Forex Managed PAMM Account Reasons Why - Key Features

Key Features Document

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• The strategy trades 25 currency pairs simultaneously via the application of 4 algorithms to each i.e.100 algorithms running.

• (DFK�DOJRULWKP�LV�DVVLJQHG�D�ORZ�SHUFHQWDJH�RI�LQYHVWPHQW�FDSLWDO��WKHUHE\�OLPLWLQJ�WKH�HƩHFW�RQ�WKH�RYHUDOO�account balance in adverse market conditions.

• Each algorithm opens a series of trades (Trade Basket) with a counter-trend strategy. Trade Baskets do not attempt to predict the trend of where future prices are going – instead they place sell orders in a rising market DQG�EX\�RUGHUV�LI�WKH�SULFHV�DUH�IDOOLQJ��$V�VXFK�DOO�WKDW�LV�UHTXLUHG�WR�VHFXUH�SUH�GHƪQHG�SURƪWV�LV�IRU�WKH�SULFH�trends to reverse.

• Trading across multiple currency pairs simultaneously allows FXPerpetual to reduce the risk of overexposure to economic factors that may cause extended price trends in any one currency pair.

Guardian Hedge

• To protect against a situation where price trends do not reverse FXPerpetual employs an automated Guardian Hedge strategy.

• A Guardian Hedge is a series of trades equal to or greater than the value of the trades in the basket placed in the direction of the price trend. As these trades are placed in the opposite direction to the basket, the basket WUDGHV�DUH�KHGJHG�ZLWK�WKH�DLP�RI�IUHH]LQJ�DQG�RU�HOLPLQDWLQJ�WKH�HƩHFW�RI�DQ\�QHJDWLYH�WUDGHV��NQRZQ�DV�“drawdown”). Once the trend begins to reverse, the Guardian Hedge is closed and the trade basket continues XQWLO�LW�FORVHV�DW�WKH�SUH�GHWHUPLQHG�SURƪW�OHYHO�

• The Guardian Hedge strategy is not “guaranteed” to eliminate drawdown.

Basket Stop Loss• In the event of a failure of the Guardian Hedge a Basket Stop Loss is employed. Trade Basket stop events

cause crystallised losses on the account.• This event activates the Basket Stop Facility (BSF).

Basket Stop Facility (BSF)• BSF, a unique risk management feature, is applied to your account.• In the event of Trade Basket Stop events causing a net loss to your account (as measured by closed Trade

Baskets at the end of each year) any net loss (closed trade basket loss) to your account will be credited to your account via the non-recourse Basket Stop Facility (BSF).

• The BSF facility is provided by UKITI�DQG�LV�ƪQDQFHG�IURP�GHDOLQJ�VSUHDG�UHEDWHV�WKDW�LW�HDUQV�IURP�HDFK�WUDGH�executed in your account.

• In the event that net losses from basket stop events exceed the amount of dealing rebates received by UKITI since your account began, UKITI�KDV�DUUDQJHG�D�FDVK�ƫRZ�IDFLOLW\�DUUDQJHG�E\�PP Financing Ltd.

• The BSF is a non-recourse facility which means that any credits applied to your account are treated as dealing rebates and therefore are not treated as a “debt”.

• The following events are not covered by the BSF - Rejected stop and or Guardian trade orders at the trade execution broker. - Price feed blackouts that lead to basket stop events that are caused by technology failure - Price gaps that lead to basket stop events

Product SummaryInvesting in FOREX managed accounts can be a rollercoaster ride. In most strategies it’s usual for account values to ƫXFWXDWH�XS�DQG�GRZQ��:KHQ�DFFRXQW�YDOXHV�DUH�XS��DFFRXQW�KROGHUV�VWD\��:KHQ�DFFRXQW�YDOXHV�DUH�GRZQ��DFFRXQW�KROGHUV�RIWHQ�OHDYH��:KHQ�DFFRXQW�KROGHUV�OHDYH�WKH\�FU\VWDOOLVH�D�ORVV�

The performance of any trading strategy might improve after account holders have left meaning the leavers lose money and the manager loses customers, a lose-lose outcome.

