| Investing in Forex |
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| 1. What is the Forex market? |
| Forex, which stands for Foreign Exchange is the simultaneous buying and selling of a currency pair. In other words, one country’s currency is exchanged for the other. |
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| 2. How does one trade Forex? |
| Forex market is the largest market in the world, trading above 1.9 trillion dollars each day. Trading Forex is not done at one central location but is conducted between participants through Electronic Communication Network (ECN) and phone network in various markets around the world. The market is open 24 hours a day from 5pm est on Sunday to Friday at 4pm when it closes. |
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| 3. How is money made in the foreign exchange market? |
FOREX is a market where individuals can maximize their profits and losses, (that’s why you need training if you plan to have a self trading account) using leverage. Most FOREX market makers provide traders leverage by allowing the trader to purchase or sell a contract by committing only 1% of their own funds. This effectively means that a FOREX trader may have the ability to buy a US$100,000 contract for a "margin" amount of US$1000.
• The Trader buys 100,000 GBP at 1.9505 USD (using US$1000 as the margin amount).
• The Trader calculates a potential profit and places a limit order of 1.9620 (Potential profit of US$1,115.00)
• The Trader calculates a potential loss and places a stop at 1.9475 (Potential loss of US$300)
• Within the next hour the GBP rallies to 1.9592, stalls and begins to reverse.
• The Trader decides the limit will not be reached, so he closes his position by selling the GBP at 1.9558 and locks in a profit of US$530.00
• The Trader made a profit of US$530 on a margin amount of $1000 = 53% return on margin in an hour.
The potential profits associated with FOREX trading can be extremely attractive due to the liquidity and volatility of the market and the high level
of leveraging involved. The margin amount is the cash amount deposited by a trader to cover losses (if any) that may result from the trade. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.
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| 4. Why is it now I am hearing about the Forex? |
| Forex market has been around for ages and was initially traded only by Banks, Large Corporations and individual millionaires. It was not until 1996 that Forex became available for small investors (speculators) to trade the market with as little as $250 USD, since then its popularity has grown. |
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| 5. What are the advantages of trading Forex? |
a. Markets are open 24 hours a day 6 days per week
b. Trading opportunities whether the market goes up or down.
c. Unlimited buyers and unlimited sellers
d. Most liquid market in the world |
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| 6. Is Forex risky? |
| Yes, trading the Forex market is a risky investment and is NOT suitable for all investors. We limit the amount of money that is at risk on any given trade by using what we call a stop loss. We control how much we want to risk in the event the market goes against us. |
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| 7. Can you guarantee results? |
| NO! Guaranteeing results is illegal, unless you are a bank or other institutions licensed to do so. We can however guarantee a maximum loss on any account, using stop losses. If you do not want to lose more than 20%, when your account reaches close to 20%, the account will be put on hold and not traded, and you will be contacted. Our systems were designed to produce a return that averages between 50 - 60% per year, but this cannot be guaranteed because no one has control over price movement in the market. |
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| 8. What makes SSCM better than other Forex managers /Forex programs? |
• We offer complete and satisfactory service to our clients
• We are 100% transparent
• You have the ability to fund and close your account anytime without notifying us, your trading agent.
• We do not limit how much profit you make, therefore if we make 25% for a particular month; it will be reflected in your trading account,
less our agreed commission
• We start at a conservative level, trading 1:1, and then as the account grows, we get more aggressive with 2:1 then level 3:1, 8:1 |
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| 9. What are the charges? |
| SILVERSAND CAPITAL MANAGEMENT fee is 2% per year management fee (billed at .1667% per month) plus 20-25% of new monthly profits. |
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| 10. What type of result should I expect? |
| In terms of results, our strategy wins and losses but over time the account grows. On a yearly average, we have been generating results between 50-60% per year. Although we cannot use past performances to predict future results we are confident that our unique trading strategies will continue to produce similar results or even better. We track each and every trade, and we are constantly using proper money management as the account balance fluctuates. |
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| 11. What does Maximum Draw down mean and how does it apply to me? |
| Maximum draw down means the most that an account has ever declined from a previous high (peak to valley). In terms of your own account, using a percentage makes explanation easiest. If the maximum draw down of a trading system is 20%, it means that theoretically the most your account should ever decline is 20% from whatever the highest total your account reaches. Example: If you opened an account with $10,000 and you experienced a maximum draw down of 20% immediately, your account might go to $8,000.00 (down 20% or $2,000 of your initial $10,000) before it started increasing in value again. The probability of that happening is less than 2%. If you started out making a profit (more likely, but no guarantees), it would refer to the highest amount your account has reached prior to the maximum draw down. Example: If your $10,000 account went up to $15,000 and you had a maximum draw down of 20%, your account would go down to $12,000 (down 20% or $3,000 of your newly high value of $15,000) before it started increasing in value again. |
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| 12. Who is my account custodian? |
| Your account is held with FXCM, Forex Capital Markets (FXCM) It is regulated as a Forex Dealer Member by the National Futures Association. Forex Dealer Members are U.S. registered Futures Commission Merchants that have greater than 35% of revenue from foreign exchange. As of September 2006, FXCM held in excess of $215 million in customer funds out of a total of over $770 million held by Forex Dealer Members. While there are approximately 31 active Forex Dealer Members with liabilities to customers of approximately $795 million, FXCM holds approximately 1 out of every 3 dollars of customer funds held by Forex Dealer Members. |
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| 13. Will I be able to access my account on the Internet? |
| Yes, you will be provided with online access to monitor your account by the broker; however that access will be "read only" meaning that you can view the account, including balances, activity and open positions whenever you wish 24 hours a day. You will not be able to place any trades since your account is managed completely by SSCM |
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| 14. What is the minimum I can invest? |
| The minimum investment is $25,000 with a minimum of $10,000 for additional investment. |
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| 15. What is the maximum I could invest? |
| There is no specific maximum investment amount as the Forex market and FXCM can support an investment of almost any size. Can I withdraw my money and close my account any time I want? There is no time commitment on your part; however we do recommend that the funds be placed in our investment program for at least three to six months. You may withdraw or add funds to your account at any time. All fund transfers, deposits, or withdrawals are handled by fxcm directly, not through SSCM. |
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| 16. What is the LPOA (Limited Power Of Attorney) |
| The LPOA is an agreement between you (Client) and SilverSand Capital Management, your trading agent. This agreement will state that you have authorized the agent to execute trades on the Forex market on your behalf. |
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| 17. What is the Fee Payment Authorization (FPA) |
| The FPA is an agreement between client and SSCM to have FXCM deduct monthly commissions. |
