Frequently Asked Questions

1. What is an alternative investment?
An alternative investment is an investment other than conventional investments such as stocks, bonds, mutual funds and exchange-traded funds (ETFs). A managed forex account is one type of alternative investment. Many alternative investments including managed futures and managed forex accounts offer the use of a high degree of leverage, which can produce either significant gains or losses.

2. How do I open an account?
Please go the page where the account program is described. On that page we provide a link to Instructions for opening an account, and the Account Application you must fill out and submit to the broker. If you have further questions, we can often help with what you need to know, or find out for you, as well as provide you the names of specific contact people at PFG, the brokerage from whom to get information most quickly.

3. Do I have to open my own brokerage account in order to participate in a managed account program?
Yes, you have to open a Forex trading account with the broker used by the managed account program. We only feature programs that use highly reputable, NFA registered brokers who offer excellent customer service. You open the account in your name. It is illegal for any non FCM broker to accept funds in their own name.
For more information in that area please read my article "How To Spot A Forex Scam".

4. These results sound "too good to be true". How can it be proven that the system really works?
We can't really answer that question directly since we are not the traders of these managed accounts. However by investing our own funds with a managed account for a period of time we are able to gain an understanding of the trading strategies and the risk management used. We believe that the managed accounts that passed our test will stand a much better chance of surviving for the long term than the vast majority of managed accounts offered on the internet.

5. I don't know anything about forex. Can I still benefit from a managed forex account?
It is not necessary to be a forex trader yourself to intelligently invest in a managed account. We encourage you to more fully educate yourself about forex, and we offer here on our site numerous educational articles and links to other sites.

6. Can I choose my own broker and ask the fund manager to use it for managing my account?
No. Your account must be opened at the same brokerage as all others under management in that program. The head trader for the program has access to software (PAMM; Percent Allocation Management Module) that allows trading of these accounts as a group -- but they must all be at the same brokerage for the trade manager to use this.

7. If I already have an existing self-trade account at the managed account's broker, can it be used in the managed program?
You can only use your existing account if it is with the broker used by the managed program AND you have converted it to a managed account. If you do this, that account can no longer be self-traded by you. If you wish to have both a self-trade account and a managed account, you must open a second account at the broker. In most cases this is quite easy, and consists of resubmitting the signature pages of your original account application, a signed Power of Attorney for the managed program, and a note to the broker asking them to open a second account. You can even ask them to transfer funds from your existing account, to get the new managed account funded.

8. My Investment Advisor recommends diversifying my assets. Do managed forex accounts have a place in a traditional portfolio?
Yes, allocating a percentage of your total assets to an alternative investment, uncorrelated to the stock & bond markets such as managed forex accounts, has historically shown an ability to provide a portfolio with better balance, reduced risk, and improved overall performance.

9. What is a Commodity Trading Advisor?
A Commodity Trading Advisor (CTA) is an individual or a firm, registered with the Commodity Futures Trading Commission(CFTC), that receives compensation for giving people advice on options, futures and the actual trading of managed futures accounts. Registrations for CTA’s are done through the National Futures Association, a self-regulated organization responsible for reviewing and accepting registrations. Please note that at this time forex traders are not required to be registered as CTA’s to manage clients' accounts.

10. Are your policies, practices and activities monitored or regulated by any government agencies?
Yes, we voluntarily registered our company as well as ourselves individually with PFG brokerage firm. PFG is regulated by the CFTC and NFA and is required to monitor all marketing and trading activities of companies like mine that are registered with them.

11. Will I be able to access my account?
Yes, you will be provided with read only access to your account either through an online report viewer or the trading platform. You can view the account, including balance and activities, but you will not be able to place any trades.

12. Can I open my account as an IRA, and transfer funds from an existing IRA into it?
Yes! The process simply requires having an IRA trustee set up the account at the brokerage for you. The one we recommend is Millennium Trust, who has an established relation with the brokers used by these programs. You would contact Millennium first, tell them which account program in which you wish to participate, and they will guide you through the process. There will be a small management fee that you will pay to them for acting as a trustee for your IRA. All the standard rules for an IRA will apply to your account, including those permitting transfer of funds from another existing IRA in this one!
Their site is http://www.mtrustcompany.com

13. Does the trader have access to my money and why do I need to sign a Limited Power of Attorney (POA)?
No, the trader does not have access to your money and cannot transfer, deposit, or withdraw your funds except for the fees specified on the POA and Management Agreement. Your account is set up directly with the brokerage that clears all transactions and handles all transfers, deposits, and withdrawals. It is necessary for you to sign a Limited Power of Attorney (POA) to authorize the brokerage to allow the trader to direct the trading of your account.

14. Does Best FX Traders LLC, invest their own funds into the managed forex accounts offered?
Yes, the principal of Best FX Traders LLC, invest with personal accounts with all recommended programs.

15. Does a managed account ever close to new investors?
What if I am in the process of opening my account when that happens?
Yes, sometimes a managed program reaches a limit and must close to new investors. Usually, if you have already submitted your Account Application to the broker, your account will still be permitted to join the managed program. To make sure, however, you should always fund your account as soon as possible. Many brokers will allow you to submit funds at the same time as your application, to speed up the process.

16. What is the minimum I can invest using managed forex accounts?
The minimum at this time is $25,000. The minimum will be moved up to $35,000 in the summer of 2008.

17. What kind of volatility do managed forex accounts exhibit?
In general, accounts with higher returns will also have higher volatility and draw downs. What is considered higher returns with traditional investments is normal with a good forex trader. The historic max peak to valley draw down for the 007 trading program is only 7.6%. Please read our report on why peak to valley draw downs is the only true way to measure risk. Past maximum draw downs are no guarantee of future draw downs but a safety contract has been put in place on our broker approved paperwork that all trading stops if a 30% draw down were ever to occur. We do not anticipate that based on the positive past performance and low draw downs but put in place for clients comfort.

