09/04/08 Trading stopped, retooling and options going forward September 8, 2008
Look like galleonFX decided to research better before they reopen again.
9/7/08 Update at the end of this article.
With sincere regret and our deepest apologies we have decided to stop trading the PAMM (Main Client Trading Accounts) accounts associated with the Cannon System as of the end of August 2008.
This month was not the turn around month as expected – in fact, it was just one more double digit draw down month that we could not afford, down -16.80% for the Euro Pamm and 18% for the USD PAMM.
August 2008 did indeed break the overlong whipsaw channel (approximately 500 pip range) from March till July that was very rough on our system. But it broke it in the direction of strong dollar with a force and pattern that was unexpected. All the major currencies – Euro, British Pound, Australian Dollar, New Zealand Dollar – fell relative to the dollar by large degrees: EURUSD fell 1650 pips or 8.5%, GBPUSD fell 2200 pips or 10.5%, AUDUSD fell 1400 pips, or 13.5%, NZDUSD fell 900 pips or 10%, and so on. These are significant figures when we take into account that these same markets had not moved more than 3% for the last 4 months prior. What could have possibly caused this fall is anyone’s guess at this point. The fact is, for the last 5 years the currency markets — along with all the commodity markets — had been on upward trend (approximating in many cases a 40% upward slope), and this advanced trend probably had to face the inevitable ceiling of resistance and significant market correction. No one would have guessed that it would come at this time.
Much of system trading and development is constructed on historical data, and when the majority of that data over the last 20 years is biased in one direction – weak dollar – it is natural that systems would have their strongest edge when the current markets are weak dollar.
We had prided ourselves that we had systems that could perform when the markets were weak dollar or strong dollar, but in reality, the systems were not equally strong on both fronts – they are stronger when the markets are weak dollar. When the markets tanked in favor of weak dollar in late July / early August, our systems were doing a reasonable job in catching some of this move, and we were up approximately 10%. However, the last two weeks of August were highly treacherous, for while the markets were on the weekly picture still looking strong dollar, the intraday picture was full of small bear market corrections — especially at night, when there would be significant upward movements during the European session before the New York session would take the markets further south again.
Unfortunately our weak dollar strategies decided that these intraday bear market corrections were worth going for, and our systems took on a number of seemingly reasonable long side positions that the next day would prove as false, and these strategies would be forced to stop out as the market headed further down. By the end of the month we had lost all we had made in the first two weeks and were down again, making three losing months in a row and a year to date drawdown not seen in the last 3 years of trading the system live. It was at this point that we thought the only prudent recourse open to us would be to close this fund.
Though we have closed the Cannon Fund, we are not going to disappear close up shop, or change names as other companies may find it easy to do in our situation. But on the contrary we will be working harder and longer to regain our reputation as offering one of the top managed FX accounts services available.
As we move forward at this point, we are continuing to trade our own private funds this month, but with a more advanced arrangement of systems, and with the intent to open it up to current clients in about a month from now. More details regarding this fund will be provided as soon as we are ready and confident that things are going in our direction again. One option we may present is to simply have your account reactivated but attached to the new advanced fund management system.
So at this time, current clients that are part of the Cannon Fund have these options.
- Withdrawal their funds partially or completely
- Transfer funds to a new a non-trading account or holding account using an FXCM Transfer Form
- Or simply leave the funds where they are as you wait for further information as to when trading may be activated again.
Of course all clients that have lost any funds, and do continue trading with Galleon will not be charged any fees by FXCM until their accounts have completely recovered from any prior losses encured from the Cannon Fund trading.
We will be having a good bit more information and details to share over the next few weeks as we report further on client options as well as progress on our currently trading private funds.
9/7/08 Update Below
To clarify why we are not yet trading client funds with the advanced system. The advanced system is not thoroughly tested. Rather than risk another bad month, we want to make sure we can create some good positive returns first. We do not want to test big changes on client funds. The new advanced system was just recently finished and only started this month on real funds for the first time. We test with our own funds before turning on systems to clients and to make sure our clients have the best systems working for them.
from http://www.galleonfx.com/content/view/147/51/
