For those who post, please list the name of individual, company, and any other details you feel would protect people in the future.  Also, this “blacklist” is applicable for all businesses related to private placement programs, such as buy/sells of bank instruments and bulk commodities.

Though we can’t list people ourselves, everyone who reads the blog can feel free to list as much information as they choose.

Let’s work as a team, and flush the ignorance and fraud out of the private placement business. The larger the list grows, the more people will be protected when pursuing future investment opportunities.

Due to the Blog’s limited search features, we ask that all BLACKLIST posts also be added to our Fraud Protection Forum !!!! This will allow each thread to register uniquely in Google, so your post shows up first when others enter their information into the search engines.

NOTE: Since we have received calls from many of the “accused” requesting the removal of certain posts, we have made it simple for everyone to understand. InsideTrade LLC will NOT remove any comments from the blacklist, it is the legal right of others to communicate their frustrations and experiences.  For a legal reference, please refer to the Communications Decency Act or “CDA”, 47 U.S.C. 230. As you will see, this protects us from any liability associated with our reader’s comments, whether the information posted is accurate or not! If you have a disagreement, contact the person directly, or create a rebuttal post by clicking “reply”. This will allow those who view the post to see both sides of the story, which is important for everyone to know

Thank you for your support, and let’s keep exposing the SCAMS for the better of everyone!

InsideTrade LLC Staff
(412) 235-2855

In today’s PPP market, things have stayed the same in some ways and are completely different in others. After watching the demand for project funding skyrocket, many unsuccessful PPP brokers had enough.  With a growing number of investors looking for project funding, PPP brokers started to look for a way to capitalize on this demand, whether it was ethical or not.

In this article we will explain viable ways to fund projects, while alerting you of a few scams that are far too common in today’s private placement industry. As most people know, the typical way to fund large-scale fund projects is by investing in private placement programs. Unfortunately, many investors now think there are other methods to fund projects, seeking new “programs” with lower entry requirements.  As you’ll see, in most cases, these smaller “alternatives” turn out to be scams.  To help you spot them the future, we have provided a great list below for our readers. Covering five of the most common scams in private placement, it gives you everything you need to stay safe, and productive. Scroll down and take a look!

Project Funding Scams

SBLC Leasing Scam:  In recent years, the SBLC (Stand by Letter of Credit) has come onto the scene in the private placement business. In most cases, “providers” claim to have the SBLC issued from the bank for a small upfront fee. Supposedly, once the SBLC has been received by the investor, they can use it as collateral for private placement and other opportunities. Though this sounds great to naive investors, the truth is, SBLC leasing never works. First of all, SBLC’s are not discountable instruments, and no bank will “cut” an SBLC for a small upfront fee. Second of all, if the investor plans to attain an SBLC, they must have the full value to give to the bank before they issue it.  In short, you can’t walk into a bank with 1M and get a SBLC for 10M. Despite what many PPP brokers may claim, leased SBLC’s are not the way to go, no matter what type of transaction you’re pursuing.

Bank Instrument Leasing:  The concept of bank instrument leasing has been growing in popularity since 2000.  With more and more PPP brokers entering the business via the Internet, it has become a niche that has polluted the private placement market.  The problem is, leased bank instruments can rarely be used for any type of transaction, whether it’s private placement or otherwise.  Think about it, could you take a leased car into a bank and get a loan against it? The answer is obvious. Since you’ve only leased the asset and do not have full ownership, no bank will recognize it as personal collateral. Though many eager brokers may tell you otherwise, bank instrument leasing can serve only as proof of temporary collateral, and NOTHING else.

Small Private Placements:  As we have stated in past articles, private placement investments require a large amount of capital to invest. Though there are programs which require smaller amounts, the truth is, you still need to have a lot of money to consider private placement.  In most cases, the investor must have 100M or more in liquid assets to even apply. Unfortunately, every investor seems to have interest in private placement, and due to this growing demand, brokers now see it as an opportunity. In today’s private placement market, ironically, you hear about more small programs than you do large programs. In fact, the PPP business has now become horribly polluted with “small programs” and “small investors”, both looking for something that doesn’t exist.  Do yourself a favor, if you don’t have 50M+ in net worth, chalk it up!  Even though other alternative investments may be great for you, PPP is only beneficial to those with sufficient capital.

Joint Venture Funding Scam:  In recent years, I have started to hear about a project funding scam which is a little trickier than most.  In this case, the “JV” partner leases the instrument to the investor for an upfront fee and a portion of the PPP profits.  Since most investors are new to private placement, they feel encouraged to move forward with the leased instrument since they are “partnering” in the private placement investment. In addition, the investor feels comfortable because conversation typically shifts to the high yields of PPP, taking attention away from the instrument leasing process. The problem is, most private placement investments never turn out as planned. For example, if the program didn’t perform, the investor would spend 400k+ for a worthless bank instrument while the provider kept the leasing commissions. Though this may sound far-fetched, it’s become a common “back-end” scam in PPP, and there is little to no recourse for investors.

Upfront Fee to Fund Projects:  If you are trying to fund a project, you should NEVER pay an upfront fee to attain funding. I don’t care if they have “sample funding letters” and “proof” of past funding success, it’s never worth it.  We have been in the business for several years, and we’ve only heard of a few successful funding opportunities which required fees.  We know, you may love your project more than life itself, but you should always take a step back and be smart.  If you do choose to pursue a project funding opportunity with fees, make sure to ask yourself a few questions before hand. First, what proof does the funding provider have of their performance? Second, where is the money going, and how do you get it back if funding doesn’t occur? Third, do the fees, time frame and other details sound feasible? Last, does the funding provider have references from past investors?  If you ask yourself these questions it should always be any easy decision, whether you choose to move forward or not.

Though project funding scams come in all shapes and sizes, we have listed the most common schemes above. With the desperation of PPP brokers growing, unfortunately, project funding scams will always be on the rise.  Since very few brokers in the private placement business are closing deals, many of them try to make commissions in any way possible. Whether its by sugarcoating details, or putting investors in harms way, its all about the paycheck for unethical brokers. For this reason and others, please be safe, because greed is a key variable in every private placement transaction.

In summary, the private placement market has become flooded with funding scams over the last decade. Though these scams are everywhere, the truth is, you CAN still be successful funding projects. In most instances, the first funding provider will NOT be the right pick, so stay patient. Remember, you never want to become desperate or anxious, or you can put yourself at great risk! You may want your project funded immediately, but the fact is, it’s never worth rolling the dice.  Ask yourself, would you put 400k+ on one hand of poker? The answer is simple, just like identifying scams should be after reading this article…

InsideTrade LLC Staff
(412) 235-2855

Since we know you can NEVER broker deals with insufficient education, we’ve provided another great article on alternative investment law. To get you started, we will review some of the basic legal facts for alternative investment brokers, covering all of the major markets in the process.This will allow you to protect yourself while brokering, making all of your transactions safer and far more efficient.  First things first, let’s scroll down and see how the law effects the investment market you are interested in!

Laws for Alternative Investment Markets

Private Placement:  If you choose to broker private placement investments, you MUST act within the law. First, you should always attain PPP investors indirectly without solicitation. This is extremely critical due to the strict laws associated with private placement programs. If you solicit investors before they inquire about the PPP opportunity, the fact is, you are breaking the law. To remain effective and legal, you should always contact investors citing “networking” as your main objective. Once trust opens up the conversation and they request information, you can discuss any PPP investments you want. Also, when providing PPP documentation to an investor, it should never state yields or commitments.  By quoting yields either verbally or via documentation, you are once again breaking the law, and this times it gets far more serious.

Forex Investments:  If you want to become an “introducing broker” for a managed forex investment, there are two routes you can take. First, you could become an “introducing broker” for managed forex traders within the USA, earning commissions for every investor you find. Though this sounds great to most, you must have an NFA (National Futures Association) license before you can start soliciting investors. Second, you can become an “introducing broker” for offshore managed forex investments, collecting commissions for investor referrals. By working with FX traders who utilize offshore forex brokers, you are not subject to the laws in the USA. This does allow you to earn commissions, but the reality is, attaining forex investors can be very tough if you’re unlicensed. Overall, whether you want to broker domestic or offshore forex investments, you must always keep the law in mind. Though there is are a lot of money in managed forex brokerage, if you slip up, you could lose it all in a heart beat.

Managed Futures:  If you choose to broker managed futures investments, you can take one of two paths. First, you can broker managed futures within the USA, utilizing domestic traders to earn commission.  This requires an NFA license, which adds strict regulation and oversight into the picture.  Though there are drawbacks to having an NFA license, the fact is, licensed futures brokers have the potential to earn Millions every year. For this very reason, it always a good idea to get a NFA license if you are working in the managed futures market. Since the license is recognized by investors worldwide, and futures have become so popular, you can truly raise limitless equity if you’re smart. On the other hand, if you choose to broker a managed futures investment without a license, the futures trader must offshore.  In this case, since you are working with an offshore futures trader, USA licensing requirements do not apply to you as a broker.  Though it would seem appealing to broker futures without regulation, in all reality, it’s harder  than it sounds.

Other Alternative Investments:  If you want to broker investment related products, you must define your niche. Whether it’s REO’s, private equity, hedge funds, private loans, funding or more, there are always opportunities to capitalize on. Though there’s a lot money in the alternative investment markets we listed, you must know one thing above all, the law. In every investment market, there are laws which you must understand and abide by if you want to succeed, and stay in business. Do yourself a favor, and thoroughly research your alternative investment niche before actively pursuing deals. The reality is, you could need a license, or you may just need a firm to sponsor you. Remember, alternative investments are great to broker, but just like everything else in life, there are ground rules.

As you can see, there’s a lot of opportunity in alternative investment brokerage, but you must always act within the law to remain successful. The reality is, each market has its own parameters, and they are usually rather easy to succeed within. If you want to broker alternative investments, do yourself a favor and know the law “like the back of your hand”. The fact is, if you do some basic legal research, it will help you to avoid mistakes which could threaten your future success. Remember, you never want to break the law in the beginning, or you could lose everything you worked for in the end.

