Automated forex trading systems can make sure that an investor will not miss out on profitable trades, and that these trades are completed quickly. Automatic forex software can be tailored to fit any FX strategy and will pro-actively seek out the best trades and conduct them quickly. These “software robots” remove much of the hassle involved with using human traders to conduct business on the currency exchanges, but more importantly, they are able to gather and accumulate information quickly and respond to it instantaneously.

The unique worldwide nature of the currency exchange market means that good deals may occur late at night or thousands of miles away, and the information regarding the trade may be buried deep within exchange rate listings. Currency exchange rates often change rapidly in response to government intervention or financial news, and forex software insures that trades in response to such actions are conducted immediately. There is often very little time to react in the constantly changing world of currency exchange, but good forex software insures that the trades get done on time, no matter when or where they need to happen.

While it is still possible to conduct trades the without automated software programs, essentially all investors trading in the FX market are relying on some type of quality trading/analysis software. Forex software opens the doors to smaller investors with less currency and resources to trade with, and enables them to do profitable day trading.

Since the forex markets are open twenty-four hours a day, five days a week, it’s extremely difficult for small investment firms and individual investors to manually keep track of the constantly shifting exchange rates. Automated forex software is always active to monitor and make the trades that it has been instructed to look for.

Alison Wells is an avid Forex Trader who relies on automated Forex software trading systems to make winning trades. She has many years of foreign currency trading experience and writes frequently on Forex trading systems and self-adaptive trading software. She can be found at http://www.WinningForexProgram.com/?id=EzineF10

1) A 24 hour trading market - With stocks and futures, the markets close at 4 pm est. With forex having an international platform, currency rates are constantly trading even if the US markets are closed. So if you come home from work at 5 pm. (like most people) you’ll always find a currency pair you can trade with forex. If you are a stock trader, by the time you get home, the market has already closed.

2) Completely recession proof – No matter how good or bad the US economy is doing, you can always be successful trading forex (as long as you know what you are doing). The dollar can always be traded with or against. As long as you can trade either way of the market, recession is something you never have to worry about, since money can be made on both sides.

3) The ability to trade anywhere - How many people in this world can say that they can travel when and where they want and still do their job? Not too many. Learning to trade forex correctly can lead to the freedom and time to do that. All it takes is a laptop and internet connection.

4) Trading flexibility – Most investment vehicles require a large sum to start trading. Most accounts require you to have 5K-10K to get started if you plan on trading stocks or futures. To be honest you’re going to need them, because it takes a lot of shares to make money trading stocks. With forex you can open an account with many brokers for a few hundred dollars. You have the ability to play micro or mini lots so you don’t have to trade with full lot sizes as the big boys do.

5) No commissions - Unlike stock brokers, the majority of forex brokers do not charge a commission for each forex trade you make.

These are just some of the many great benefits of forex trading.

Learning to trade forex is much easier than people might think. To see how I learned how to be successful forex trading, make sure to check out LearnForexDirectory.com to see more forex reviews

The fervor to just own property seemed to be greater than the glaring fundamentals of the property they were buying. Commercial real estate’s most basic valuation method is the income approach, and the outcome provides a capitalization rate (CAP). Without going into a whole seminar on the topic, it is basically net income before debt divided by the price. While people should have been buying properties north of an 8% CAP (the higher the better when you are the buyer), they were buying them down in the 5′s and 6′s, and I have even seen some extremely over-valued scenarios in the 3′s. At those prices, there is a lot of out of pocket money going into servicing the debt on a monthly basis, and it was happening all in the name of price appreciation. That’s just not how this investment is supposed to work. However, it was actually working for a brief time because of the upward momentum of the market, and if your time horizon was short, there were decent profits to be made off of a flip.

We are now seeing CAP rates starting to creep back up north of 7%, which translates into lower values. High valued areas are still coming in lower than that, but that is a function of perception on future valuations and not a reality based off of current cash flow. The numbers are under the microscope even more so because of more stringent lending guidelines, and also due to the fact that most of the buyers that are left are professional investors that live and die by these valuation formulas. . At the end of the day, if you are valuating commercial real estate on price comparisons then it looks like it’s starting to slide.