FXPerpetual is designed to change this to a win-win outcome.

FXPerpetual�RƩHUV�DQ�DQQXDO��FORVHG�WUDGH�EDVNHW��QHW�ORVV�FUHGLW�WR�DQ\�DFFRXQW�WKDW�KDV�UHGXFHG�LQ�YDOXH��PHDVXUHG�by closed trade baskets) at the end of each account year compared to the beginning. The net loss credit is provided by a smoothing facility called Basket Stop Facility (BSF).

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Non-recourse means the account holder does not have to pay it back.• 6LPLODU�WR� LQVXUDQFH�EXW�ZLWK�RQH�ELJ�GLƩHUHQFH���WKHUH�DUH�QR�FRVWV� �LQVXUDQFH�SUHPLXPV��SD\DEOH�E\�WKH�

account holder.

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$V�LW�RSHUDWHV�LQ�D�VLPLODU�ZD\�WR�DQ�LQVXUDQFH�SRRO�%6)�FDQ�DƩRUG�WKHVH�FODLPV�DV�LW� LV� LPSRVVLEOH�IRU�DOO�DFFRXQW�holders to claim at the same time.

FXPerpetual expects spread rebates to exceed the cost of claims, in a similar way to insurance companies expect LQVXUDQFH�SUHPLXP�UHFHLSWV� WR�H[FHHG�FODLPV��(DFK�DFFRXQW�KROGHU�KDV�D�GLƩHUHQW�DFFRXQW�DQQLYHUVDU\�GDWH�DV�HYHU\RQH�MRLQV��RSHQV�WKHLU�DFFRXQW��DW�GLƩHUHQW�WLPHV�

FXPerpetual�PDQDJHV�WKH�%6)�FDVK�ƫRZ�XQGHUSLQ�SRRO�WR�HQVXUH�WKDW�LW�FDQ�DƩRUG�WKH�FRVW�RI�FODLPV��%\�SRROLQJ�WKH�risk and providing a smoothed performance experience, FXPepetual expects that account holders will stay invested longer.

FXPerpetual� LV�GHVLJQHG�WR�RƩHU�HDFK�DFFRXQW�KROGHU��SURƪWV�GXULQJ�JRRG�SHUIRUPDQFH�WLPHV��DQG�QRQ�UHFRXUVH�loss credits that underpin losses in the event of poor performance.

A win-win.

Black Swan Events

A question that is often asked is how BSF might cope with what is known as a “Black Swan” event. This is where a combination of serious, adverse market conditions combine to cause extraordinary volatility / losses in FX markets. Most designers of DOJRULWKPLF�WUDGLQJ�VWUDWHJLHV�KDYH�JUHDW�GLƬFXOW\� LQ�UHSOLFDWLQJ�WKHVH�FLUFXPVWDQFHV� LQ�WKHLU�PRGHOOLQJ�DV�RI�FRXUVH�WKH�other protection features would probably have already cut in to reduce losses. However it has to be recognised that although very extreme Black Swan events are within the range of probabilities so in theory they could happen.The FXPerpetual website contains several tutorial videos covering many aspects as to FXPerpetual’s operation. These can be found under the “Knowledgebase” tab (www.fxperpetual.com) and one 10-minute video looks at how BSF might deal ZLWK�D�%ODFN�6ZDQ�HYHQW�DQG�ZRUNV�WKURXJK�D�VLPSOLVWLF�VFHQDULR�LQ�WHUPV�RI�KRZ�WKH�FDVK�ƫRZV�ZRXOG�ZRUN��

The scenario assumes the account has enjoyed months of target performance (3% net per month) followed by an entirely unexpected loss of 80% during one month.

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In such an extreme instance the Managers have the right to note the previous high value of the account and to defer payment RI�WKH�FODLP�XQWLO�VXFK�WLPH�DV�WKHUH�LV�VXƬFLHQW�FDVK�LQ�WKH�%6)�XQGHUSLQ�DFFRXQW�LQ�RUGHU�WR�UHLQVWDWH�WKH�DFFRXQW�KROGHU�back to that previous high value.