In summary, if you want to become an alternative investment broker but you don’t like strict laws, too bad!  The fact is, each alternative investment market has rules which apply to everyone, at all times. By working within the laws creatively, the truth of it is, you will have far more credibility with your client anyways. All in all, just set your goals and be patient. If you don’t feel educated enough in the market you are brokering, you should NEVER push deals until you are completely comfortable. It’s always better to gain experience slowly, rather than risk your entire future from the beginning. Remember, brokering investments is a double-edged sword which can lead to riches, or legal disaster…

InsideTrade LLC Staff
(412) 235-2855

With the barriers in today’s private placement industry, the truth is, it’s very tough to close a deal. With little to no transparency, and tons of inexperienced brokers in the business, the odds are stacked against you from the beginning.  You may be saying, “Why all of the negativity about private placement investments”? Well, we just wanted to introduce you to your #1 ENEMY, “false hope”.

If you are a broker or investor, the private placement business is alluring for one reason, HUGE profit potential.  Though this is great for people who succeed, for most others, it leads to greed and irrational thinking. The fact is, EVERYONE thinks they’ll be one of the lucky few who profit in the PPP business.  Unfortunately, by ASSUMING you will be successful, you shift your thoughts to the financial reward, losing track of the realities in front of you.  Let’s face it, it feels a lot better to dream of riches and trust others, but the truth is, that’s NEVER the best choice in private placement.

To become successful in private placement, you must first develop the right psychological approach. By switching your focus from the reward to the RISK, you can create a view of the transaction that ISN’T tainted by greed or hope. This will help you prevent time waste, spot inconsistencies, and most importantly, it will dull the heartache when deals go wrong. Remember, controlling your emotions is one of the most important components of PPP, and without it, you will NEVER be successful.

In summary, though hope can be very powerful in normal life, it can be detrimental when utilized in the private placement business. Let’s face it, everyone dreams of closing the big private placement deal, but very few do. The reason for this is simple, most people focus on the financial reward instead of the transaction at hand. By chasing dreams rather than reality, your left with blinders on and NO checks to cash.  Once you educate yourself in the PPP business, and STOP believing private placement will change your life, you will finally have a REAL chance to close a deal. In short, do yourself a favor and ALWAYS remember, “Hope doesn’t close private placement transactions, education and diligence does”…

InsideTrade LLC Staff
(412) 235-2855

Since futures trading has become quite the trend, we felt our readers would appreciate some more education on the topic. In this article, we will cover the critical concepts of hedging and speculating in the futures market. This will allow you to understand the two strategies in futures trading, citing applications, benefits and more. As you will see, futures trading can be as profitable as you want it to be, it just depends your strategy, expertise and risk tolerance. First things first, let’s cover the meaning of speculation and its relation the futures market.

By definition, “speculating” is purchasing a naked futures position , hoping the market will go in the direction you predict. For example, a futures trader would be speculating if they bought “long” crude oil futures at $72, hoping to cash out at some point above that price. As you can see, a speculator would earn money if they choose the right direction of the market, using either a buy (“long“) or sell (“short“) position to profit. Typically, speculators are stuck to their computer screens analyzing the futures markets, waiting for the latest price break or news release. Once it happens, the trader jumps on the opportunity, positioning themselves accordingly. Even though the high yields may sound great, the fact is, there can also be higher risk. With even the best traders in the world, the leverage in futures make speculation a double-edged sword.

In contrast to speculation, “hedging” is defining your risk by protecting your investment on both sides of the market. Though this may sound confusing, it is far safer AND easier than speculation. For example, a futures trader may buy 10 “long” crude oil positions at $72, and if the market looked like it was declining below $72, they would buy 10 put options to “cover” their 10 “long” crude oil positions. By doing this, they offset positions and are no longer responsible for any losses below the “strike price” of options. Typically, a smart hedger covers their open positions as soon as the markets show any sign of risk.  Even though hedging can hurt overall yields, it keeps the accounts protected from volatility. Generally, futures hedgers have a strategy which is focused on risk prevention first, using spreads and options to earn their profits.

Though most futures traders are either speculators or hedgers, there are times when both strategies should be used. For example, a savvy hedger could use “long” futures positions to take advantage of a market swing in Gold.  In contrast,a smart speculator could hedge during high risk and volatility, buying options or futures to cover “short” positions in crude oil.  The reality of futures trading is, hedging and speculation are best used together. In fact, each strategy has distinct flaws which prohibit it from succeeding alone in the futures market.

As you can see, futures trading can be very complicated, but it can also be VERY lucrative. If you’re a smart futures trader, you should always have a hedging strategy in place during volatile markets. Though some traders choose to speculate for high yields, the fact is, you’ll always get your head cut off by trading “naked”. The smart money always hedges, benefiting from speculation only during the biggest market swings.   Remember, each futures trader does have their own unique strategy, but risk should always be the main focus, not yields.

In summary, hedging and speculating are the main strategies utilized by futures traders. Speculation focuses on earning high yields by predicting price movement, while hedging focuses on minimizing risk and stabilizing returns.  Though either strategy can generate profit, it’s always a good idea to use both when trading futures. Whether you choose to speculate or hedge, the reality is, futures trading is only as risky as the strategy. Remember, despite this statement and the desire for high yields, it’s always best to stay realistic in a leveraged market. All it takes is one big loss in future trading, and unfortunately, you’ll learn this lesson the hard way…

InsideTrade LLC Staff
(412) 235-2855

You may be thinking, this sounds interesting, but what’s actually traded in a managed futures account?  Well, in this article we will answer that question and more.  To make things simple, we have listed the main sectors of the futures industry, and noted the primary markets that are traded within each.  This will give you a fundamental understanding of the futures market, and the popularity of different sectors amongst managed futures traders.

List of Futures Markets

Energy Futures:  This is one of the most actively traded sectors in the managed futures industry. The main energy futures are crude oil, heating oil, gasoline, and ethanol.

Metal Futures:  With the recent financial crisis, and the high prices of gold, metals have become a very popular sector amongst managed futures traders.  The main metal futures traded are gold, silver, copper, and platinum.

Grain Futures:  The grain futures markets typically have moderate volume, and are far less popular than metals, energies, and stock indices amongst managed futures traders.  The commodities which are considered grain futures are wheat, corn, soybeans, oats, and rice.

Currency Futures:  In the managed futures market, currencies are very popular due to the wide number of markets to choose from.  Some examples of currency futures are the U.S. Dollar Index, British Pound, Canadian Dollar, Swiss Franc, Japanese Yen and Euro FX.

Stock Index Futures:  This sector of the managed futures business is the most popular of all.  In fact, once stock indices became tradable, the futures industry started to explode almost overnight! Some examples of stock index futures are the S&P 500, Nasdaq 100, Dow Industrials, NYSE Composite, Russell 2000, and the Nikkei.

Meat Futures: This is a sector of the managed futures market which very few traders specialize in.  Due to low trading volume, meat futures prices can be quite volatile.  Some examples of meat futures are live cattle, pork bellies, lean hogs, milk, and butter.

Soft Futures:  This is another sector which very few managed futures traders choose to specialize in. Though there are some that have success, the futures markets in this sector can be very volatile.  Some examples of soft futures (“softs”) are coffee, sugar, cocoa, lumber, and orange juice.

As you can see, there are a number of different markets which managed futures traders can pick from.  If you want to “trade breakfast”, you can invest in orange juice and coffee futures.  On the other hand, if you want to trade equities, you can invest in the S&P 500, Dow Index and more! Either way, whether you an investor or trader, the futures markets are bound to have something that interests you.

Though the information discussed in this article may seem simple, it is very important to know of the different markets before investing in managed futures.  If you are an investor, this will allow you to ask the right questions, and better define your risk before moving forward. In contrast, if you are an aspiring trader, understanding the different futures markets will allow you to find your niche, and shorten your path to success.

Remember, whether the topic may seem basic or complex, education is the key to promoting success and safety in your investment decisions!

InsideTrade LLC Staff
(412) 235-2855

To help our readers avoid the same learning curve, we created something which everyone can appreciate, a “Private Placement Glossary”.  Providing OVER 85 of the most important terms in the private placement business, we GUARANTEE you will NEVER find anything more comprehensive, or well-detailed.

Below we have listed various acronyms, phrases, and other unique terms which are commonly used in the private placement community. Scroll down, it’s a long page, but it will prove invaluable in your journey to success!

PRIVATE PLACEMENT ACRONYMS

BCL (Bank Comfort Letter):  A letter written by a bank officer on behalf of a customer, attesting to the current balance and good standing of an account holder.

BG (Bank Guarantee): A bank instrument, guaranteeing a certain face value for an investor, while collecting an annual interest before expiring upon maturity.

CD (Certificate of Deposit): A financial product offered by banks to account holders who agree to leave their funds on deposit for a pre-defined period. This allows investors to collect a higher annual interest, while securing their money in a low risk venture.

CIS (Client Information Sheet): One of the compliance documents typically required for private placement programs. This document asks for basic information such as the contact details, and line of business the applicant is in.

CMO (Collateralized Mortgage Obligation): A mortgage-backed, investment-grade bond that separates mortgage pools into different maturity classes. By creating a CMO, the bond issuer can collect immediate capital while the purchaser gets the bond at a discount from face value, and collects annual interest.  Though these bonds are frequently found in the private placement business, most of them are worthless since the financial crisis hit.

DTC (Depository Trust Committee):  A third party company which provides clearing and settlement services by immobilizing securities, and making “book-entry” changes to the ownership of assets.  This medium is used in private placement programs to transfer/assign assets to a trader, from an investor.

FPA (Fee Protection Agreement):  An official document outlining all fees due to intermediaries upon the completion of transaction.  This is critical for any private placement broker to understand, and utilize.

ITR (Irrevocable Trust Receipt):  A receipt confirming and detailing the deposit of specific assets into a trust.  Though the ITR contains all details of the asset, banks typically will not assign a value to it since the asset is NOT deposited in a credible bank, but rather a private trust.

JV (Joint Venture):  An agreement between two entities outlining compensation, fees, and the obligations of both parties in relation to a specific business venture.  This is the most common legal structure for private placement programs.

KYC (Know your Client):  In some cases, this form will substitute for the client information sheet. Just like the CIS, it requests contact details and other related information.  Also, this phrase is used when referring to the “Know your Client” law, which many investment markets enforce. It states that you must know your client well, and unless deceived, you can incur certain liabilities for future problematic actions of the client.

LOI (Letter of Intent):  A letter provided by investors interested in a private placement programs, defining their unsolicited interest to enter the investment transaction.  This document can also be used for areas outside of private placement, especially where solicitation laws apply.

LTV (Loan to Value):  This is the loan value that a bank/lender will provide after evaluating an assets worth. Usually, this is used for hard/illiquid assets, and is stated in % in relation to the asset’s appraisal value (Loan/Appraisal Value = LTV %).

