Vega FX - Managed Forex Account

TRADE STRATEGY AND METHODOLOGY
The strategies employed by the VFX system have been an evolving work in progress over the past year, and up until this point have morphed into something quiet extraordinary and unique. The core system is comprised of 4 sub-strategies with different components and algorithms which run in parallel to one another. Two of the three strategies are proprietary and can be classified as adaptive and price action based. One can be generally classified as a “deep trend following strategy”, the other as a “distinctive reversal strategy”, and the 3rd as an Asian scalping strategy. The 4th module is a simple trade series management function which focuses on money management and risk management for the aforementioned three trade strategies.

Algorithm A:
The first algorithm was developed by realizing the fact that the most common flaw in the majority of all reversal strategies is that they are actually countertrend strategies, which are in essence, just that – trades in the opposite direction of the prevailing trend. Utilizing a complex mathematical formula to define what we believe are the true reversal areas, VFX has developed an innovative tactic to identify these points and has managed to achieve an astounding > 80% accuracy rate at determining these levels and reversal points. This strategy mainly trades 3-4 of the major pairs, with a 5 point grid, and trades 24/5.

Algorithm B:
The second algorithm was born out of identifying the inherent problem in which most typical trend following strategies are faced with - that they typically run into problems when price stops trending and begin to range. This is characteristically when most of the losses occur for the trend followers. Through innovative charting methods and custom developed indicators, Vega’s algorithms attempt to trade only when price is trending or when a breakout is occurring, in an area we like to call the “value area”. Trending trades are exited quickly when trends diminish and ranges begin to form.

Algorithm A + B:
So why these 2 systems? Besides the obvious reason being diversification, as seen in the chart below on larger time frames these 2 types of strategies, when used synergistically, allow Vega to maximize profit potential by employing systems that cover about half of the movement in the currency markets.

Orange areas represent Algorithm A trades in "reversal areas", and blue areas represent Algorithm B trades in "value areas". But these trending, counter-trending and break out movements typically account for only half of the market movement. What about the rest?

Algorithm C:
Enter algorithm C. The remainder of the time markets are usually ranging, and basically meander along not moving to much at all. This period overlaps a little with the counter-trending strategies, but it is also a prime time to take advantage of scalping the quieter hours. Vega's scalping strategy is very unique and often averages positions when trades break out of their fractal envelopes. The scalping strategy has tight stops, and trades over 8 pairs.

These 3 algorithms compliment each other very well and can facilitate the identification of various currency pairs that behave together in a particular and coherent way and locate pricing misalignments and initial trend formations among these. The algorithms then collectively identify the most likely movements in a particular pair by analyzing an array of custom technical indicators along with other variables such as the relationship between the current price and the price in the recent past, and the interrelationship between prices of various currency baskets.

The 3 algorithms collectively are able to interpret complex patterns from the indicator data and the relative importance of certain movements on the various pairs in question. Because there are 3 underlying algorithms that work synergistically, yet still independently from one another sometimes multiple trades on the same pairs will occur, and hedged positions will transpire from time to time as well. A few other key features the system employs are as follows;

1. Each automated system generated trade typically holds positions anywhere from 5 minutes up to a few days depending on which strategy is trading.
2. The system can place anywhere from 0 to upwards of 80 trades per day.
3. Multiple trade cycles can and will be run at the same time to further reduce the probability of hitting a draw down period in a given trade cycle.
4. The system is usually in the market except for times when the system is scheduled to go “flat”. It trades Fridays, and overall is not specific to certain sessions or periods.
5. Risk and money management are paramount in this system. It is extremely well calculated and drawdown is controlled and managed efficiently.
6. Trades are risk limited from the time any trade series is placed.
7. The general target profits for any given series are known in advance, but trailing stop losses are frequently used to maximize profits and limit downside exposure.

The system was originally developed for the EURUSD currency pair only, but has since been reduced in trade exposure and applied to up up to 10 other currency pairs to help offset and mitigate risk.

PERFORMANCE
The return that the VFX system aims to achieve is always an “absolute return”, meaning there is no benchmark to be expected. The objective when trading the VFX system is to simply maximize returns within certain risk parameters. The VegaFX trading team targets above industry average returns. To achieve these goals, it is possible that this system may occasionally suffer from sizeable drawdowns.

NOTE: Performance in the table below is represented in percent (%) and displays the gross monthly return. All months depicted below were traded with live money (not demo, or hypothetical or back test or forward test). The various other colours and breaks represent changes in brokerages as indicated in the "Notes" column.

Yellow cells = SPFX Brokerage
Orange cells = Inv Brokerage
Green cells = OFM Brokerage (our current brokerage)

2009 2010 2011 2012

Month Return Month Return Month Return Month Return

Jan-09 n/a Jan-10 14.63% Jan-11 12.39% Jan-12 -2.36%

Feb-09 n/a Feb-10 22.48% Feb-11 -10.38% Feb-12

Mar-09 n/a Mar-10 13.57% Mar-11 0.23% Mar-12

Apr-09 n/a Apr-10 1.34% Apr-11 0.47% Apr-12

May-09 n/a May-10 6.52% May-11 4.40% May-12

Jun-09 n/a Jun-10 12.75% Jun-11 -2.01% Jun-12

Jul-09 n/a Jul-10 4.29% Jul-11 51.13% Jul-12

Aug-09 n/a Aug-10 3.34% Aug-11 -0.41% Aug-12

Sep-09 n/a Sep-10 0.82% Sep-11 11.56% Sep-12

Oct-09 n/a Oct-10 9.60% Oct-11 8.04% Oct-12

Nov-09 35.58% Nov-10 19.62% Nov-11 -7.57% Nov-12

Dec-09 11.14% Dec-10 5.77% Dec-11 -1.64% Dec-12

Total Compounded Return Since Inception: 636.25%

Average Monthly Return Since Inception 8.34%

Example Cumulative Return By Monthly Balance (based on a 100K account)

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