciplined Approach:

The MST system is a counter-trending robot that measures symmetrical patterns, or lack thereof, and is completely independent of any type of oscillator based indicators or any classical indicator and relies on a strict set of rules requiring a balance in price value, pattern and time.  Once these proprietary rules are met, the system will evaluate the price value and establish two independent price targets.  Protective stops and limits for trading opportunities are managed based on price action and is dependent on the price value relationships identified earlier.

Diversification:

Currency trading can be a beneficial component of a portfolio due to its liquidity and low correlation to other market segments.

Consistent Performance:

The MST system is distribution driven. Realized trading opportunities and losses will be calculated on a monthly basis. While distributions cannot be guaranteed, we have designed the system to serve as a performance portfolio.

Historical Trading Opportunities Results:

Performance results are derived from back-testing, and are hypothetical in nature. Based on historical results of the system, the average drawdown was 13.65% and trade opportunities were 86.3% over a 21 month period.**  While past performance is not necessarily indicative of future results, the trade opportunities as measured against the maximum drawdown is favorable.

Web-Based Account with Real Time Access:

In order to promote and support clarity, tracking results is available with direct access to your account via the internet.  The MST system is designed to achieve results over the long term.  We expect periods of trade fluctuations and encourage annual evaluation.  

How Do I Get Started?

This investment is suitable for those individuals that understand the risks involved, are investing no more that 10% of their net worth and/or have a household income greater than $100,000, and are looking for current cash flow. IRA and other retirement vehicles can also invest, as long as the plan beneficiary meets these guidelines.

Contact your financial advisor or call Genesis Financial Advisors, LLC at 888-902-9191 or request your application packet at info@genfinre.com

Quick Facts:

Account Information:

-  Minimum Investment:  $25,000 Individual Account / $100,000 Institutional Account

-  Management Fee:            0%***

-  Performance Fee:           35%

-  Distributions:   Monthly distribution of net trading opportunities exceeding the initial deposit

DISCLAIMER - WE ARE NOT COMMODITY TRADING ADVISORS.  THE INFORMATION IS FOR TRADING EDUCATION AND TECHNICAL TRADING ANALYSIS AND INTERPRETATION.  THERE IS NO TRADING RECOMMENDATIONS FOR ANY ONE INDIVIDUAL BUT PUBLIC TO ALL INDIVIDUALS. ALL TRADES ARE EXTREMELY RISKY AND ONLY RISK CAPITAL SHOULD BE USED WHEN TRADING.

U.S. GOVERNMENT REQUIRED DISCLAIMER: COMMODITY FUTURES TRADING COMMISSION FOREX, FUTURES, AND OPTIONS TRADING HAS LARGE POTENTIAL REWARDS, BUT ALSO LARGE POTENTIAL RISK.  YOU MUST BE AWARE OF THE RISKS AND BE WILLING TO ACCEPT THEM IN ORDER TO INVEST IN THE FOREX, FUTURES, AND OPTIONS MARKETS. THIS IS NEITHER A SOLICIATATION NOR AN OFFER TO BUY/SELL SPOT FOREX, FOREX FUTURES OR OPTIONS.  NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHEIVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED.  THE PAST PERFORMANCE OF ANY TRADING SYSTEM OR METHODOLOGY IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING.

**Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particularly trading program.

One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk. Variables such as the ability to adhere to a particular trading program in spite of trading losses as well as maintaining adequate liquidity are material points which can adversely affect actual real trading results.

***The FCM and RB are compensated for their services through the spread between the bid/ask prices.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.