MIA (Missing in Action):  A term that describes what happens to most private placement brokers when they fail to live up to their promises. One day, they are blowing up your phones, the next day they are nowhere to be found.

MTN (Medium Term Note): A tradable and discountable debt instrument issued by banks, collecting an annual interest before expiring upon maturity with a specified face value.

NCND (Non-Circumvention, Non-Disclosure Agreement):  An agreement between two parties defining the boundaries and limitations of their relationship. Typically, this agreement is used by private placement brokers to “protect” from future circumvention.

POF (Proof of Funds):  The process of allowing another individual to temporarily show your assets as their own, with the fee dependent upon the time it’s utilized.  Also, this phrase can refer to a bank statement, or other financial document, proving the assets of a prospective investor.

PPM (Private Placement Memorandum):  A formal description of an investment opportunity which is created to comply with various federal securities regulations. This outlines all details of the “private placement” offered, as well the obligations of both parties involved.

PPP (Private Placement Program): A private investment program which trades discounted bank instruments (MTN/BG) for profit in the secondary market.

RWA (Ready, Willing, and Able):  Phrase used by private placement brokers confirming the readiness of an investor to satisfy requirements, and more forward with an opportunity.  This statement can also be made in the form of a document, which some programs may require.

SBLC (Stand by Letter of Credit):  A document issued as a guarantee of payment by a bank, on behalf of a client. This is used as “payment of last resort” if the client fails to fulfill a contractual commitment with a third party. In the private placement world, this term is often associated with fraudulent companies that offer bank instrument leasing and/or project funding “opportunities”.

SKR (Safe Keeping Receipt):  A document created by a bank, on behalf of its customer, which specifies all details of an asset, and confirms its current existence on deposit.

T-BILL (Treasury Bill):  A short-term debt obligation in the form of a interest accruing note, backed by the U.S. government with a maturity of less than one year.

T-NOTE (Treasury Note):  A marketable U.S. government debt security containing a fixed annual interest, and a maturity between one and 10 years.

T-STRIP (Treasury Strip):  This is a “zero coupon” bond issued by the U.S government whose yield is based upon the difference between the discounted price it is purchased at, and its face value at maturity (ex. 10M Note, buy at 85% of face, worth 100% at maturity).

VOD (Verification of Deposit):  This is a signed document provided by a financial institution, verifying the current balance and history of an account holder.  This is similar to a BCL, but the verbiage may be different.

PRIVATE PLACEMENT KEY TERMS

Administrative Hold: A term usually referred to by inexperienced brokers. It refers to the investor’s bank reserving funds in favor of another individual, without actually encumbering or moving the asset.

Asset Backed: Refers to a note or bank instrument which is collateralized by hard assets, not liquid assets.  This can be gems, gold, art, diamonds, or other rare valuables.

Assignment: Transferring ownership, or rights to use the collateral, to another individual for a specific period of time. Some traders require this for private placement investments.

Bank Instrument: A debt instrument issued by banks to access immediate liquidity, providing an annual interest and face value for the purchaser. BG’s and MTN’s are common examples.

Bank to Bank: A phrased typically used by brokers, referring to the private verification of assets from the investor’s bank officer, to the trader’s/seller’s bank officer.

Beneficiary; The individual listed as the owner of a debt instrument, such as a medium term notes (MTN’s) or bank guarantees (BG’s).

Best Efforts: This is a term used in any real private placement contract. It states that the trader, or investment manager, will use their best efforts to achieve high profits.  For example, a contract may say “profits will be achieved on a best efforts basis”.

Blocked Funds: A general phrase which refers to blocking liquid assets in favor of another person. This is most commonly achieved via swift MT 760, unless you are in the USA.

Broker Chain: Also known as a “daisy chain”, this frequently used term describes the “layers” of brokers that one must go through before they reach a trader. Unfortunately, there are usually several private placement brokers involved in any deal.

Bullet Program: Phrase created by inexperienced brokers that describes “short-term” private placement programs, promising high returns in less than 30 days.

Cash Backed: Assets which are backed by cash, making them far more appealing for banks and private placement traders.

Cash Poor: This refers to an individual that is “asset rich, but cash poor”.  Though they may have millions in hard assets, they may have little to no liquidity to engage in various transactions.

Circumvention: Cutting out the people who introduced you to the opportunity or broker, with no intent to reward them if you are successful.

Collateral: An asset guaranteeing the line of credit the bank gives, which can be seized upon default from the loan terms.  Bank instruments, cash, and MT 760’s are some examples.

Commission: Payments which can be earned by introducing a service provide to a prospective client.

Commitment Holder: An individual/institution who is contractually obligated to purchase a bank instrument at an agreed upon value.   Without “prior commitment”, the seller of the bank instrument would never have purchased the note because their intent was trading for profit.  This term is also similar to the phrase “exit buyer”.

Compliance: The process of completing due diligence on a new private placement investor. At this time, the investor must complete the required documentation, usually referred to as the “compliance package”.

Corporate Resolution: A compliance document which asks the client to formally state their relationship to the business entity they represent.

Cutting House: Term referring to a bank which creates, issues, and backs discounted bank instruments. The instruments are “cut”, and sold to traders at discounts, who then sell them at a higher price to “exit buyers”.

Discount: The idea that bank instruments can be purchased at a discount from face value, leaving the opportunity to profit from resale, or the difference between face.

Due Diligence: Phrase referring to the process of qualifying people by verifying and investigating their background. This is used mutually by private placement traders and investors.

Escrow: An escrow service is a licensed and regulated company that collects, holds, and sends money, according to conditions specified by both the customer and service provider. Once the conditions of the customer are met, funds are immediately released to the service provider. Typically, in the private placement business, escrow is used to pay upfront fees for “sketchy” services such as leased bank instruments, funding opportunities, and others.

Euroclear: The world’s largest settlement system for securities transactions, covering bonds and equities, as well as bank instruments.  This important and efficient medium allows transactions to be completed remotely, while ensuring safety for both the buyer and seller of the asset.

Exit Buyer: A term used very frequently, referring to the “buyer in place” purchasing the bank instrument at a higher value from the current owner.

Fishing: When a “prospect” contacts a private placement broker with little to no intent to move forward, but plenty of detailed questions in an effort to “fish” for information.

Free and Clear: Also known as “unencumbered”, it means there are no liens or current debt obligations associated with that particular asset.

Fresh Cut: Phrase referring to a recently issued bank instrument that has had only one owner over the course of its existence. Usually, they are accessed at a steep discount from face.

Funding: A shorter way to reference “project funding”, usually referred to by those with insufficient capital to fund their project through private placement programs.

Gate-Keeper: An individual who claims to be “direct” to a trader with a private placement program.

Guarantee: This is a word that should NEVER be used in any investment niche, especially one as volatile as the private placement market.  Though it may not seem like a key term, it is for one VERY big reason.  Any broker or trader that “guarantees” certain profit amounts is breaking the law, and will NEVER fulfill their claims.

Hypothecate: The process of assigning a monetary value to an illiquid asset, and then extracting liquidity in the form of a loan, using the illiquid asset as collateral.

In-Ground Assets: Land areas which have been appraised based upon geological assessments of the assets which lie beneath.   Many in the private placement business try to enter programs with land containing precious metals, energy materials, and more. Unfortunately, most have no luck due to the current worldwide liquidity crisis, and the high excavation costs to isolate the asset.

Intermediary: Anyone involved in a private placement transaction, either through introduction or compensation, who is NOT the trader or client.

Joker Broker: Term used to describe inexperienced private placement brokers who do nothing but waste your time.

Junk Bond: A bond issued by a company or institution which has poor financial integrity, making the bond effectively worthless.  Some examples which private placement brokers may encounter are: Venezuelan bonds, Brazilian bonds, gold bearer bonds, certain corporate bonds, and many others.

Ledger to Ledger: This phrase refers to a transfer between two accounts held by the same bank. For example, a trader may have an HSBC account, and send the profits to a client with a different HSBC account.  This is far more efficient, and avoids possible problems associated with external transfers.

Letter of Authorization: A compliance document required for all private placement investors, allowing the trade group to verify the investor’s assets bank to bank.  This is also known as the “Authorization to Verify”.

Line of Credit: Though it may sound fancy, it’s just a bank loan. Usually in the private placement world, this refers to the loan given to the trader right before trading starts.

Managed Buy/Sell: Another synonym for private placement programs. It refers to the managed buying and selling of bank instruments by a private placement trader.

Mandate: Another term meaning someone is “direct” to an investment opportunity or client.  Usually, this term is used by very inexperienced brokers.

MT 103: This is an improved version of the original swift MT 100, which is similar to a wire transfer. Though it is a direct transfer, the MT 103 has a large number of options which describe conditions and instructions for how the payment should be made.

MT 760: This swift message is used to block funds in favor of someone other than the investor, collateralizing the asset while allowing for loans against it.

MT 799: This swift message is used between banks to communicate in written form, and is usually referred to as “pre-advice”. Typically, the MT 799 will be needed directly before the MT 760 Is issued.

Non-Depletion Account: A term used in private placement contracts which guarantees the funds of the client will never be depleted by the trader.

Non-Solicitation: A compliance document that protects the consultants by having the investor state they were not solicited.

Paper: A synonym used by private placement brokers referring to bank instruments such as bank guarantees or medium term notes.

Paymaster: An individual elected by intermediaries who will accept all commission payments on a private placement transaction, and then distribute them in accordance to the agreement between the parties.  This can be an attorney, one of the brokers, or anyone else the intermediaries feel comfortable with.

Piggyback Program: A newly created phrase referring to the concept of “pooling” investors to meet the minimum capital requirements of a private placement program. For example, 10 investors with 10M would try to meet the 100M minimum which most private placement traders require. Be VERY careful when pursuing this type of “program”, since most do not perform as promised.

Ping: This term refers to a type of private placement program which allows investors to leave funds in their account, while the trading bank verifies the full balance is still present on a daily or weekly basis. Supposedly, traders can access a loan against this “ping”/verification of funds and start trading on the clients behalf. Beware of these programs, as most never perform as promised.

Platform: Another synonym for private placement programs which refers to the corporate structure of the trade group.

Power of Attorney: A document signed by the account holder which gives authority for someone to act on their behalf, as specified in the agreement.

Program Manager: An individual who claims to be “direct” to a trader with a private placement program, accepting all applications and questions from prospective investors.

