Attracting Investor Capital

From a certain point of view, and unfortunately most investors will share that view. How we get there does matter, most people just overlook it.


I didn't mention large drawdowns, and I'm not going to argue with investors. If I want their money I'll play by their rules, if I don't like their rules I won't take their money. The only point I was making here is the silliness of being worried about a 10% drop after a 90% rise, such as what might happen at the end of a successful pyramided position.

http://www.cftc.gov/PressRoom/PressR...pr5844-10.html

"According to the complaint, beginning in January 2006 and continuing through December 2009, the defendants solicited and accepted at least $4.3 million from at least 23 customers for the purported purpose of trading forex. Of the approximate $4.3 million provided to Jackson by customers, approximately $1.6 million was traded and lost, about $600,000 was refunded to customers and the remaining $2.1 million remains unaccounted for.

The complaint alleges that Jackson claimed never to have experienced a single losing year trading forex. Actual domestic forex trading accounts managed and controlled by Jackson, however, had consistent net losses each year from 2005 to 2009.

-----

In the continuing litigation, the CFTC seeks rescission of all contracts and agreements, full restitution to customers and disgorgement of ill-gotten gains. The CFTC also seeks civil monetary penalties and permanent injunctions against further trading and violations of the federal commodities laws."

trading OPM, with PAMM or POA, series 3 or any other license is not needed nor is an ID # from a regulatory body ( USA). This is what I have understood for quite some time. Has this changed more recently?

As soon as People hear the word "managed" a lot of comments come flying out quickly. It is understood as most traders fail and even Hedge funds can not make a consistent profit.

After all the CFTC complaints piling up, I see the necessary steps of regulation, but becoming a CTA doesn't increase your chances of success, nor prevent misuse. The only difference is transparency of the trader( to assure investors that you are who you say you are.)

To the point:
Dukascopy has changed their regulations (more strict) and since they are a bank, they senf me an email stating this claim.

"For American EM we require proof of affiliation with a regulatory authority or a legal opinion from a Law/Audit Firm stating that such affiliation is not required."

EM= external manager.

Can anyone send me in the correct direction?
( I have the series 3 exam book, I have read it, but for the past 6 months, I have never needed to become a CTA. )

How can a Prove this claim?
""a legal opinion from a Law/Audit Firm stating that such affiliation is not required."""

I am at the point, to either jump through the hoop(CTA and NFA #), or talk to a lawyer.... but before I do either. FF has always been a great source of Advice. Let the Comments Flow! Thanks FF members. and R.I.P Robwaltos:-)

LOL

Actually I'm just getting warmed up.
See you on the finish line one day.

I don't know how any person not exposed to internet forums can live a life without experiencing all the love you get in all these places.
I think I had too much of it so I need to step back and let others enjoy it.

R

http://www.accelacast.com/programs/nfa_cta_performance/

Necessary monthly spreed sheets, just in case you get audited by the NFA

Having two margin calls and Blowing OPM isnt warming up. It's failure! And, the fact that you say, " you are just warming up" displays your inability of risk management and only displays your ambition to entice more investors.

But since your track record is at point A again, this should limit your ability to lose OPM.

A successful business is arguably one that does not get sidetracked in dealing with regulators because it failed to set up and operate in compliance with all applicable laws and regulations. You're on the right track just trying to find out what you need to do.

Personally I am waiting for CFTC to finalize the rules for spot leverage and for CTA registration requirements, etc - it will probably be done before the end of the year.

I don't think it would be a bad idea to take/pass the Series 3/34 tests asap, though - you might be grandfathered in after the fact on something by doing so now.

re: Dukas - I have talked to them, too - and I don't think there is any way around being a registered CTA if you want to do managed accounts through them. I am hesitant to open any offshore accounts until I see how fi. reg. reform is going to affect that option.

Thanks for your honest opinion.

I am in contact with a Rep from CFTC regarding an investor (someone who got scammed out of 15k on Craigslist) that funded a FX account and the trader blew the account in one night. Flip the coin, we both win, or you lose style. It's sickening.

How did I get involved? I have been posting on Craigslist for about 1 year on and off, labeled "forex scams" . where I break down all the ways fake traders deceive potential investors.

