Here is the latest update from GalleonFX:
If you have followed our news on our website for a while, you will know previous draw downs have provided us important information we have used to strengthen our strategies or even develop new strategies that not only would have prevented or lessened draw downs in the immediate term, but also provide for additional profits throughout the extent of our back testing periods which can be as much as 30 years.
If you have been keeping up with any market news you know that this January 2008 has been an unprecedented month with extreme volatility and erratic movements in both US and world markets. The uncertainty in the markets has no doubt helped push gold over $918/oz even as I write this.
No forex system or trader can stand the test of good long term trading results unless they can react quickly and learn from draw downs for quick recoveries. We believe this to be one of our strengths as we have already proved such several times in the past. We also feel it is very important as well, to keep you informed of what is happening and why, along with how we are reacting to what is going on. We appreciate your patience as it does take time to analyze situations, react and provide such updates as these.
So as most of our clients know, we are currently in a greater than normal draw down brought about by the severe bearish turn of the global marketplace this last month. All the world stock market indices, and with it all the world currencies (except for Swiss Franc and Japanese Yen - the safe haven currencies) suffered staggering price drops. We found ourselves caught in this fall as well. We had recently expanded our trading systems to trade more currency pairs in these last two months, and so when these same pairs smashed through their support levels, we suffered a series of losses. Most of our long trades could not be supported for any amount of time before forced to close at stop loss, and only a few of our short trades were adept enough to navigate the greatly increased volatility of the market in order to capitalize on its fall.
Thankfully, on Wednesday afternoon January 23rd the world stock indices and currency markets rebounded enough to end a seeming free fall of world markets, and we were on this rebound. We have regained much lost territory in the last 3 days and hoping to regain most (if not all) by month’s end with almost a full week of trading yet to go.
We learned an important lesson from this fall. We had previously understood that the Dow Jones and S&P had some impact on world indices and world currencies, but we did not know the full scale of it. When we tested these indices for correlation as leading indicators for price movement in the last two weeks, we were amazed at how powerful they shape overall movement from 1970 till present. In fact, after discovering such a correlation, we developed a very interesting strategy that develops a breakout/trend signal on the Dow Jones or S&P cash index (or futures index) that in turn is transferred to an underlying currency pair (it works amazing well from 1960 till present on at least 10 pairs - without any need for currency specific alterations to the core strategy). In fact, if we had this strategy in place two weeks ago, we would have capitalized on (instead of brutalized by) the dramatic and volatile fall of the Dow Jones and its impact on world currencies.
This new “US Index Leading Indicator Strategy” would have shorted the major currency pairs these last two weeks, piling up impressive profits. The benefit of adding this strategy on 6 of our currency pairs at this juncture is that they will insure us (perhaps even benefit us) from a falling Dow Jones in the future. On the flip side, they will also help us when Dow Jones corrects and resumes an uptrend, which we have already seen evidence of in this recent case in point…
Wednesday afternoon January 23rd, just before the rebound took place, this new strategy was implemented on five currency pairs and they all caught the rebound just in time. Part of our recent dramatic comeback is due to them. We hope for everyones sake that the market does not become again as volatile and bearish as it has been these last three weeks, but if it does happen again, we are much more prepared now to weather such a storm and even turn a nice profit from it.
I imagine some clients may want to discontinue trading as often happens just at the peak of a draw down. This is unfortunate since these are the only clients that ever loose with us. We have others that have also be capitalizing on this draw down seeing it as the perfect opportunity to put in new funds or open an account for the first time. As much as $400k of new funds have come in after announcing our draw down and about $100k of it from our own staff.