Promissory Note: Basically, it’s an IOU given from one party to another, stating debt repayment obligations and terms. In all reality, it is really worth nothing to third parties.

Seasoned: Common term that refers to bank instruments, such as medium term notes (MTN’s) and bank guarantees (BG’s), which have been owned by several different beneficiaries over their existence.

Shopping: When a representative/broker sends out an investor’s compliance package to several “program managers” at the same time.  This is greatly frowned upon, and can ruin relationships with real traders.

Signatory: An individual who legally represents the assets/services of another person, entity or themselves, by executing all contractual agreements and related obligations.

Slightly Seasoned: A bank instrument which has been traded, having more than one owner over its lifespan before maturity.  This is usually a bank instrument which is discounted moderately, sold at a value of 70-85% of face.

Swift: A system of communication between banks, allowing account holders to block, transfer, or assign assets as per their request.  Examples are the swift MT 100, MT 103, MT 760, and MT 799.

Tabletop: A term which refers to a face to face meeting between a buyer/investor, and a seller/trader.

Trade Program: A synonym of the term “private placement program”, this phrase is frequently substituted by brokers in business.

Trader: A person with a direct relationship to a bank that is issuing discounted bank instruments, which will later be sold to a pre-defined “exit buyer” at a higher value.

Trading Bank: This is the bank where the trader receives the collateral, or assignment thereof, from the investor. Also, this bank provides the line of credit to the trader.

Unencumbered: This means the referenced asset has no liens or debt obligations to any third party.

Though we’ve done our best to include all of the key terms associated with private placement programs, we apologize if we missed anything you feel is important.  If there are any other terms you feel our readers would appreciate, scroll down and post them now!

Being this is ONLY Private Placement Glossary that exists online, we truly hope that you appreciate the extensive effort we have put into it.  Obviously, we encourage our readers to understand and apply the terms we have mentioned, but you must ALWAYS must remember one thing: you can learn all of the “lingo”you want, but acronyms don’t close deals, education and experience does.

InsideTrade LLC Staff
(412) 235-2855

Well, if you invest with the right futures trader, these are just a few of the benefits you can experience.  Whether Dow futures are peaking at new highs or testing new lows, it really doesn’t matter. The reality is, your profit is determined by the accuracy of the trader’s market analysis, not the growth of the unstable equity markets.  The amazing thing is, some managed futures traders earned 100%+ during the financial crisis while the rest of the world lost 40%+ trusting “safer” investments.  Isn’t it ironic.. don’t you think?

In this article, we will explain the concept of buying and selling positions in the futures markets.  This will allow you to understand how you can trade futures profitably in both bull and bear markets.  First things first, let’s define the term “short-selling”, and explain its importance to those in the futures markets.

Short-selling (“going short”) is selling commodity futures in anticipation the price will decline.  If you “go short” and the market declines, your profit will be determined by the price difference and leverage you apply. On the other hand, if you “short” the market and prices for that commodity rise, you will begin to lose on that futures position.

For example, if you owned one “short” position in crude oil futures and prices moved from $81.19 to $79.19, you would earn $2 (200 “ticks”).  Though this usually translates into a $2,000 profit for crude futures, if you apply additional leverage, it can be far more. Now that you understand how to short-sell futures markets, let’s teach you what it means to “go long”.

Buying (“going long”) is purchasing commodity futures in anticipation the price will rise. If you “go long” and the prices rise, your profit is determined by the price difference and leverage you apply. If you “go long” and the prices for that commodity declines below your purchase price, you will begin to lose on that trade.

For example, if you owned one “long” position in crude oil futures and it moved from $81.19 to $83.19, you would have $2 in price movement.  Though this usually translates into $2,000 in profit, if you choose to apply additional leverage, it can become far more. Let’s face it folks, it’s really just this simple.  Why do you think futures have become one of the biggest investment markets in the world?

You may be saying to yourself, “This sounds easy, but what if you’re not sure what direction the market is trending?  Well, that’s where it gets far more advanced. If you’re a good trader, you will benefit from the market trends, and protect yourself with a “hedge” position if needed.  Also, if you are even more experienced, you can purchase options on futures contracts to define your risk up front. In most cases, managed futures traders use techniques just like this to “cover” or “hedge” their positions, lowering their yields in exchange for more stability.

In summary, whether the market is volatile or calm, futures trading can give you the opportunity to produce very high yields. If you find a good trader, just as the CTA index has shown, managed futures can be far safer than equities.  Keep this in mind, futures trading isn’t about “having a good WEEK in the market”, it’s about opportunistic trade execution.  Though you can lose money if you make a bad mistake, you can also DOUBLE your account with one good trade…

InsideTrade LLC Staff
(412) 235-2855

In today’s market, “private equity” refers to any money invested with non-public companies which expects a yield for the use of the capital. Also, private equity can refer to buying public companies with the intention of making them private in the future. With either definition the idea is simple, private equity provides funding to companies that do not want to go public. As we will explain later, by choosing to not go public, there are a number of benefits these companies can receive by utilizing private equity. Now that we’ve covered this fundamental concept, let’s define the term private equity firm.

By definition, a “private equity firm” is a company which pools money to invest in non-public corporations, hoping to profit from growth. Since the private equity investors’ give legal authority to the manager, they can use their expertise to make the best investment decisions.  In most cases, this involves a detailed analysis of the companies they are prospecting, in addition to whatever diversification strategy they implement. To help you understand what we mean, we will give you an example. One on hand, private equity firm “A”  invests ONLY in biotechnology companies, diversifying amongst corporations at different stages of growth. On the other hand, private equity firm “B” ONLY invests in in the energy market, looking for late stage venture capital opportunities. Either way you slice it, the point is, each private equity manager has their own niche and strategy.  By defining their niche, and becoming an expert in that specific area, the private equity firm can create its unique formula for success.

Private equity firms invest in every major industry, assisting both small and big corporations. Though they do help many small companies, the real economic impact comes from their assistance in “late-stage venture capital’ opportunities.  By “late stage venture capital”, we mean companies which possess strong growth but not enough liquidity to reach their bigger goals. In many cases, you can have a company with huge potential, but not enough money to meet their product demand. By giving these companies thefunds to invest, it allows them to grow to their potential, adding money, ideas and jobs into the economy.  The great part is, private equity creates a positive economic cycle, keeping new companies flowing into the market at all times. In addition, they provide seed capital for new innovations which better the lives of everyone. If you take a good look around you, many of the biggest companies in the world have been funded through private equity. In fact, technology firms of all kinds are receiving private equity funding right now! For example, even Palm, the once-dominant PDA and smart-phone provider received $325 Million from Elevation Partners. The reality is, deals like this happen every day, and most people never appreciate the critical role of private equity.

In summary, if there weren’t private equity firms around, the markets would be a very scary place. Companies would either have to go public, or bang their head again the “glass ceiling” forever. With private equity funding now available to many businesses, this option has removed the pressure to go public. As most eventually learn, being in the spotlight isn’t the best choice for some products. With stock markets now recovering, it has become a perfect environment for private equity firms to profit. Hopefully this new trend continues, because as you now know, private equity is a market that can make or break any economy.

InsideTrade LLC Staff
(412) 235-2855

In this article, we will define the term “broker”, and explain its relation to the alternative investment markets.  As you will see, brokers are the key to a company’s success or failure.  In fact, without brokers, most companies would shut down and our economy would fall apart instantly.   Could “brokers” really be the glue that holds our global economy together? Well, first things first, let’s define the concept of “brokerage” and its place within the supply chain.

By definition, a “broker” is an individual who creates a business relationship, connecting the buyer and seller of a product.  Since this is VERY important to both the buyer AND seller, the broker earns a commission for creating and maintaining these relationships.  For example, a real estate broker earns a predefined commission for connecting a home buyer with the right seller.  Simple enough, isn’t it? Well, now that you understand the concept of brokerage, let’s see how brokers fit into the alternative investment markets.

Types of Alternative Investment Brokers

1. Forex Introducing Broker (“IB”):  As a managed FX broker, your commission is based on the number of trades (“round turns”), profit-sharing agreements, or “rebates”. If you are paid by the trade, you should review the strategy of the managed FX trader, focusing on how many round turns they do. Most FX traders have a strategy which aims to raise capital, placing as many trades as possible without putting the investor at risk. Many of the most successful FX brokers can make over 1M per month, while maintaining a 50M+ book of investors. Currently, you need to get a Series 3 License and join the National Futures Association (NFA) if you want to broker managed forex in the USA.  If you are brokering offshore FX traders, the laws vary, as long as you are not soliciting USA investors.

2. Private Investment Broker:  When you are a private investment broker, your commission varies based upon the type of transaction.  Just like any other investment, you find the opportunity and introduce an investor to it, aiming to create a synergy between the two parties. After doing so, you can then create a Joint Venture (“JV”) agreement to secure your financial interests as a broker. Though there are several types of private investments, private placement has become the market of choice for most brokers.   Despite the fact that private placement deals are hard to close, brokers have flooded the market, chasing the dream of getting rich quick.  To add to this growing problem, as a private placement broker, there are NO licensing requirements.  Even though that may sound like good news, in all reality, it’s lead to a market FULL of misrepresentation, fraud, and inexperience.

3. Managed Futures Broker:  If you are a managed futures broker, your commission is based on the number the trades (“round turns”) placed, or profit-sharing agreements.  As we mentioned before, if you are paid by the trade, look for a managed futures trader with a large number of round turns, and high yields.  By raising equity for a trader who places a lot of trades, you will earn far more in commission from the investors you introduce.  If you are a successful managed futures broker, your commission is almost limitless.  Since managed futures is widely accepted amongst institutional investors, you could honestly raise 1B+, and make over 20M+ per month in commission!  The only downside is, as a managed futures broker, you MUST get a Series 3 License, NFA License, and become affiliated with a seasoned futures firm.  Though this sounds quite tough, in all reality, brokering futures can be well worth the effort.

4. Hedge Fund Broker:  If you broker hedge funds, your commission is either collected upfront (“load fee”), or you are paid a small residual on the investor.   Since the term “hedge fund” is really just a corporate structure, there are very few things which are present in ALL hedge funds.  For example, you can have a hedge fund that trades options on futures, and another that just buys securities. The only thing that’s present in all hedge funds is the “JV” agreement, which outlines the relationship and fee structure for the parties. In short, the laws, fees, and potential for brokering hedge funds depends COMPLETELY on the strategy and background of the fund.  If you are working as a broker for a successful FX hedge fund with high yields, it could be VERY easy to become wealthy.  On the other hand, if you are working for a equity-based hedge fund with conservative yields, it could be VERY tough to raise money during unstable markets.  All in all, remember, FX and commodities are the wave of the future, NOT securities.  If you are going to broker a hedge fund, focus on these two markets ONLY, and you’ll be set.