1. Hidden equity, hidden broker, hidden trading activity (myfxbook)
2. Modified HTML broker statements( Mt4 generates a statement, then you can edit and include anything that you want, Even label the bucket shop as a creditable one. ) I've seen it all.
3. Screenshots- altered
4. Broker Login Video (youtube and his own website)- this was an eye opener. ( a guy built his own website to mirror a real broker( I forgot which one) He starts off on the real broker, says he is going to login to his account and share his performance, the video pauses for a split second, then he logs in (into his website) and displays his performance... The performance was so impressive, I watched the video over 5 times, and this is when I noticed the change in color contrast from the Real brokers website and his own. It wasn't a 100% match. Nice try though!

So to say the least, I have had investors that got scammed contact me and ask how do I know this stuff, etc..

I've been contacting pretty much every managed account gig that I come across. I ask some basic questions, and some sound legit and some are a red flag to me instantly. However to an investor (greedy or not) they do not have the experience or the knowledge to filter out these scams.

The trader from Craigslist ( Mike Dezego) who has blown many accounts ( 3 of his clients have contacted me), I contacted this guy before these investors contacted me and I asked him some basic info, after several emails back and forth, he finally sent the Doctored HTML trading statements ( 1 full years worth). And, sure enough they were fake.( He did an amazing job,but made 1 critical error in the editing that I noticed- No I will not share, as then more scammers can benefit and improve their editing skills)) I requested a link to Myfxbook for verification (he laughed and didnt care to do so. Red flag), and I asked, if you can turn 20K into 500K in 1 year, why trade OPM. ( well the answer is honest, just like anyone who is interested in OPM, its about goals and making more $ with the same amount of effort).


So being in contact with CFTC rep, I can honestly say that regulations will continue to increase. However, there are still loop holes around them, like trading with other brokers with POA or PAMM. Unfortunately, the broker/bank that I am interested in requires regulated EM. Well, it is not really unfortunate because jumping through some more hoops isn't that big of a deal, and it will put me ahead of the others that fail to go through this process.

Yeah, it will be very interesting in what will take place within the next six months.. Luckily the world is large and we have many options.

I'd like to applaud you for your efforts , very unique. Makes you wonder if these people are born for this sort of thing....(The scammers)

Interesting. That's a good attitude re: being ahead of the game on the regs.
Actually I put trading on a far back burner since the Spring, when it seemed the reg changes might be huge & were going to take a while. Actually, now I am not so sure that things will change that much - but we shall see.

So - are there any myfxbook scams that you know of? I am on the verge of putting up a public account there. Some of the traders' results are impressive to say the least.

Best of luck to you.

Scams on Myfxbook? Yes of course. Most of the systems are false advertisement to say the least. I've been asking and suggesting to the owner/builder of Myfxbook to fix the transparency issues, however, their efforts often steer around the issues of REAL drawdown.

I'm still wondering what their True intentions are....

So far, Zipsignals is the only trading activity recorder that is accurate. If a trader has a 100 pip drawdown or a 20% equity drawdown, the DD is recorded whether the trade was closed at BE, TP or loss. So displaying the true DD, you can see who is accurate and who is holding their positions.
On myfxbook. Its the opposite. DD is only recorded when a position is closed at a loss. Irrelevant if you ask me, considering traders can hide their Equity, hedge positions for the next year, close out only the + and show this fabulous Balance curve, when their equity is at an inverse relationship.

So if you are on myfxbook. If the broker is hidden, trading activity is hidden, balance, equity, hidden.. Dont waste your time.. You will be in for a treat

--yeah, you can say I'm trying to improve their website and educate investors. Its not only benefiting me, but improving the FX community.

I just read somewhere on FF about the jacko thread Scam artist. I do not know the details, but only heard that in the end, it was a rip off artist.
If anyone has read the ordeal and would like to summarize. That would save many from the needed efforts to read the thread ;-)

I don't have any issues with drawdown since I'm mostly a scalper and rarely hold positions open more than a day - typically not more than 10 minutes.

But I have been thinking about what I might commit to in the way of drawdown - i.e., what can I guarantee an investor his maximum dd at any time may be? That's a tough one.

