We hope that this message finds you all well. We are pleased to announce that August’s month of trading has again been a profitable one for the majority of our clients. Although we did not hit any “home runs” (double digits) this month, we still came out unscathed - and so we survive to trade another month! August was rough for us in that the first two weeks of the month were very profitable, while the exact opposite occurred for the last two weeks. We built up some nice profits early in the month, and watched as we sustained some losses in the latter part of the month. Typically speaking, the last few weeks of the summer season in general, and the first few weeks of the fall season are always a little bit tricky, in particular for our scalpers as many large institutions that do not trade during the summer months (or trade very lightly) begin to enter back into the markets. We will of course continue to be mindful of this in September. Some of our biggest news this month is that we have ended up discontinuing our Guardian FX system temporarily (no new clients) until we solve a few issues which have presented themselves on the broker front. We have in no way given up on this system. We are simply taking a step back to take care of a few things before we bring this forward again. We want to ensure that all areas of concern are addressed 100% before starting back up. More details on this below. We encourage both our current and prospective clients to read through our update in its entirety so that everyone is up-to-date on our latest developments.
Our returns for the month of August are as follows…
AUGUST 2010 PERFORMANCE
Precision FX: +5.46%
Chrome FX: +2.35% (Average of Chrome A: 0.6% and Chrome B: 4.09%)
Mclaren FX: +7.35%
August Average: +5.05%
* Account Discrepancies – Once again, please remember that if your returns for a given month do not match our posted returns 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 that day, NOT the floating equity. So open trades which have not realized their PnLs yet will be carried into the next month.
For certain systems we have also noticed small discrepancies between larger investor’s accounts (100K+) and very smaller investor’s accounts (<5K). This often has to do with the broker’s min position sizes and how smaller trades are distributed with the allocation software in our MAM/PAMM. All accounts are usually never out more than a percent or two max, and usually match within a fraction of this.
Our Performance Table has also been updated with the following statistics of interest:
MONTH | PRECISION | CHROME | GUARDIAN | MCLAREN | AVERAGE | |
Dec-08 | 32.30% | 72.73% | 52.52% | |||
Jan-09 | 18.70% | -4.19% | 7.26% | |||
Feb-09 | 27.50% | 160.30% | 93.90% | |||
Mar-09 | 29.50% | 21.97% | 25.74% | |||
Apr-09 | -34.40% | 61.33% | 13.47% | |||
May-09 | 53.30% | 33.35% | 3.52% | 9.43% | 24.90% | |
Jun-09 | 23.60% | 25.77% | 4.69% | 30.46% | 21.13% | |
Jul-09 | 10.10% | 20.69% | 4.13% | 28.02% | 15.74% | |
Aug-09 | 26.92% | 10.77% | 4.86% | 26.94% | 17.37% | |
Sep-09 | -0.32% | 5.44% | 5.79% | 7.83% | 4.69% | |
Oct-09 | -4.26% | 20.36% | 6.55% | 11.94% | 8.65% | |
Nov-09 | 10.76% | -20.98% | 30.98% | 29.39% | 12.54% | |
Dec-09 | 9.37% | 15.94% | 10.39% | 7.78% | 10.87% | |
Jan-10 | 33.63% | 27.91% | 16.02% | 4.30% | 20.46% | |
Feb-10 | 15.31% | 14.93% | 22.63% | 2.33% | 13.80% | |
Mar-10 | 15.43% | -5.08% | 3.23% | 6.75% | 5.08% | |
Apr-10 | -8.11% | -9.43% | -0.05% | 2.99% | -3.65% | |
May-10 | 0.70% | -7.66% | 27.30% | 21.07% | 10.35% | |
Jun-10 | 20.86% | 10.56% | 4.83% | 9.68% | 11.48% | |
Jul-10 | 10.80% | 14.57% | 6.60% | 0.15% | 8.03% | |
Aug-10 | 5.46% | 2.34% | 7.35% | 5.05% | ||
TOTAL COMP'D RETURN: | 1106.14% | 3239.49% | 302.76% | 554.22% | 2457.43% | |
MONTHLY AVERAGE: | 14.15% | 22.46% | 10.10% | 12.90% | 14.90% | |
MONTH-END TRADING RECAP and NEW DEVELOPMENTS
1. Precision FX - Scalping conditions were once again rather good early in the month for August, but deteriorated slightly in the latter part of the month. Overall we cannot complain with the profit made this month, which is still a very lofty return as far as we are concerned. As this system is a continuous work in progress, we have a few new developments happening this month. For starters, we are tweaking around our risk profile for the system. Secondly, we have added in a smaller longer-term eur/usd strategy. Last but not least we have added in more scalping pairs to the core scalping strategy of PFX! After a lengthy testing and back testing phase to come up with the best trade times and risk settings we have added gbpcad, cadchf, and usdjpy to the scalping mix. Although these wont scalp every day as most of our major pairs will, we will certainly see these appearing in the trade terminal from time to time.