5. Private Equity Broker:  As a private equity broker, your commission is either a fixed % of the investment upfront, or a residual payment which varies between firms.  If you are collecting your brokerage commission in residual payments, as with most alternative investments, you get paid as long as the client is invested. In order to broker private equity markets, you MUST be affiliated with a firm carrying a FINRA license, and have one hell of a drive! Though the private equity market has some opportunity for brokers, due to the recent financial crisis, we advise our readers to place their efforts elsewhere.  Until the economy and housing market completely recover, it would be an uphill battle to solicit a private equity product.   Despite this fact, there are ALWAYS “stars” in every investment market, so keep your eyes peeled for good private equity firms, because they are around.

Though there are other types of alternative investment brokers, we have covered the most popular markets for our readers.  As you can see, any type of brokerage can be lucrative, but in today’s market, FX and futures have become the emerging trend.  With FX and commodities attracting more investors than ever, it isn’t hard to see why most brokers believe they’re the markets of the future.

In summary, the concept of alternative investment brokerage may appear simple, but it’s not as easy as it sounds.  To be a successful broker, you MUST have people skills, confidence, integrity, ambition, and strength to overcome adversity.  Without even one of these characteristics, in most cases, you will eventually realize you were “barking up the wrong tree”.  Whether you want to become an alternative investment broker or not, the one point to remember is, BROKERS make the world go round….

InsideTrade LLC Staff
(412) 235-2855

In this article, we will cover everything you’ve ever wanted to know about hard asset hypothecation, and how it applies to private placement programs.  This will give you both direction and experience, and most importantly, it will teach you how to ask the right questions.  Before we go any further, lets define what a “hard asset” exactly is.

By definition in the private placement world, a “hard asset” is any asset that is considered illiquid, containing a “value” that can fluctuate based upon demand.  To give you an example of what we mean, we have listed a few of the most common hard assets below.  In addition, we have provided detailed summaries to help you avoid the typical “hard asset” learning curve.  Scroll down, and take a look!

List of Common Hard Assets in Private Placement

Precious Stones:  This can be diamonds, rubies, and other precious stones owned by a collector.  These stones will come with a gem certification and appraisal, and should also have a SKR (Safe Keeping Receipt) as well.  In most cases, precious stones are very tough to monetize unless you can sell them in the open market, or you have a private investor to loan against them.  Either way, though I have heard of gems being used for private placement trades, it should be considered rare and tough to achieve.

Valuable Art:  This can be paintings, antiques, collectibles, and other similar items.  As you would expect, this would be VERY hard to take into trade because they are completely illiquid items.  The value of art is completely based upon demand, and with the unstable global markets, it has becomes tougher to get a loan against art than ever.

Precious Metals:  If you have an asset such as gold, silver, platinum, copper or other metals, we may have good news for you. Currently, precious metals such as gold are in high demand, and can be converted into cash far easier than most assets by banks.   If you have gold bullion, you’ll almost always be able to get into trade, since most banks will loan against gold bars. On the other hand, if you have lower grade gold (“gold ore”), or other metals, you may still have a tough time finding a program to accept the asset.

In-Ground Assets:  In the private placement world, in-ground assets are EVERYWHERE.   Some examples of these are oil interests, copper mines, gold mines, and other similar assets.  Even though these assets may be worth Billions on their appraisals, in most cases, they are pretty much worthless for private placement investments.  This is due to the high excavation costs associated with removing the asset from the ground.  If the bank may have to spend their own money to extract value from this “in-ground” collateral, they will pass on it every time.

Real Estate:  If you have valuable real estate, private placement is only realistic if you get a loan against the property and utilize the cash to invest.   Despite what many private placement brokers may claim, once the real estate market crashed, it became next to impossible to use property to go into trade. Currently, banks are trying to retain all of the liquidity they can, and real estate is no longer a “stable” asset class in their eyes.

Since you now understand what a hard asset is, and some common examples, let’s explore the burning question you all want to know….

Can hard assets really be used for private placement programs?

To greatly simplify the answer, YES, hard assets can be used for private placement investments.  Though this is true, you must also know that there are several obstacles associated with completing such an arduous task.   To communicate these facts to our readers, we have listed the process below to demonstrate the unlikelihood of this process actually working.

Steps to Success for Hard Asset Investors

1.  Asset Must be Valuable in Market and in Strong Demand
2.  Private Placement Trader Must be One of the Very Few that are Real
3.  Bank or Private Investor Must Lend Against Asset and Specify LTV (Loan to Value)
4.  Trader Must Access Line of Credit Against Asset and Make Trades Successfully
5.  Asset Must be Unencumbered After the Private Placement Investment

Unfortunately, even though clients with hard assets are abundant in the private placement business, REAL lenders and private placement investments are not.  Before the global credit crisis it was already tough to close a hard asset deal, but in today’s private placement market, it is nearly impossible.  Banks across the world are holding on to as much liquid capital as possible, and are extremely reluctant to loan against anything that is illiquid, such as the “hard assets” we discussed.

In summary, if someone could successfully convert illiquid assets into a line of credit (100M+) for a real bank instrument trader, they would be one of the richest people in the world.   The problem is, the process of doing so relies on many moving parts which in most cases never align as planned.  Though we have put effort into countless hard asset transactions which all produced nothing, we can honestly say that we HAVE been close. If you choose to pursue these transactions like we did, remember what you have learned in this article, and you just may have a chance to beat the odds!

InsideTrade LLC Staff
(412) 235-2855

Though it may sound extreme, one mistake during a conversation about private placement can lead to the infamous “knock on the door”. As with any other investment market, there are laws for brokering private placement, AND consequences for breaking them.

To help protect our readers, we have responded with an article covering solicitation laws, AND some key tips for brokering private placement.  This will allow you to work within the law, and aim for success the right way. First things first, let’s define the term “solicitation”, and how it applies to private placement investments.

Solicitation is defined as approaching an individual to promote an idea, business, service, or opportunity. In private placement, you are “soliciting” by quoting yields or approaching an investor before they have submitted a full compliance package. Since authorities are now looking for this type of activity, almost anything can be considered solicitation, hence the seriousness of this article.

Now that we’ve defined the term solicitation, let’s review some tips to help you avoid the legal hassle, and hit the jackpot.  Scroll down and take a look!

Solicitation Tips for Private Placement Brokers

1.  ALWAYS get the Compliance Documents:  Before you send details about private placement, or compliance documents, you must first have a formal request via email from the investor.  This email will prove that the investor requested the information from you, which makes it no longer a solicitation once you respond.  When sending out the compliance documents, make sure to include a Non-Solicitation Statement for the investor to complete.  After you have this document signed, and the initial email from the investor, you can prove you did not solicit them if needed.

2.  NEVER Guarantee Anything to Investors:  Let’s face it, less than 1% of the deals you work on have a chance of closing.  If you choose to think otherwise, and guarantee something that doesn’t perform, you can be in a lot of hot water.  If there is one word I would NEVER use in the private placement business, it is “guarantee”.  By doing so, you incur liability for something you have no control over.  Even if you are the trader, or have seen it work before, private placement investments rarely go as planned.

3.  Do NOT Sugarcoat Details to Investors:  If you paint a picture of unrealistic yields and no risk to the private placement investor, you are doomed for failure.  Not only are you setting yourself up for a BIG waste of time, but you are also risking your freedom. As the transaction evolves, the finger will always be pointed at you when the details don’t match up.  Even worse, if the transaction becomes a scam, it will look like you had a major part in it. Remember, most private placement investors have been through the ringer, and they know what sounds real and too good to be true.  Be the one broker that sounds confident and consistent, and eventually, the real investors will all come running back to you in the end.

4.  Use Disclaimers in ALL Communications:  When emailing anyone in the private placement business, it is always good to have a disclaimer below your signature.  It should state that you are NOT an investment advisor, and that NO information you provide should be considered a solicitation.   If you have this disclaimer below every email communication, as long as you are doing everything else legally, you will be protected.  Also, when speaking to an investor, it isn’t a bad idea to give “truthful disclaimers” here and there. This will protect you, while also helping you to establish more rapport with the investor.

5. NEVER Misrepresent Yourself to Investors:  When you misrepresent yourself or your experiences to others, you are breaking the law. Even if you are three brokers away from the trader, you should NEVER lie to get an application.  If your “trader” falls through, you will be stuck covering up your lies, and will have lost a good investor in the process. If you’re frustrated due to a lack of success, be more aggressive, and brokers will usually get out of the way.  Remember, honesty is safe and far more productive than deception.

Though it may be easier to paint a rosy picture for investors, the truth is always uncovered as the transaction unfolds.  No one appreciates the “bait and switch” technique, and as you know, ANYONE can file criminal complaints or sue you.  Remember, having a PPP investor submit an application is great, but NOT if they are expecting something you can’t provide.  Having applications that don’t close does nothing but degrade your reputation, and in such a fraud polluted business, that is all you really have.

In summary, if you have honest conversations outlining realistic expectations and worst case scenarios, you will ALWAYS be more productive in the end.  Keep it truthful, legal, short, and sweet, and you will surround yourself with people of similar ethics in return.

InsideTrade LLC Staff
(412) 235-2855

In this article, we will outline the facts of alternative investment brokerage, while providing great tips for aspiring brokers.  This will help you grasp the facts of the industry, and adapt to future circumstances as an alternative investment broker.  What are you waiting for? Scroll down and take a look!

The 10 Facts of Alternative Investment Brokerage

1.  Brokering Alternative Investments is Not Very Easy:  Even though you can be very successful brokering alternative investments, it takes a lot of effort. First, you have to define the market you are going to broker.  In most cases, this will either be the forex, futures, private placement, or hedge fund markets if you’re focusing on alternative investments.  After you choose the market to broker, the next step is to find a good alternative investment opportunity.  Though this seems like it would be the toughest part, you haven’t heard the next step yet.  Once you have completed the two prior stages, you then need to do the hardest thing of all, raise equity.  As you can see, brokering alternative investments is rather hard, BUT there are thousands of self-made millionaires who make it look simple every day.