Draw downs are part of forex that will never go away. They can either scare you away for good, or allow you the opportunity to take advantage of a situation (if you in fact do believe such to be the case). We can make no guarantees for short term gains but feel very confident we can continue to provide nice long term profits most of our clients have become accustomed to
January 25th, 2008 at 11:42 pm
[…] forexfinancialgroup.com wrote an interesting post today onHere’s a quick excerpt Here is the latest update from GalleonFX: If you have followed our news on our website for a while, you will know previous draw downs have provided us important information we have used to strengthen our strategies or even develop new strategies that not only would have prevented or lessened draw downs in the immediate term, but also provide for additional profits throughout the extent of our back testing periods which can be as much as 30 years. If you have been keeping up with any market ne […]
February 4th, 2008 at 9:50 pm
improved system…ok
since i am a former “victim” :) i watched galleon very close today.
as far i can say, they again let positions of 950€ fall down to 98€ and then close, some former even with loss. unbelievable. we could have broke even today and even make a profit from the bad trades yesterday…i again start to ask myself, why i gave them another chance,since i don’t really like the system’s profit locking behaviour…
February 5th, 2008 at 1:40 am
Hmm…I think that’s because they try to “catch the big swings.” Usually this works out okay because if they get one big move it more than makes up for the tiny loses.
February 5th, 2008 at 4:18 am
correct, but what about adapting to the actual situation? recovering from the dd should be the main focus and 5% gain on one day, which could have been today, is definitely ok…
February 5th, 2008 at 6:18 am
I agree. I think now they should focus on maximizing profit as much as possible…focus on increasing the profit factor basically.
Hmm, you know if I was to make a comparison among my MA accounts, I’d say that the Sentiment Fund is doing much better.
February 5th, 2008 at 7:39 pm
i just wanted to inform you (as i always do :) ) that i just have revoked the lpoa again, after this senseless fund, which is married with miss volatility but can’t handle her, has prodcued another 10% / 2000€ loss to my account in the last two days and like a few weeks ago, no end in sight. i will definitely never, never again sign a lpoa of them! there’s a reason for them to be based in panama - lol. just summarize the performance of the last years and calculate. a few months profits and then one or two months with even bigger loss in %. thats a way to shrink equity fastly. i will transfer the funds to the sentiment aggressive, until my other accounts are opened. i will give phil’s program a try, which has been recommended by tom trimmer. my pfg devrim account is up and funded, but it isn’t yet mapped to devrims pool. this man seems to be amazing as i here from every side. he even knows what risk management ist (lol, *wink*). i opened another account based at saxo, managed by phil worley from mcelhannon. it is a program with low dd, 7% gain in janaury where nearly all other mainstream accs sucked. check your mail for the link.
February 5th, 2008 at 8:36 pm
yeah Mat..I’m pissed too…Galleonfx is turning out to be a real disappointment for me. I had hoped - perhaps naively - that they would turn the account around, but every time I log into my account my balance is lower!
I may try the Devrim MA but not now. Right now I’m a bit sour with managed accounts. Sentiment Fund on the other hand seems to be holding in there. It’s not performing particularly spectacular but at least it’s not eating away at my balance like Galleon.
As for your allusion to Galleon being potential crooks, I dunno, if they aren’t that then surely their automated technical analysis wizards isn’t all that I thought it was cracked up to be.
My balance is at $583 right now..from $1100 that’s one big ass drawdown, I don’t care how you slice it or how you sugar coat it.
If this string of loses continue I just may end up regretting ever getting back in - hopefully not, but you know they say hope dies last.
February 7th, 2008 at 4:27 am
[…] mentioned in our prior news posting on January 25th 2008, January was extremely bearish and volatile for all world financial indexes and all world […]
February 7th, 2008 at 4:28 am
[…] Comments GalleonFX - Review of January trading, results and adjustments | Alan’s Forex Blog on GalleonFX - Update on January draw down and starting reboundmat on GalleonFX Q&A - Why don’t you take profits when you’re ahead?World of Forex […]
March 8th, 2008 at 7:28 am
Can you please tell me how did you open Mcelhannon account at Saxo? They do not have on saxobank Web site. Many thanks in advance.
March 8th, 2008 at 7:40 am
Hi Sergey. I was intending to write a posting introducing Mcelhannon Managed Accounts to my readers, but I kind of got sidetracked a bit with other things. Lately I’ve been really busy trading on my own seeing as how the dollar is taking another beating, but I will be writing an article about Mcelhannon accounts soon. So please stay tuned to this blog.
You know, don’t they have account opening instructions on the Mcelhannon website though?