18. Can I withdraw my money and close my account any time I want?
Yes. This typically takes one to three days.

19. How do I fund my brokerage account?
PFG accepts funding by bank wire or personal check, cashier's check, or bank draft, but not by credit card. See the broker's web page for details.

20. Do I need to keep my money in the managed account for a certain period of time to avoid penalties like mutual funds?
No, there are no penalties for withdrawing from the managed account program at any time you choose.

21. If I do not withdraw profits, do they reinvest -- i.e. compound -- automatically?
Yes, eventually profits left in your account will be considered an addition to principal, and will be factored into trade size calculations for future trades. How long it takes before they are included varies according to when new clients are added to the master account. It could take up to a week before your profits were fully reinvested.

22. Once my new account is funded, how long before it will start being traded by the fund manager, when will I start seeing trades being placed?
As soon as your account is funded, the trade manager for the managed account sees that it is ready for inclusion in the next new cycle of trades -- you need do nothing, the trade manager is automatically alerted by the broker. Typically trading will start within 48 hours from when the broker receives the wire.

23. How do I verify the status of my account?
When your managed Forex trading account is opened at the broker, you are issued a Username and Password which enables you to view and monitor the status of your account 24 hours a day. Through this Login, you can view a complete history of all closed trades as well as the status of any open trades.

24. If I have a question about trades in my account, who do I contact?
The broker is the main contact for all questions about your account. Because we refer a lot of clients, there are particular people in the brokerage who are most familiar with the managed program in which you are participating. In the Instructions for filling our Account Application, we give you the direct contact information for these people. You will not have direct contact with the trader. Sometimes the broker will refer questions about the trader or trading style back to us to answer if we can, because we are familiar with the trader's background. With a managed account you let the trader do the trading and periodically evaluate the results, however frequently you wish. We post daily and monthly results here which you can also check.

25. Can I stop my account from being traded at any time I choose?
Yes. To stop trading, you submit a revocation of the LPOA which originally authorized the trade manager for the managed program to place trades in your account. You submit this to the broker using the link found on the broker's web site. Their web sites are open 24 hours a day. To withdraw funds, you simply execute a withdrawal just as you would normally from any other brokerage account, according to the procedures the broker uses.

26. How is profit share/performance fee calculated?
What if there is a loss?
At the end of the first quarter after your account begins trading, if there is a profit, the broker will deduct the performance fee/profit share, technically called the "incentive fee” that has been authorized on the Power of Attorney you sign when opening your account. Each quarter they will do the same. The incentive fee is a percentage of the net profits per quarter from the "watermark" of previous highs. If there are no profits in a given month, there are no incentive fees. The high equity point established after incentive fees are calculated creates the "watermark" which must be surpassed before any future profits may again be calculated. Example: you start with $100,000 in an account with an incentive fee of 35%, and during the quarter there is $20,000 in gross profit. The incentive fee deducted would be 35% of $20,000, which is $7,000, so your net profit would be $13,000, and your account would now have a "watermark" new balance of $113,000. If in the next quarter there was a loss of $10,000, there would be no incentive fee deducted, since there is no profit, and your new balance would be $103,000. Your "watermark" is still $113,000. In the third quarter, if there was $30,000 in gross profit, then the incentive fee would be calculated on only $20,000 of that, since the first $10,000 in profit gets your account back up to its "watermark" of $113,000. So the incentive fee would be 35% of $20,000, or $7,000, and your net profit for that month would be $23,000 (which is $10,000 + $13,000), and your new account balance would be the new "watermark" of $126,000 (which is $113,000 + $13,000).

27. Do I have to pay taxes on profits made in a managed Forex account?
You are responsible for paying all taxes on your income, according to the laws of your country. Profit made in your managed Forex account is income in every classification of which we are aware, upon which taxes would be due. Forex falls under the tax laws of Futures where gains are counted under the 60/40 rule. 60% is considered long term capital gains and 40% is considered short term capital gains even if all trades are short term trades. This is better then stocks that were traded short term because 100% of those gains must be considered short term capital gains and are subject to that higher rate.

28. Do the owners or employees of this website manage these accounts?
No. We have searched the financial world to find the best managed fund traders, who offer managed accounts at the best brokers, that offer you the best returns. You open your account yourself at the brokerage used for the account program. Your account is then managed by the trader, completely independently of us. Our role is to find the best opportunities for you, gather all the information you need to evaluate them and open your own account. You never send us any money, and we play no part in its management.

29. What are the benefits of portfolio diversification, such as by opening a managed Forex account in addition to my other investments?
Here are some reasons to diversify:
1) Investment advisors have always advocated diversification.
2) Most investor portfolios are heavily concentrated in the stock market and or bond market. 3) Most of the 8,000 mutual funds are highly correlated to each other and the market.
4) Protecting yourself from the risks associated with investment concentration is important to your financial well being.
5) Forex is not correlated to the stock market, so it provides true diversification to lower your overall investment portfolio risk.
6) Forex offers profit/loss potential regardless of market direction, unlike some other markets (no “Bear” Market).

30. I have more questions.
Please call or email the office today with any other questions.

*Risk Disclosure: There is a substantial risk of loss in trading off exchange forex exchange products (forex). You must be aware of the risks and be willing to accept them in order to invest in the forex market. Don't trade with money you can't afford to lose. This report is neither a solicitation nor an offer to Buy/Sell forex contracts. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this report. The past performance of any trading system or methodology is not necessarily indicative of future results.