2.  Alternative Investment Brokers Need the Right Personality:  Everyone is NOT born to be an investment broker.  It takes an aggressive person who is willing to speak to thousands of people just to find that one big opportunity.  If your AMBITION and VISION don’t set you apart from others, you will NEVER succeed as an alternative investment broker. In addition, when brokering volatile investments, you must realize it can take you on an emotional rollercoaster.  All it takes is one big mistake to devastate an investor’s account, and finally at that point, you’ll know if you are right for the position.  Be honest with yourself, if it doesn’t feel exciting to broker large investment deals, then don’t waste your time.

3.  It’s Tough to Find a Good Alternative Investment to Broker:  If you choose to broker alternative investments and find your market of choice, the next step is finding a good opportunity.  Though there are some GREAT alternative investments in the market, they are also hard to find. To be honest, you MUST get creative via the Internet, or already be well-connected beforehand. If you are working in the managed FX or futures markets, look for traders with high yields and a history of infrequent draw-downs.  Also, if you want to pad your pocket, look for traders who place a large amount of trades.  This will allow you to earn far more commission, which is the goal, right? The one thing to remember is, don’t broker deals until you are experienced, and 100% sure of the opportunity you are offering.

4.  Private Alternative Investments are Hit or Miss:  Brokers who focus on private alternative investments can get rich far quicker than any other market.  Despite this fact, the main drawback is, they also have the HIGHEST rate of failure.  Depending on the market you are brokering, legitimacy is always a problem you run into.  If you are working with a private FX or futures trader, you can make a killing, as long as you find that needle in the haystack.  On the other hand, if you are brokering private placement investments, your chances of success are far slimmer.  The SECRET to private placement success is found in one concept, “ratios”.  If you educate yourself and then speak with thousands of PPP brokers, you should have a good chance to close a large deal.

5.  Managed FX and Futures are the Fastest Growing Markets:  If you are wondering which alternative investment may be best to broker, it’s managed FX or futures.  Though there are great opportunities in other markets, if you are working with the right trader, NOTHING can compare.  In FX and futures markets, commissions are far greater than almost any investment industry.  On top of that, interest is growing faster than ever for these high yield investments. With hedge funds, private equity, and real estate ALL recovering from the financial crisis, why not look elsewhere? The truth is, if you found a good futures trader, and gradually acquired 5M of investors, you would be immediately retired and a multi-millionaire.

6.  Some Alternative Investments Require Licenses for Brokers:  When you choose to work as an alternative investment broker, you also need to decide if you want to get a license or not.  If you choose to broker transactions unlicensed, you can only work in private placement, real estate, or certain types of FX investments.  Though this severely limits your options, it also removes the hassle and cost of becoming licensed.  If you are someone who is “swinging for the fences”, then it is best for you to get licensed.  By getting a Series 3 License, and then registering with the National Futures Association (NFA), you can legally broker managed FX and futures investments.  Even though this process can seem arduous at times, if you want to make the big money, you should just suck it up and get the appropriate licenses.  At that point, you can solicit institutional or retail investors, and in all reality, the world is in the palm of your hand.

7.  The Amount of Equity Raised Measures Success for Brokers:  If you choose to become an investment broker, don’t think you are going to close one big deal and walk away forever.  Though this can happen if you broker the right private investments, REMEMBER, relationships fade when you don’t nurture them.  If you do choose to become a licensed broker, this is where it gets interesting.  Before you can become an independent broker, you must affiliate yourself with a licensed firm in that market.  By doing so, you open yourself up to the constant pressure of account “quotas”, among other things.  In many firms, you have to raise a certain amount of new money every month, or your job can be in jeopardy.  The truth is, raising equity isn’t really that hard, as long as you have support and a good product to pitch.

8.  Beware of Broker Circumvention in Alternative Investments:  Unfortunately, in the alternative investment business, greed can show up out of nowhere in deals.  With so much money on the table, the truth is, some people will change for the worse.  By sharing your contacts with brokers or investors, you are jeopardizing your commission and niche all at once.  Unless you have a GREAT relationship with either the fund manager or the investor, in many instances you can get cut right out of a deal.  Though this isn’t very common in licensed investments, if you are brokering a private investment, you should ALWAYS be on the look-out.  It just could be the difference between a Million Dollar check, and “another deal gone wrong”.

9.  Integrity and Realism Attracts Investors, Not Sales Pitches: It is great to have investors as an alternative investment broker, but ONLY if you obtained them the right way.  If you are completely honest and empathetic with your investors, you will build life-long relationships that will pay you the entire time.  On the other hand, if you overemphasize the benefits and fail to explain the risks of the investment, you’re on a path to disaster.  Even if you find a few investors who fall for your “slick” sales pitch, remember, it will ALWAYS leave you behind in the long run.   Be real with your investors, and remember the Golden Rule: “Treat others as you would like to be treated”.  This will make things far easier for you during the good times, and the BAD!

10. Alternative Investment Brokers Make Great Commissions:  If you are a successful alternative investment broker, you can get filthy rich in very little time.  Lawyers work day and night for $250K per year when all it takes is one big investor, and you’re instantly retired as a broker.  For example, if you had a 100M book of investors for a FX trader, you could be making over 2M per month.  The great part is, all you have to do is make sure the relationship remains stable, and you get residual payments until they close their account.  The reality is, if you want to become as rich as possible in the shortest amount of time, brokering alternative investments is the way to go.

In summary, with any job there are facts of the industry which must be acknowledged and adapted to.  As we mentioned, the 10 facts listed above will ALWAYS determine your level of success, or failure as an alternative investment broker. Remember, you CAN make a TON of money as a broker, but ONLY if you find the right investors AND close deals. Hopefully after reading this article, you now understand the realities of alternative investment brokerage, because if you’re sharp, there’s ALWAYS a pot of gold at the end of this rainbow…

InsideTrade LLC Staff
(412) 235-2855

Before the crisis, the private equity market had been flourishing since its “MVP year” of 1978.  In this year, venture capital investments SKYROCKETED from a measly $39 Million in 1977, to an astounding $570 Million in 1978.  You may be asking yourself, “What could cause a 1000%+ increase in private equity investing in just one year”?  Well, that’s a question with a two-part answer. First, the government lowered the capital gains tax from a maximum of 49% to 28%, leaving investors with HIGHER net profits.  Second,  the government removed some of the strict legislation from ERISA, allowing pension funds to become major investors in private equity funds.  As a result of these new laws, institutional investors began piling into the private equity markets and things were great, until it all came to a screeching halt in late 2007.

Once market sentiment changed during the HEART of the financial crisis, it was almost impossible to find investors for private equity.   Unfortunately, with little to no faith in the economy, MOST of these investors left the market, protecting themselves from future risk.  Though this was the case in almost EVERY investment market, as you can see in the graph below, it was especially true in the private equity industry. Scroll down and take a look!

When you first glance at the chart, you have to be amazed by the HUGE drop in equity from Q4 2007 to Q2 2009.  Believe it or not, $178 Billion was raised by private equity funds in 2008, and ONLY $12 Billion was raised in 2009!  That’s a 93.3% DROP in money raised over just one year! As you can see, raising money in the private equity markets is almost impossible when there’s poor market sentiment.  The reason for this is simple, steady growth is what interests private equity investors, not “value hunting” during unstable times.

The reality of the current economy is this, there has been a massive financial disaster that has affected every market world-wide, and though it seems to be coming to an end, it may take years to fully resolve.  Now in the aftermath there is still plenty of hope, but the fact is, many investors are badly scarred from these recent events.  Despite all of the “fear” in the market, remember this, if you time things right in a depressed economy, you CAN “turn dust into diamonds” while it recovers.  To illustrate this critically IMPORTANT point, we have provided another chart below!

As you can see, private equity has rebounded faster than any other market, and it is VERY likely this will happen again.  Though it can be quite volatile at times, volatility isn’t always a bad thing. Remember, the smart investor buys during the “overcast”, and inexperienced investors wait until the sun comes out.

In summary, despite the turmoil from the recent crisis, the private equity market has a bright future for decades to come.   With the information and charts we have provided, you now see how private equity funds can either become rich or insolvent from a financial crisis.  It all depends on the strategy, timing, and expertise of the fund manager, just like every other investment…

InsideTrade LLC Staff
(412) 235-2855

Until recent years, very few private placement brokers mentioned SBLC’s, or even knew what they were. This was a time where investors pledged cash or bank instruments for their private placement investments, not “fictional” leased assets.  In today’s private placement world, SBLC’s are all over the scene, popping up like weeds! Unfortunately, they have become popular in bank instrument leasing programs, and are now associated with this “niche” of the industry.   For those who don’t know what a “SBLC” is, let’s start at the beginning by defining its meaning and applications.

By definition, a SBLC (Stand by Letter of Credit) is a document issued by a bank, guaranteeing payment on behalf of a client. This is used as a “payment of last resort” if the client fails to fulfill a contractual commitment with a third party. In all reality, the SBLC is just a piece of paper with a “value” backed by the good credit of the bank, allowing clients use a “conditional collateral” if needed.

The SBLC (Stand by Letter of Credit) is commonly used when two parties enter into a contract calling for one party to arrange a L/C in favor of the other.  With any Stand by Letter of Credit, the agreement is the SBLC will NOT be “drawn” unless the owner defaults on the contract.  If the beneficiary was to monetize the SBLC without prior agreement, the owner could dispute the contract in court. The truth is, SBLC’s are rare and used MOSTLY in industrial or bulk commodity sales, serving as a “performance bond” of sorts.

Despite what private placement brokers may claim, the SBLC is not used for leasing or investing very often. Just like we explained above, it’s MOSTLY used in bulk, wholesale, and logistical markets. If you are an investor, watch out for the infamous “SBLC leasing scam”.  Don’t waste your time “leasing” an SBLC, or having it “fresh cut” from the bank, it will never fund your project or get you into PPP.  The fact is, unless you are using it for credit enhancement or proof of temporary collateral, a “leased” SBLC will ALWAYS be useless.  In addition, if you are a private placement broker, ALWAYS BEWARE of investors with SBLC’s.  This could mean the funds are leased, fraudulent, or a part of a prior deal gone wrong.  All in all, the SBLC is legit, but brokers have tried to apply it to a process it isn’t made for.

In summary, though the SBLC is a credible term, it’s ONLY important when private placement investors are in the USA. Since USA banks do NOT offer the MT 760, the SBLC is the only safe way to assign a trader as temporary beneficiary. Remember, do yourself a favor and BEWARE of PPP brokers who use the term “SBLC”.  In all reality, incorrect usage of the term should be considered a HUGE RED FLAG and nothing less!

