Dear Investor,
We hope that this message finds you all well as we enter into the month of September. Our apologies for the delay, as mentioned previously we will shorten our updates down significantly. We will keep this update short and to the point as we have a lot on the plate to deal with on the brokerage front.
Markets are again all over the place. The Greece saga continues to worsen. Things continue to worsen very much so in the entire Euro Zone with Spain and Italy popping up as big dots on the radar. The Occupy Wallstreet movements are taking over many cities the world over from Australia to Canada to much of Europe. Rather than write our own commentary we figured we would share some links to some good videos and articles on the subject with you this time around.
* A MESSAGE BY “ANNONYMOUS” FROM THE OCCUPY WALL STREET MOVEMENT:
For those not following this, we found this particular video to be outright “bone chilling” and quite CREEPY! But they send a very strong and clear message in this clip. This was sent on October 1st, and the movement has changed and picked up quite a bit of momentum since then.
* HOW TO EXPLAIN GREECE TO A COMPLETE IDIOT / POLITICIAN:
This is a message written by Simon Black at Sovereign Man. This is very good and puts the Greece debacle into a very clear and simple perspective for people to understand.
* IMF ADVISOR SAYS WE FACE A WORLDWIDE BANKING MELTOWN (how it would affect the everyday person): http://www.youtube.com/watch?v=6UGDTtqklSo&feature=player_embedded#
Dr. Robert Shapiro who advised Presidents Clinton and Obama and who currently advises the IMF predicts a cascading meltdown of the World's banking system starting with Sovereign debt in the Euro Zone, affecting the UK then finally bringing down the global banking system. This clip was aired October 5, 2011 on the popular News show Newsnight with the corporation's top interviewer Jeremy Paxman.
As most of us can see tensions are still sky high. FX Markets are tense, but showing small signs of regularity according to the “gurus” who claim they really know about this kind of thing. People seem to be awakening to many of the problems we are all facing (not just Greece or the countries in the spot light right now). Are we are on the brink of some kind of change? Or some implosion? Or do we have a ways to go before we hit the rock bottom? Its tough to say and everyone has a different perspective on it. We always say its best to be safe, and be prepared, but not paranoid either. Times are changing and changing very fast. We feel that something must give (aka break) before we see any kind of true improvement on this whole debt situation – the world over. When or to what degree that is, we are still unsure.
Last month’s trading has been “OK” depending on the system and the brokerage as we had some very large broker discrepancies for various reasons. Trading continues to improve quite nicely into this month. Our McLaren system is approaching 20% already this month, and the other systems are positive as well. We are the most dedicated and stubborn group of people though and will never stop tweaking, testing, trying to improve, and trying to eliminate our problems until we get things to the best possible place they can be.
Our returns for the month of September are as follows…
| SYSTEM | OFM | INOVA | Broker Average |
| Precision FX | -6.47% | 5.87% | -0.30% |
| McLaren FX | 0.12% | -13.20% | -6.54% |
| Vega FX | 13.69% | -0.49% | 6.60% |
| August Average | 2.45% | -2.61% | -0.08% |
* 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 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.
* Please keep in mind that we are now trading some of our systems at more than one broker. We will always have discrepancies between different brokers no matter who they are. For certain systems we have also noticed small discrepancies between larger investor’s accounts (100K+) and smaller investor’s accounts (<5K). This often has to do with the broker’s min position sizes and how smaller trades are distributed or rounded with the allocation software in our MAM/PAMM. Please take note that while our returns are calculated from 1st of each calendar month to the last trading day of the month, our performance fee period (the period in which high water mark performance fees are calculated on), is from NFP to NFP. NFP is the non-farm payroll and is the first Friday of each month.
Our complete Performance Tables have also been updated with the following statistics of interest (broken down by brokerages) on this following page: http://cayoflow.com/performance.html
MONTH-END TRADING RECAP
Without getting into to many details on this update, we had a lot of struggles last month again. We spend a large portion of the month having our systems re-coded from one language (an older one) to a newer one. We had found some errors in the strategies that caused some very minor problems and discrepancies this month which have all since been rectified. Our new language for the systems will take some extensive testing but we will eventually migrate things permanently. Our brokers also had quite a few problems from their liquidity providers this month, in turn causing us probs. There were a few misquotes by several large banks last month (namely Goldmans), which caused huge erroneous market moves that had to be audited and corrected. Thankfully our brokers did this in a rather swift fashion. Our Vega system ran perfectly well at OFM brokerage, but had troubles at Inova. This is turning into a very nice stable system, and the same goes for all 3 now. They are on lower risk, and are set to just “trade” through whatever the markets throw at them. We are off to a good start in Oct, and hopefully without any storms rolling in we will end this month on a much needed nicely positive note.
BROKERS
This is always our section where we rant and vent like disgruntled employees who hate their bosses. We are so frustrated with brokers we are going to permanently give it a red heading color until we have officially removed all the scumbag brokers from our life (the vast majority of them are scumbags) and only have good ones we are associated with. We are sick to death of dealing with brokers. They suck up more time and energy from us than any other component of our lives. As many of you know, we are have started to take legal action against Mark Edward Rice the director of Sparen FX, who has still not returned ours, our investors, and virtually every other trader, IB, and account manager who has ever traded at Sparen FX our hard earned funds. This has been one of the single most frustrating episodes we have been through in the past 4 years. It is quite a big deal given the amount of people involved. But we are not about to sit aside and let him get away with this at least without a fight.
In other news, ironically, and almost unbelievably actually, things have seemed to have gone from bad to worse with Inovatrade, another Panamanian brokerage headed by Mr. Michael Alcocer. Customer service has been almost non-existent lately; emails and phones are not answered (or take very long to be answered). Many wires are pending with longer delays. We are looking into the root causes of the delays, and are hoping we do not see them follow the same path of Sparen FX. We have our hands completely tied at the moment with what is happening with Sparen. But should this not improve, we will certainly follow suit here and take action. We are planning to travel to visit them in person very soon. The good news is that Panama is now adopting a form of regulation for FX which should really help things in the future. A penny short and a day late perhaps for some firms. But it is a step in the right direction for the jurisdiction nonetheless.
One Financial Markets in the UK has been a true pleasure and the breath of fresh air in this whole brokerage mess. Never again will we ever so much as look at a private brokerage. I know that there are some good ones out there. But it is not worth it in our view for the potential of what can happen. The original draw which attracted us and many other systematic traders to private brokerages in the first place was essentially their feeds (usually unmatched by any regulated brokerages). While they could often provide an extremely high quality feed, when there is no regulation over how they run the internal workings of their business, other people, or greed, or mismanagement, or misappropriation seem to eventually set in like a cancer to many of these firms. Because of this we are presently only working at OFM in the UK who have been quite good to us, and accommodating, despite regular brokerage problems which always seem to happen from time to time.
I suppose the best news in all of this is that we are for certain setting up our own brokerage. It will be done right. It will be good. And it will be everything we ever wanted in a brokerage. For years brokers have been our biggest obstacle, hurdle, source of frustration, and root cause of lost funds. We are following the rule of “if you want something don’t right, you need to do it yourself”. We will provide more details as we near completion. In the meantime we are working on bringing some resolve and fixing the problems with the current ones, and implementing better longer-term and sustainable solutions.
Please do not hesitate to contact us at any time should you have any inquires or concerns you would like to discuss with us.
Warm Regards,
The CayoFlow Team
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