I am not trading any OPM at the moment. I don't know where I would start. Somewhere with seg. account under FDIC or other insurance seems to be a must - Citibank and Dukas come to mind. Interactive Brokers. I don't know. I am basically on the fence until the new regs shake out.

I'm skimming through the Series 3 exam book (CTA)

"Criminal, civil, or administrative (regulatory) action directed against the adviser or its principals, or its designated FCM or IB, within the preceding five years, must be disclosed."" page 242

Ok, I am starting to understand why the CTA license is important. It basically limits the ability for felons to run a investment business. A good thing to say the least.

And, also after reading this, it makes me realize if someone is avoiding this small HOOP to jump through, maybe they have read this info too.. lol.

We as a CTA, also have to disclose trading performance for the last 5 years, and if you are new, the Last years activity must be available. We also have to keep updated performance spread sheets of clients performance. (regulatory body may want to see how much are you making)

What concerns me as much as the potential margin cap in the upcoming regs is the possible closing of the lower limit that allows one to trade OPM unregulated if there are <15 investors and <$250,000 AUM. I wonder if that part might devolve to the individual States?

If you have to be a CTA to take $1,000 to trade from your uncle, well fuck

Does CTA prove that the guys has PRACTICAL skill to make money ?

I hear ya. Does having a Driver's License mean you won't be texting your boyfriend while driving high on crank through a school zone at 65 mph and run over 10 first-graders at a crosswalk? No.

But if you have done something like that your DL will be taken away and you won't get it back for a long while - plus you won't be able to become a CTA.

Yep thats right..

This is interesting

" the Pennsylvania Securities Commission announced an action against a forex manager who was managing forex accounts for individuals through a PAMM structure. The Commission “ordered the Respondent to stop offering or selling the Program in the Commonwealth of Pennsylvania, in violation of the Pennsylvania Securities Act of 1972, and in particular Section 201 thereof.” Section 201 provides that “It is unlawful for any person to offer or sell any security in this State unless the security is registered under this act, the security or transaction is exempted under section 202 or 203 hereof or the security is a federally covered security.”"

http://forexregistration.com/blog/forex-pamm-accounts

this site above, sums up everything that we want to know.

http://www.hedgefundlawblog.com/nfa-...ry-record.html

CFTC's new rules for US spot fx are in the Federal Register - see link - effective 10/20/10.

max margin on majors now 50:1, on minors 20:1

I am still trying to figure out what the new CTA registration requirements are - I believe the <15 clients/$400,000 AUM threshold is still intact, but I am not sure. Do your own DD.

http://www.cftc.gov/ucm/groups/publi...ster083010.pdf

The Commodity Futures Trading Commission (CFTC) has issued final forex rules which become effective on October 18, 2010. Any firm acting as a counterparty to certain retail off-exchange forex transactions is required to register as a Retail Foreign Exchange Dealer (RFED). (Futures Commission Merchants offering forex transactions to its retail customers but acting primarily or substantially as a traditional FCM are exempt from registering as an RFED but must be approved as a Forex Firm and designated as a Forex Dealer Member of NFA.)

In addition, any individual acting as a forex solicitor, account manager and/or pool operator is required to register with the CFTC as Introducing Brokers (IBs), Commodity Trading Advisors (CTAs) or Commodity Pool Operators (CPOs) and become Members of National Futures Association.

National Futures Association (NFA) has prepared this brief summary of the forex registration requirements to give firm and individual applicants a basic understanding of the registration process.

Firm Registrations

All forex firms registering as a Retail Foreign Exchange Dealer, Introducing Broker (Independent or Guaranteed), Commodity Trading Advisor or Commodity Pool Operator must meet the following requirements:

Completed Online Registration Forms:
Applicants must file a completed 7-R form through NFA's Online Registration System (ORS).

Additional Requirements for Introducing Brokers:
Applicants registering as Guaranteed Introducing Brokers must submit a completed Guarantee Agreement (Form 1-FR-IB Part B) from an RFED or FCM. Applicants registering as Independent Introducing Brokers must meet additional financial requirements.

Additional Requirements for Commodity Trading Advisors and Commodity Pool Operators:
Before they can begin soliciting customers, CTAs and CPOs must submit a Disclosure Document to NFA for approval. The Disclosure Document must be completed in accordance with NFA Compliance Rule 2-41.