If you want to learn how to spot other”warning signs” in PPP, take a minute and read the article “Top 10 Red Flags for Private Placement“. It will help you identify real opportunities, while providing key tips to keep you sharp in this oh so unique “business”…

InsideTrade LLC Staff
(412) 235-2855

Due the growing access to information on forex, as well as the high yield potential, there are now thousands of wealthy investors looking for managed forex investments at this very moment.  Though this is great for the markets, the problem is, most investors go into managed forex investments before they should, making critical mistakes along the way. In this article, we will cover the most common of these mistakes, investing with a offshore forex trader.

Despite its monumental growth in recent years, forex is still a widely unregulated market, even after the recent NFA/CFTC law changes. To add to this problem, most investors don’t even know what type of license a forex trader must have to legally pool money and trade.  In addition, most investors have no idea how to evaluate a managed forex investment, whether it is domestic or offshore. Facts such as these have lead to a market filled with high demand, and plenty of undereducated investors eager to reap the “high profits” of forex trading.  In response to this ripe environment, private forex traders and offshore forex companies flooded the market to meet the demand of investors, aiming for “HIGH YIELDS”, while claiming “low risk” to thousands of clients around the world.  As you would expect, this recent movement in the private forex world has lead to stories of great success, but most often, it has lead to immense disaster.

Since many investors we have spoken to have had trouble with offshore forex investments, we felt that we should communicate some key tips to protect you if you choose to pursue the same avenue.  Take a look below, and soak up the knowledge!

Tips for Offshore Managed Forex Investments

1.  Be Very Cautious with Private FX Traders:  Private managed forex traders are already risky to invest with, but if they are also offshore, you have a recipe for disaster. Even if they are not in the USA, ask them for some sort of license or certification in their country which allows them to trade others money.  Remember, all traders must be held accountable in some manner, no matter what the situation.

2.  FX Accounts Must Always be Transparent:  If you are sending money to an offshore forex broker, make sure the account is completely in your name, and you have access to it at all times.  Sending money directly to a “forex trader” will reduce the transparency of the account, and in many cases, you can be scammed out of your investment.

3.  Always Withdraw the Initial Principal:  Once your account doubles, ALWAYS withdraw the amount you initially invested. If everything runs smoothly and the funds return to your account, you have just eliminated your risk, and have likely found a good managed forex investment.

4.  Make Sure there are References:  Though I am not a stickler about references, I feel they are a MUST for any offshore forex investment.  If you are investing based upon the word of a forex trader thousands of miles away, you may just deserve to lose your money.   In all honesty, if the trader is not licensed, can’t show you proof, and resides in another continent, you really have little chance to succeed.

5.  Keep in Touch with Other FX Investors:  If you are lucky enough to have references, or know others who are investing with the same forex trader, keep in touch with them. It is always good to compare notes, and make sure there are no inconsistencies that have popped up.

6. Define Accountability and Contract Obligations:  Before investing with any offshore forex trader, you must always feel comfortable with the contract you sign.  If the contract presented to you is bare, as most are, make sure to define accountability, and the various obligations the trader must fulfill.   This can be accomplished by adding addendums to the contract, as long as both parties agree to it. By doing so, you may have the opportunity for recourse if something unsavory was to occur.

7. FX Trader Must Guarantee Max Drawdown:  If you are working with a licensed forex investment, HUGE drawdowns can usually be avoided, but with offshore forex investments, this is usually not the case. When you first speak with an offshore forex trader, you should address their stop loss strategy, and ask them to guarantee a max drawdown limit (i.e. Max % of account value at risk).  If they are unwilling to add this agreement to the contract, it may not be a good idea to proceed. Unfortunately, we have heard stories from a number of managed forex investors who were raking in the profit, just to see it ALL disappear overnight.

8. Conduct Thorough Due Diligence on the FX Trader:  If you are investing with an offshore forex trader, it is more important than ever to complete a thorough background check. The problem is, if the trader lives in another country, how can you complete due diligence when you do not know of the proper channels to do so?  In all reality, most of the time you can’t access the information you need on an offshore fx trader, which is another reason we feel it is risky.

9. Never Pay Attention to Hypothetical Track Records:  Offshore managed forex traders are HIGHLY UNLIKELY to have their yields audited by a credible third party.  With this in mind, you should NEVER make decisions to invest with an offshore forex trader based upon their history of yields.  Though the numbers may look great, there is no way to truly know if the figures are real, or just hypothetical.

10. Never Send the Money Directly to a FX Trader:  There is really never a reason to send money directly to a forex trader, offshore or not.  Forex investments will always have a clearing house or FX broker that holds the funds of the investors, for this and other related reasons.  Though you CAN lose your account on a bad forex trade, it is better to have that risk than having someone run away with your money.

Just like any other alternative investment, taking the risky route can pay off, but it rarely does.  With offshore managed forex investments, you can easily find the opportunity of a lifetime, to see it all implode overnight!  Personally, I do not like to invest or refer people to a forex trader without a licensing history, and accountability for their mistakes.  In most cases when investing in offshore forex programs, this is exactly what you’re left with.  No matter how good someone sounds on the other end, it is hard to invest strictly based upon someone’s “word”, and hypothetical yields.

Though this article is merely our opinion, PLEASE be careful when working with offshore managed forex investments. We have received plenty of phone calls from investors who were burned by offshore forex traders, and most never saw it coming.  Since this has become such a consistent story, we felt it was critical to reinforce the seriousness of this issue one final time before ending this article.

If you have any insight or questions, as always, feel free to post them below. We truly appreciate any new input, and thank you once again for a few minutes out of your day.

InsideTrade LLC Staff
(412) 235-2855

Before we get to the good stuff, let’s identify the 3 critical steps that must be followed when considering any alternative investment.  Generally, these processes should be used by all investors, and MUST be completed correctly to succeed in the alternative investment world.

Steps to Evaluate Alternative Investments

1. You must define the risks associated with the investment you are pursuing, and make your choice based upon your tolerance of it.
2. You must properly estimate the reward, focusing on realism rather than hopeful expectations.
3. You must weigh the risk of the investment and against the reward, choosing the decision that is best for your investment goals.

Though this may seem simple, it is really not that easy in most cases. Without proper analysis of both risk and reward, deviation from expectations can develop, and problems can start to follow shortly thereafter.  Despite the fact that weighing risk vs. reward is the key to success, to complete this process correctly, you must first understand how to evaluate each separate from one another.  In the section below, we will teach you how to do just that, while providing tips for private placement, forex, and futures investments to ensure we address all of our reader’s interests.

In the alternative investment world, RISK is thought of differently than it is in other facets of life.   In all actuality, by definition, RISK should be thought of as the CAPITAL INVESTED + OPPORTUNITY COSTS.   To help you understand a few typical risks of the alternative investment markets, and give you a better idea of what we are talking about, we listed a few tips below.

Managed Futures:   Risk is typically assessed by looking at the audited history of the managed futures trader, and focusing on the maximum “draw down” months.  Though this usually worst case scenario you will encounter, it is quite possible the losses could be higher in future months. Once you view the history of the managed futures trader, have a discussion with them about the “stop loss” strategy and procedure to prevent losses for their investors. Usually, good traders will “flag” the accounts, and trade conservatively until the balance is built back up.  Generally, risk is usually limited to 15-20% of the account value.

Managed Forex:   Risk in managed forex investments is usually defined by the leverage and “stop loss” procedure of the trader.   Though it is always good to look at the history of a forex trader, in many cases, we have found that investors are choosing private fx investments over licensed ones.  Since private traders are not audited by a governmental agency, their returns should be ALWAYS considered hypothetical.  In licensed forex investments, you may have lower returns, but you usually will have lower losses as well. In private managed forex investments, you must be prepared to risk your entire account value, no matter what the promises of the trader are.

Private Placement:  Defining risk when pursuing private placement programs is critical to ensure you make an educated decision.  Despite what many uneducated brokers may claim, your assets must be collateralized (i.e. put at risk) to stimulate a line of credit for the trader.  If you choose to work with programs that “ping” your account, or let your funds remain in your account unencumbered, you are usually setting yourself up for disappointment. In this area, more than any other alternative investment, you are prone to lose a huge amount of money in OPPORTUNITY COSTS. In many cases, people spend years looking for a program, when they could have doubled their money several times over the course of that search.

As we have said before, identifying risk properly is the key to protecting yourself.  Even if you don’t have the guts to pull the trigger, it is crucial to learn and understand your risks at all times.  Once you properly determine your risk, you have accomplished the hard part and are on to the next important step, projecting your reward.

In the alternative investment world, REWARD should be thought of as the profit that you earn and withdraw over the course of your investment.   Until you have the money in your hand, any talk of “rewards” should be considered premature. Unfortunately, many people focus on future hypothetical earnings, losing touch of reality and risk in the process. Once an investor drifts away from acknowledging the risk associated with an investment, all hell can break loose.  As we have stated prior, prospective “rewards” should NEVER be the sole reason for making a decision to pursue an alternative investment.  If you are smart, you will address every other aspect of the transaction, and then view the yields before making your reward projection, and final decision.

Now that you know how to evaluate risk and reward separately, you have arrived at the final step, weighing the two against each other.  The good thing is, this is really the easy part! If you have already defined your risk and reward properly, it should be as simple as comparing the pros and cons of your: (A) decision to move forward, or (B) choice to pass on the opportunity. Once you complete this final stage of the 3 step process, it will become increasingly easier to substantiate future alternative investment opportunities. Eventually, by adhering to the process we have discussed, your experience and diligence may just carry you to a life of success, and wealth.

To summarize, whether you choose to list “pros and cons”, ponder the risks and rewards in your mind, or ask someone with relevant experience, risk assessment techniques are fundamental to promoting success. Once you identify the specifics of the transaction you are evaluating, it is always good to go through the process and key points we have listed above. By nature, due to the cutthroat world we live in, it is best to evaluate your risk before your reward, and weigh them based upon your risk tolerance. This will keep your eyes open, facing the facts of the transaction, rather than daydreaming into your fantasy of riches…

InsideTrade LLC Staff
(412) 235-2855

Due to the financial crisis, Gold futures prices have hit record highs in 2009, and may continue to grow for years. Since we thought this was an important topic to understand, we provided a video to share some facts about Gold and it’s link to the economy.  By taking the time to watch this video, you will start to understand the Gold futures market, and most importantly, you will learn how to benefit from it.