In the simplistic scenario assumed in this video presentation it takes two years to recover the position. However it is very important that you watch and listen to the video in order to fully appreciate how the various assumptions made in this scenario are themselves unhelpful to how BSF might work in the real world.

If such a catastrophic event were to take place at least account holders in FXPerpetual would not simply have to leave and crystalise their losses. They can wait for their claim under BSF to recover their position.

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For more information contact

This document is issued by Stargate Capital Management Limited (“Stargate”) which is authorised and regulated in the United Kingdom by the Financial Conduct Authority (FCA) registered number 191763, and is for informational SXUSRVHV�RQO\��);3HUSHWXDO�LV�D�SURGXFW�PDQDJHG�E\�6WDUJDWH��1RWKLQJ�FRQWDLQHG�LQ�WKLV�GRFXPHQW�LV�LQWHQGHG�WR�EH�DQ�RHU�RU�SURPRWLRQ�E\�6WDUJDWH�WR�SURYLGH�ȴQDQFLDO�VHUYLFHV�RU�RWKHU�UHJXODWHG�DFWLYLW\�LQ�DFFRUGDQFH�ZLWK�WKH�)LQDQFLDO�6HUYLFHV�DQG�0DUNHWV�$FW�������0DUNHW�DQG�FXUUHQF\�PRYHPHQWV�PD\�FDXVH�WKH�YDOXH�RI�LQYHVWPHQWV�DQG�WKH�LQFRPH�IURP�WKHP�WR�IDOO�DV�ZHOO�DV�ULVH��7UDGLQJ�IRUH[�RQ�PDUJLQ�FDUULHV�D�KLJKHU�OHYHO�RI�ULVN�DQG�ORVVHV�FDQ�H[FHHG�DQ\�LQYHVWPHQW��8QOHVV�RWKHUZLVH�VWDWHG��WKH�VRXUFH�RI�DOO�ȴJXUHV�FRQWDLQHG�KHUHLQ�LV�6WDUJDWH��:KLOVW�DOO�UHDVRQDEOH�FDUH�KDV�EHHQ�WDNHQ�LQ�SUHSDULQJ�WKLV�IDFW�VKHHW��WKH�LQIRUPDWLRQ�FRQWDLQHG�KHUHLQ�KDV�EHHQ�REWDLQHG�IURP�VRXUFHV�WKDW�ZH�FRQVLGHU�UHOLDEOH�EXW�ZH�GR�QRW�UHSUHVHQW�WKDW�LW�LV�FRPSOHWH�RU�DFFXUDWH�DQG�LW�VKRXOG�QRW�EH�UHOLHG�XSRQ�DV�VXFK��$OO�UHWXUQ�ȴJXUHV�KDYH�EHHQ�FDOFXODWHG�DV�FRPSRXQGHG�UHWXUQV��1HLWKHU�6WDUJDWH��LWV�RɝFHUV�RU�HPSOR\HHV�VKDOO�EH��LQ�DQ\�ZD\��UHVSRQVLEOH�IRU�LWV�FRQWHQW��7UDGLQJ�VWUDWHJLHV�DUH�GHQRPLQDWHG�LQ�*%3��e��XQOHVV�RWKHUZLVH�VWDWHG��ΖW�LV�WKH�UHVSRQVLELOLW\�RI�DOO�XVHUV�WR�EH�LQIRUPHG�DQG�WR�REVHUYH�DOO�DSSOLFDEOH�ODZV�DQG�UHJXODWLRQV�RI�DQ\�UHOHYDQW�MXULVGLFWLRQ��DQG�WR�VDWLVI\�WKHPVHOYHV�WKDW�WKHLU�XVH�RI�WKLV�LQIRUPDWLRQ�DQG�DQ\�VXEVHTXHQW�LQYHVWPHQW�LV�SHUPLVVLEOH�XQGHU�WKH�DSSOLFDEOH�ODZV��UXOHV�DQG�UHJXODWLRQV�RI�DQ\�DSSOLFDEOH�JRYHUQPHQW��JRYHUQPHQWDO�DJHQF\��RU�UHJXODWRU\�RUJDQLVDWLRQ�where they reside.

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