However, if you are basing your valuations on the income approach, it’s clear that commercial real estate is going back to exactly where it should be; producing income. When I was first getting involved in real estate, I received the best piece of free advice from a very wise man. He said, “Owning commercial real estate is like a business and almost every business needs to generate income. So let the income be the cake and the appreciation be the icing, and everyday will feel like a birthday.”

Copyright: Dominic Mazzone, Regent Global Funds 2008

This article was written by Dominic Mazzone, Managing Partner and Fund Manager of Regent Global Funds.

This article and other like it can be viewed at http://www.investingsymposium.com which is part of the Regent Global Funds Network.

Regent Global Funds, http://www.rgfunds.com is a alternative investment fund that offers its participating investors and asset backed investment through asset based lending.

The Fund Managers of Regent Global Funds have an expertise in commercial real estate lending and have created a successful alternative investment vehicle that is diversified through this structure.

They separate themselves from other fund mangers by personally investing their own money side-by-side with their investors in the fund, creating an absolute structure of accountability. Dominic Mazzone has written about the need for this type of accountability in an article titled “Fund Managers Need to be Accessible and Personally Invested.”

As worldwide demand for commodities continues to heat up and more and more investors (both institutional and individual) begin seeing commodities as a viable investment vehicle, this trend is likely to continue. This growth has also increased the need for effective ways to choose a commodity trading advisor. In this article we will outline what we feel are some of the best tools and methods available to the individual investor when choosing which managed futures product to invest in.

First things first, let’s define what managed futures are and what they are not. Managed futures are not stocks or ETF’s that simply invest in commodities. Managed futures accounts are investments in which funds are invested in mostly leveraged, future dated contracts for the actual physical commodities or financial instruments. Commodities can include sectors such as food, energy, raw materials and also financial instruments like interest rates and stock indices.

The leverage, risks and rewards can be (but are not always) substantially higher when investing in the futures markets vs. the stock market. Managed futures investments in the United States are regulated by both the National Futures Association and the Commodity Futures Trading Commission (unless the firm / fund have “exempt” status). Regulated firms are licensed as Commodity Trading Advisors (CTA’s) or Commodity Pool Operators (CPO’s). However, keep in mind that just because a firm is licensed or regulated, this is in no way an endorsement of potential performance. Futures trading can carry large potential risks and is not for everybody. Investors should fully familiarize themselves with all applicable risks and disclosures prior to making any investments.

Finding lists of potential managers to sort through is relatively easy if you know where to look. Firms such as Barclays Trading Group, Stark Research, Autumn Gold and Altegris Investments have databases of manager information available. One resource we particularly like is website of IASG .Institutional Advisory Services Group provides a free (with registration) online database of over 450 programs. In addition, the programs can be sorted by a wide range of parameters such as minimum account size, funds under management, various performance measurements etc.

The only problem we see with the online databases is that it can become somewhat overwhelming to try and narrow down your choices to just a handful of managers. In order to make the process a little easier we would like to share with you what we think are some of most important performance metrics to pay attention to.

First recommendation, forget return! The least meaningful statistic often is a manager’s return. How can that be you ask? What matters is RISK ADJUSTED RETURN. Just because somebody bet the farm and got lucky does not mean it was a good idea. Sooner or later (most often sooner) the inevitable wipe out will occur with a manager betting too aggressively.

There are a number of traditional risk adjusted return measurements, the most popular of which being the Sharpe ratio. The Sharpe Ratio compares the return relative to the underlying volatility in the investment. While fundamentally we are in complete agreement with the Sharpe Ratio’s logic, we feel it has one serious flaw. The flaw is that the Sharpe Ratio only views past volatility and makes no attempt to try and predict future volatility. As a result, we feel the Sharpe ratio does not give an adequate view of the potential risks involved in a program.

A good example of this comes from the world of the “option writers” (those who sell options). Since most options expire worthless it’s not uncommon for managers that sell options (and have a good approach) to have excellent Sharpe Ratios. They can have very smooth looking equity curves that have produced for many years. However, just because an equity curve looks smooth and consistent does not mean it will stay that way. What happened in the past is meaningless if you don’t have the same results in the future. Unfortunately, option sellers with longer term excellent track records have been known to have very quick spectacular “blowups”. The problem, in our opinion, is that past volatility is not a good predictor of future volatility.