Individual Registrations

Individual Registration Forms:
Any individual applying as an Associated Person (AP) Principal or a Forex AP of a Forex IB, CTA, CPO or RFED must file a completed 8-R form through NFA's Online Registration System (ORS).

Proficiency Exams:
All individuals who solicit retail off-exchange forex business or who supervise that activity will be required to take and pass two exams. One is the National Commodity Futures Examination (NCFE or Series 3), which covers on-exchange futures trading theory, terminology, and regulation. The second exam is the Retail Off-Exchange Forex Examination, Series 34. This hour-long exam consists exclusively of forex-related questions. NFA has published Study Guides for both exams in the Registration section of its website (www.nfa.futures.org).

Both exams are currently available and are administered by the Financial Industry Regulatory Authority (FINRA). The testing application form (U10) can either be downloaded or completed online at http://www.finra.org. The fee for taking the Series 3 exam is $105 and the fee for taking the Series 34 exam is $70.

Note: Effective September 23, FINRA will no longer accept U10 forms submitted through the mail. It will only allow online filing of U10 forms and electronic payment (debit or credit card) of exam fees.

Fingerprint Cards:
NFA requires all individual applicants to submit fingerprint cards, which are sent to the Federal Bureau of Investigation (FBI) to determine if the applicant has a criminal record. NFA can only accept and process a complete FBI Applicant card. These cards are available by contacting NFA's Information Center at the numbers listed below. Applicants are encouraged to submit more than one set of fingerprints with their application to avoid delays in obtaining additional sets if necessary for processing.

NFA offers a fingerprinting service for NFA applicants at the Chicago office (300 South Riverside Plaza, Suite 1800) between the hours of 8:30 a.m. and 4:00 p.m. for $15 (cash, check or money order). In order to use NFA's fingerprint service, visitors must be pre-registered in the building's visitor registry. Visitors should contact NFA's Information Center at the numbers listed below or send an email to [email protected] to pre-register their name and date of visit so they can receive access to NFA's offices on the 18th floor. NFA recommends that visitors pre-register at least a day prior to their visit.

All individuals being fingerprinted will be required to present two forms of identification, one of which is a valid picture ID issued by a government agency, in order to verify the identity of the person being fingerprinted. NFA now submits digital images of fingerprints to the FBI for criminal background checks. Results are received in three days or less, and in some cases within several hours, resulting in a faster and more efficient registration process.

CFTC Registration Fees:
$500 non-refundable registration fee for RFEDs

$200 non-refundable registration fee for each IB, CTA or CPO

$85 non-refundable registration fee for each principal and/or AP of an IB, CTA or CPO

NFA Membership Dues:
$50,000 annual dues for a Retail Foreign Exchange Dealer

$750 non-refundable annual dues for each IB, CTA or CPO

This brief overview is not intended to provide a comprehensive guide to CFTC registration. NFA has published an ORS Users Guide and a tutorial on its website that contain more detailed information. Within the next several days, NFA will be posting a series of educational videos on its website that will provide step-by-step instructions for common registration tasks.

For additional information, visit NFA's website at www.nfa.futures.org or contact NFA's Information Center at (800) 621-3570 from 8:00 a.m. to 5:00 p.m. CT Monday through Friday.

September 2010

All registered IBs must be Members of NFA in order to conduct futures business with the public.

An IB is required to file the following:

A completed online Form 7-R (includes NFA membership sections)
Compliance requirements for applicants
A non-refundable application fee of $200.00
IB Membership Dues of $750.00
An IB is required to file the following for its Principals and Associated Persons

A completed online Form 8-R
Fingerprint Cards
Proficiency Requirements
*A non refundable Principal Application Fee of $85.00
*A non refundable Associated Person Application Fee of $85.00
Additionally, all registered IBs engaged in retail off-exchange forex activities are required to:

Apply to become a forex firm by completing online Form 7-R
Have at least one principal that is also an approved Forex Associated Person
*An application fee is not required if the individual is currently registered with the CFTC in any capacity or is listed as a principal of a current CFTC registrant. In addition, only one application fee is required if the individual is filing an application as both an Associated Person and Principal