2. Chrome FX – We had a tougher month with ChromeFX’s new split (dual) strategy performance in August. Chrome A being largely scalping based had run into the same problems as Precision FX in the latter part of the month, and Chrome B – the aussie/kiwi “cash machine” ended up encountering some large trends without retracement. This was mainly chalked up to some unprecedented news events occurring impacting that pair, in particular the Aussie dollar. Overall we are happy with how this system (both A and B) handled the turmoil and come out without any big losses. Sometimes the true power of a system shines through more when it encounters difficult trading conditions.
3. McLaren FX – McLaren FX is starting to earn the nick name “the sleeping giant”. It stays quiet for quite some time, and then erupts with some heavy activity. We have noticed specifically that this system seems to be profitable when our scalpers are not. This makes for some nice reverse correlation, and of course a nice diversification between PFX/CFX and this system. The developer of this system has noticed some very interesting discoveries this past month with this system. The demo account made approximately 15.7%, the developers live account made approx 12%, and we made the lowest with 7.34%. This was the same system, all running at the same brokerage. After much analysis we found that our server was giving us different indicator readings (in particular the macd & adx) which prevented a couple of losing trades that were taken by our live accts. The difference between the live accts is due to one of the platforms reconnecting much later to the server after the live server went down and eventually came back up. We have brought this to the broker’s attention for correction. It is just too bad that we did not catch it earlier in the month. This system is not very action packed - but it is certainly powerful and it sure goes the distance! If anything else, it makes for some nice diversification.
4. Guardian FX – For those of you in the Guardian FX account, we have been communicating with you throughout the month as to some major decisions being made on the PAMM at ATC. The problems seemed to present themselves one at a time over the past two months while trading this at ATC. Moving to this brokerage solved many of the problems at the previous brokerage, but because of the unique setup in which ATC clears orders through FXCM, we encountered many new unique problems which we could not foresee when we first started trading there. The initial problems started with how comments were affected on orders passing through FXCM/ATC (this is very important to the integrity of the system). We then seemed to uncover more anomalies which were having an effect on the trading system, ultimately with how partial fills and pending partial orders were being treated. ATC has been a tremendous help to us on this front. FXCM has not. We were able to put some work-arounds in place, the most recent being an SMS alert system developed by ATC when our system encounters pending partial orders. While we have this system very close to being perfect, and no holes, we are at the point where we do not want to take any more unforeseen risks with this system, and do not want to bring further client funds to this until we are very comfortable with all fixes (no patches), and have zero holes in how the system operates. We have had to put manual hedges on the accounts frequently during the past month, which defeats the purpose of this system which is supposed to run on full autopilot. If we can eventually make this work at ATC, then that would be great. If not, and we are not 100% comfortable on the safety of the system, we will take a step back, and look to trade this elsewhere. While this may set us back a little while, we are by no means quitting on this system. All of the associated parties have met in Colorado
5. USA Clients – We are continuing to work with a new brokerage for our core systems (McLaren, Chrome and Precision) where we will be in a position to work with USA
6. Incremental Minimum Investment Increases – Starting November 1st, we will be implementing a small increase in our initial minimum investment amount for new investors. We will be increasing this from $5,000 USD which is our current minimum, up to $10,000 USD as the new minimum. We have kept our minimums quite low (some might say very low) for quite some time now. We started out at $2,500, then increased this up to $5,000, and are now increasing this up to $10,000. We have listened to many of our investors to keep this low for them to “test our trading”, and we have took the advice of prospective investors to have our accounts audited. We have acknowledged both of these requests and recommendations. We feel we have been building enough momentum with our trading to warrant increasing this very slightly. While we have always been fair and accommodating to the “smaller investor” we feel that $10,000 is still small enough for the majority of investors to participate with. We also feel that for those who are not comfortable with an investment of this size, that managed forex in general may not be a comfortable investment for them, due to its risky nature. Our next increment will be increasing to $25,000 USD, which right now is slated for January 1st, 2011. We anticipate that we will stay at that level for a while as that is soon to be the new minimum for both of our brokers (those in earlier and with less, will of course be “grandfathered”). Currently, the majority of our investors right now fall in between the 25K – 50K range approximately, so we doubt this will have much overall impact.
7. New Systems – While we have our hands full working with various different aspects of the business (mainly brokers right now), we have made some introductions with the programmers between our different systems during the summer, and some magic has seemed to have since stemmed from that. We have witnessed the construction of a new “synergistic” automated system unfolding before our eyes which is looking quite attractive. It’s both a short and long term system combined into one. We are going to keep moving forward with this, and our live testing phase has already begun. Should things continue looking as good as they do now we could very well have a new and final product on our hands. We are still a little bit away from that at this point, so we are simply suggesting to keep a watchful eye out for one last system from us.
SUMMARY
We hope everyone enjoyed their summer (they seem to go by faster each year) and while we wind down the warm weather, we are also looking forward to heading into a profitable fall season as we approach the final quarter of 2010. As always we will do our best to communicate with our investor base whether in the form of monthly updates, or on a per needed basis as we go through the month as any issues may be arise. That being said, please visit our website and blog for frequent updates and newsletters (note: we are always adding new content to our website) and do not hesitate to contact us at any time should you have any inquires or concerns you would like to discuss with us.
Thank you to all our current investors for your trust once again in trading with us. We are looking forward to more profits each month to wrap the final bit of 2010 up making it one to remember.
Warm Regards,
The CayoFlow Team
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