What is a good predictor you ask? In our opinion one of the best volatility predictors is called the “Margin to Equity Ratio” (MTE). The MTE tells you approximately how much of your investment would be used for margin purposes. This number will vary day-by-day for a given manager but you can get the average range. If for example a managers MTE was 10% this means that for every $100,000 invested the manager uses approximately $10,000 of that for margin at any given time. Keep this in mind; the exchanges set margin based on their approximations of risk. The higher their perceived risk in a contract the higher the margin they set. We encourage you to think just like the exchanges and raise your expectations for potential risk as the MTE goes higher. If we go back to the example of the option writers with good Sharpe ratios you will also often see that they have very high MTE ratios. We believe that these high MTE ratios could have been the tip off to have avoided many disastrous scenarios. Once again, just as the exchanges often raise margin requirements as their expectation of volatility rises, so too do we see the potential for volatility (risk) to be higher as the MTE rises.

Another important use of the MTE comes down to simple math. If you have two managers that both made a $30,000 return yet one used $30,000 in margin to do it and the other used $60,000 in margin to do it then the results are not the same. Based on margin usage one manager’s return was twice as high as the others. This is very important to keep in mind because often managers can appear to have very similar performances but when you dig down into their margin usage you see large differences.

What is an ideal MTE? In our opinion we don’t like to see margin to equity ratios much above 10%. This is on the low end of the spectrum for managed futures accounts and eliminates the vast majority of managers. While it is true that having a low MTE is no guarantee of lower risk (managers with low MTE’s can “blowup” too) we feel that at the minimum it is possibly a good indication of sound risk management. Once again, it is our belief that as the MTE rises so does the potential for risk. There is also a related risk measurement often referred to as “portfolio heat” that uses similar concepts.

In summary, what we suggest is that you compute returns not based on what the manager reported, but rather on what the return was based on margin (you should also compute the risk and drawdown the same way). This will level the playing field and allow you to compare apples-to-apples. Furthermore, we are in favor of being on the conservative side of the MTE spectrum, for us that means that we would likely reject any manager with a ratio above 10%. Using this method can help you narrow down your list of choices to a manageable number rather quickly. After you have done this then you can then look and compare all of the other risk adjusted performance measures and further refine your selection. (At this risk of this article being too long we will save the other risk adjusted performance measurement discussions for future installments).

We want to caution once again that ultimately no measure is a guarantee or assurance against risk or losses. Past performance is not necessarily indicative of future results. Futures’ trading involves high risks and is not for everybody. We are simply sharing with you what we feel is the best method by which to select a manager.

Sincerely,

Dean Hoffman

Mr. Dean Hoffman attended Pennsylvania State University where he studied computer science. In 1987 Mr. Hoffman initially began his career as a commodity broker and worked for several large futures commission merchants in Chicago. After many years as a broker, Mr. Hoffman formed his own trading firm at the Chicago Mercantile Exchange. Throughout this period Mr. Hoffman intensively researched and developed algorithmic trading systems. In 2001 Mr. Hoffman formed a financial software firm, Strategic Trading Systems, that markets algorithmic trading systems. This firm is a corporation that has been registered with the CFTC as a commodity trading advisor since February 2000, and Mr. Hoffman has been registered with the CFTC as its sole associated person since that date. In June 2004 Mr. Hoffman formed Hoffman Asset Management Inc. He became registered with the CFTC as an associated person of Hoffman Asset Management Inc. on August 4, 2004, and he became an NFA Associate on the same date. Mr. Hoffman is responsible for all trading decisions as well as the day-to-day operations of the Advisor.

Mr. Hoffman resides in Central Pennsylvania with his wife and three children.

Website: http://www.hoffmantrading.com

For a related article to this topic please visit the following URL: “The Small Futures Account Conundrum”
http://hubpages.com/hub/The-Small-Futures-Trading-Account-Conundrum