Dear Investor,
We hope this newsletter finds you well as we enter into Q2 of 2012. We hope that you all get a chance to enjoy the long Easter weekend. The 1st quarter of 2012 has been a volatile one. Aside from that we have some important news which almost explicitly involves brokerages. We will get more into a trade oriented discussion on our next update. On this one we would really like to discuss the brokerage developments. We will be moving our Cayo newsletters to a quarterly schedule going forward, however we have someone who will be updating our performances each month. You can always write us if you require additional information, and of course we will email everyone of any new or important news events of ours when they occur. All of 2011’s audits have finally been completed and will be uploaded to the site next week.
This quarter we have seen the markets risking sharp bursts of volatility and many whipsaw patterns. It has been a tough period for many with a large amount of institutional and central bank manipulation. We have implemented some very unique changes to our core managed account products this month, as many of you have seen, especially with regards to McLaren which hit a rough patch this quarter, breaking its 5 months winning streak. It has a new scalping algorithm added to it, which has faired quite well this month so far, despite the crazy sell offs happening on GU and EU which has caused some big ups and downs, but ups overall. Q1 left us with one positive month, and two negative months on all 3 systems, also leaving us with 1 positive and 2 negative months in terms of averages. While Q1 has been somewhat disappointing for us, we are positioned as best as we can be for a “cross the board positive month” this month and quarter on of our core systems – something which we have not had in a while.
Our results for Q1 2012 are as follows:
| Month | PFX | MFX | VFX | Average |
| Jan-12 | -12.66% | 3.25% | -2.36% | -3.92% |
| Feb-12 | -14.91% | -5.81% | -2.32% | -7.68% |
| Mar-12 | 13.54% | -8.98% | 2.17% | 2.24% |
* 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 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 will also be updated with the following statistics of interest (broken down by brokerages) on this following page: http://cayoflow.com/performance.html .
BROKERAGE(S)
FX BROKERS (both OLD and NEW!) – Most of you have been involved in, or following our developments on the brokerage front for quite some time. 2011 was a year from hell (to put it bluntly) in terms of brokerage activity. We had two of out of three brokers we were trading at fold their cards on us last year. The first being Sparen FX. We have taken collective legal action against this firm and owner Mark Rice, and it is now approaching the final stages in the federal court (update to all participants coming next week) and the other, Inovatrade, has various recovery options organized by other groups in which many of our members have been participating in to recover funds under management by Michael Alcocer. The list doesn’t stop there, and no one or any jurisdiction is immune. On a much bigger scale we had the JP Morgan silver scandal, and of course one of the worst - MF Global. And it is still ONGOING! We have just come to learn via the financial times that the CFTC has filed a lawsuit in the Manhattan federal court against one of Canada’s largest banks (the Royal Bank of Canada) over alleged “wash trades” worth HUDREDS OF MILLIONS of dollars! It will be interesting to see how this one plays out. The fact of the matter is that given the state of the monetary system and financial markets in general around the world, the toxic debt that institutions (which we feel that governments essentially are) are “playing with” these days, means that this trend is likely going to continue or worsen.
It has always been a deep desire of ours to someday structure our own trade environment, where we can essentially remove ourselves from the toxic mess of manipulation, greed, fraud, and poor service and older technologies that inherently surround most financial markets these days. This has been the story of our lives and a constant struggle of ours for over 5 years! Trading forex is hard enough to begin with on the technical front. Finding an edge and being long-term profitable is extremely difficult. But having to battle the markets AND constantly battle with terrible brokers makes it 10 fold more problematic. We are ecstatic to say that those days will soon be over for us, and all of our clients and like minded partners!
Since June of last year, almost 1 year in the making, we have worked very hard on this deep desire of ours to bring this goal into a reality. Before this month is out we will be live with a new brokerage firm, which we believe will be truly revolutionary in the FX marketplace. We have researched and networked and utilized all of our known contacts to find and help build the right group of people who shared our same vision and goals. It turns out that there are some really amazing people out there in the private sector, who have been faced with our same concerns, and who are doing some really amazing things in response to this. We have essentially brought together and forged a partnership with the best of the most forward thinking people in entire industry. Our final product is an ECN exchange and retail brokerage which will be known as “Vida Markets”. Vida meaning “life”, in which we hope to breathe a new life into the current dead financial markets as we feel it is very much needed, and is long long overdue. We are ¼ owners in this partnership. And we have never been more proud of anything in our lives. This is our baby. Our safe haven. And a place for honest humble traders to come together and do what many of us love doing without all the riff raff problems and greed that typically are associated with it. Not only have we done this, but we have done it extraordinarily, and at no compromise!
We have a game changing feed at the core, and there is not any brokerage on the planet which can compete with it. We have structured the rest of the firm around this, in the best way we could think of based on our experiences as fund managers and traders and having the worst of the worst possibly happen to us over the years. Then we compiled this with the input of the other partners who come from the Hedge Fund, banking, and technology backgrounds. Think of it as being an auto mechanic, and seeing and dealing daily with the problems and frustrations encountered by most automobiles and their owners. Imagine doing this for years! Then imagine getting to form a team with the top leading experts and engineers from Ferrari, Lamborghini, BMW, Porsche, all with a new and shared vision to design a new automobile from the ground up to solve the problems you are so very aware of, and be able to change the industry (for the better) while doing so.
We won’t get into to many of the specifics of the new brokerage in this letter as we could literally fill pages with it. But we just wanted to give this heads up to our many clients who have been with us through the good and tough times over the years, that things will soon be changing (for the better) and we believe that in the near future we will all have many new and unique opportunities which lay ahead! This brokerage is not going to be a wide open project for anyone to participate in. It will be largely based on referral business and new and existing relationships. On that note we will cut this off and present more details as things are closer to launch.
Should you have any questions or concerns please feel free to contact us at any time. We would like to wish you all a great Easter weekend!
Warm Regards,
The CayoFlow Team