Before we get to this great video, let’s review some critical points to remember.

Key Points of Gold Futures Video

1. Peter Schiff was Right about Gold Futures Prices and the Financial Crisis Years Before this Video
2. It is Not too Late to Buy Gold Futures and Make High Yields
3. We are Not Anywhere Near the Top for Gold Futures Prices, Gold will Keep Rising because of Several Economic Factors
4. What Gold Really Tells you is the True Value of the USD, and the USD is getting Weaker with the Printing of New Money
5. Gold Futures may Hit $5000 Before it Stops Rising in Price
6. Inflationary Pressures are Everywhere, if you Don’t See them, you’re Not Looking
7. In the Great Depression, Prices of Goods were Declining, In Today’s Financial Crisis, Consumption has Greatly Contracted BUT Prices are Still Going Up
8. Schiff Predicted Gold Futures would be $1200 by Year’s End, and it Hit $1223 a Few Weeks Ago
9. As People Lose Faith in the Dollar, Investors are Flocking to Commodities such as Gold, which has Become a “New Asset Class”
10. Until Interest Rates are Raised by the FED, the Dollar may Lose a lot of its Value, and Gold Futures could Soar in Price

Scroll down, and click play. We hope you enjoy the video!

InsideTrade LLC Staff
(412) 235-2855

Since the process of opening a managed futures account is critical to grasp, we have listed 10 steps below for your ease of understanding.   In addition to listing the entire process step by step, we have also included tips on how to complete each stage like a pro! This will give you the tools you need to efficiently open your account, while allowing you to choose the right trader for your goals. Scroll down and take a look below!

Steps to Open a Managed Futures Account

1. Investor Defines Profit Expectations:  Before choosing a futures trader to invest with, you must first define your profit expectations. If you enter into an investment with no goals, you may walk out with no shirt. Once you find a managed futures trader who has a history of satisfactory yields, all you need to do is weigh the risk against the reward, and make the smart decision.

2. Investor Searches through Futures Traders: If you are looking for a good managed futures trader, you can start by checking the websites of the top clearing houses in the futures industry. Usually, they will promote traders with track records of proven success, which makes most investors feel quite comfortable.  Once you have glanced through those websites, do some Google searches with different managed futures related keywords.  After you find a few companies, take some initiative and call around to brokers and traders to get a feel for feel for the business.

3. Investor Evaluates History of Traders/AUM:  When you speak with a trader, you always want to address two important issues: yields and assets under management.  If you see that they have a good history of audited yields, and they have a large amount of money under management (50M+), then you may have found the right futures trader. In contrast, if they a small amount of assets under management (less than 10M), whether the yields are good or bad, you must address how their strategy will adapt to future growth.  In many cases, investing with a small but rapidly growing futures fund can be the wrong decision in the end.

4. Investor Selects Top Futures Traders:  After you have scoured the internet and other resources for managed futures investments, you need to eliminate those you are unsure of.  Usually, it is best to narrow down your list to 5 traders, and no more.  If you are able to evaluate the information the traders have provided, citing the benefits and risks of each investment, it’s makes it far easier to make the right decision.

5. Investor Chooses their Futures Trader:  After you have narrowed down the list of futures traders to 5 or less, the rest is easy. If you simply list the pros and cons of each trader’s strategy, yields, history, and risk, you should be ready to make the right decision rather quickly.  Once you choose a futures trader to invest with, it’s time to review the contracts and get started.

6. Investor Completes Contract and Documents: Typically, futures traders do not have their own contracts unless they are a “Fund”, or “CPO”.   For almost all investors, the contract is with the company which holds the funds, the clearing house. On this contract, the clearing house will address the risks of futures investments and outline several other related topics.

7. New Futures Account Created for Investor:  Once you complete the contract and provide all required documents, the clearing house will file the paperwork and open an account for you.  Along with the account number, the clearing house will also provide wiring instructions for you to fund your account.  Remember, this segregated account at the clearing house is only in your name, and no one can withdraw funds or authorize trades but you.

8. Investor Funds the New Futures Account:  After the investor has received the account number and wiring instructions, it is time to fund the account. For most futures accounts, the investor must wire the funds with “further credit to themselves” and their account number.  By doing so, the investor is ensured that the funds will only be held in their name, and will never be transferred to a trader or broker.

9.  Authorization Call with Trader and Investor:  Once the funds of the investor have hit the clearing house account, the trader and investor are both notified.  If the account is managed, then the trading can start immediately. If the account is non-discretionary, the trader and investor must have an “authorization call”.  On this call the trader will explain the strategy of the investor, and ask for their permission to implement trades on their behalf.   After this call is completed, the trader can legally start to trade the investor’s account.

10. Futures Trading Starts Next Good Day:  After the wire and authorization call have been completed, trading starts the next “good day”.  In many cases, futures traders will jump right into the market the same day, but if it is best to wait, they may do so for a few days.

Though the process seems long, it really isn’t at all. In fact, you can have a managed futures account opened and be in trade within just a few days.  Despite the expedience of the process, you should always remember, there is NO rush to making your decision.  Since you always want to give a futures trader at least 3-6 months to prove themselves, good preparation is the key to reducing time waste and poor investment decisions.

In summary, investing isn’t fun when you’re anxious and unprepared, but it is when you are making high yields hand over fist. For your benefit, be as thorough as possible, and make sure you understand every detail during the process of opening a futures account. Remember, though they may seem self-explanatory, every step is important to your success.

InsideTrade LLC Staff
(412) 235-2855

1.  Forex Investors and Traders have been Weary of Increased Regulation in the FX Markets
2.  Legislation has Lowered FX Leverage to 100:1, and Now Trying to Make it 10:1 in Forex
3.  The Regulated USA FX Brokers are Setting Up Offshore Offices to Keep High Leverage Available
4.  Foreign FX Brokers doing Business in the USA can Still Offer Higher Leverage to FX Investors and Traders
5.  The NFA has a Goal of Protecting Investors, and is Regulating FX Leverage to the Lower Risk of Loss

As you’ll see in the video, there is really nothing to worry about. Though forex leverage may decrease to 10:1 within the USA, the offshore FX markets will not be affected.  This will still allow traders to take advantage of high leverage, as long as their working with FX brokers outside the USA. Want to learn more? Take a look at the great forex video below. Sorry about the advertising pitch, but its well worth the watch…

Scroll down, click play, and enjoy!

InsideTrade LLC
(412) 235-2855

With all of the wealth that now exists, you may ask, “Where do all of these high net worth individuals invest their money”?  Well, though most choose fixed investments (ex. Bonds, CD’s, Treasuries, etc.) for a portion of their portfolio, there are a rising number of investors seeking diversification within alternative investments.  Though other investments such as managed forex and futures trading have made a huge impact all over the world, the private equity market is the most important for one reason: it is the lifeblood of the global economy.

Before we get any further, let’s take a look back 20 years ago, and examine the beginning of a huge shift in the private equity markets. It the early 1990’s, it was a time for great opportunity and unparalleled growth within many parts of the world.  At that time, technology companies were popping up everywhere, the internet had just started to become popular, and many other new businesses had great ideas, but not enough funding.   As you will learn, this became a ripe environment for private equity firms, which lead to immense growth in the industry.

By the end of the 1990’s, investors had caught on to the trend in the private equity industry, and responded by allocating a large amount of assets. Once a market with a few billion dollars of participation, private equity had now become a multi-trillion dollar investment arena. Though this was great for investors, this growth had far more implications worldwide.  Now, with the help of private equity firms, much of the wealth which was generated over these years could go back into funding new ideas in the economy.  With over 2.5 Trillion dollars invested in private equity funds, things were good for investors, firms, and the world, until the financial meltdown of 2008.

Once the financial crisis had hit, and private equity had reached its peak, the economy started to tumble fast.  With a looming credit crisis, and limited funding access from private equity firms, the entire world economy started to feel the pain. No matter what the company or idea was, without funding there became little chance for new growth.  Once the private equity funded companies  stopped growing, investor sentiment dramatically changed.  Just a few months ago, investors had been lining up to invest with private equity firms, and now, they were nowhere to be found. Since very few people were willing to invest in late stage venture capital or pre-ipo companies, this lead to a cycle of economic stagnation that persisted until consumer sentiment improved.

In today’s investment world, the financial markets have turned around, spurring a change in the private equity industry.  Once a “sellers market” in 2008 and early 2009, we have now entered a “buyer’s market” that has lasted for over six months, and may persist for quite some time.  As a result, many companies are now considered undervalued and even more are underfunded.  Though we are not out of the woods yet and growth is slow, this shift in investor sentiment has lead to a rebirth of interest in private equity firms.

When you observe the massive growth in the 1990’s and recent years, it is safe to say that private equity will continue to be one of the biggest markets in the world.  With a profit potential far beyond traditional investments, and seemingly endless companies in need to funding, it has become a CRITICAL solution for investors, illiquid companies, and the world economy.

InsideTrade LLC Staff
(412) 235-2855

In this article we will tell you how to find a managed forex trader while providing tips on how to complete the process of investing. In addition, we will outline steps on how to open a managed forex account and succeed for years to come.  First things first, let’s cover the steps to opening a FX account. Scroll down and take a look!

Steps to Open Managed Forex Account

1. Define your FX Goals and Risk Tolerance: Before investing with a forex trader, always define your MAX risk upfront.  If you understand what you are willing to lose, you can view the track records of different FX traders and pick what meets your risk tolerance.  Also, you MUST define your goals when you are seeking a forex investment. If you are looking for high yields, then be prepared to risk more as well. If you are looking for lower yields, try to find a FX trader with a history of 3+ years.  Either way, remember, unless you align your investment with your personality and goals, you will ALWAYS end up disappointed.

2. Create your Plan to Search for FX Traders: Once you have defined the goals and risk for your FX investment, create a plan to start searching for traders.  Though you can find a number of forex websites on the Internet, you will only find the best traders if you network aggressively in the forex industry.  This won’t happen from you hiding behind a computer screen. Don’t be shy, grab the phone and start searching for the “golden egg”.  Remember, Googling can do wonders, but the best traders do NOT advertise on the top of the search engines. The truth is, those who settle for the first managed forex investment they find are usually the ones who end up disappointed in the end.

3. Find Several FX Traders if Possible: During your searches on the Internet, you may become frustrated, but here are a few tips.  By searching the web for forex discussion forums, managed forex companies, FX brokers, forex clearinghouses, financial directories, and blogs such as this, you will ALWAYS uncover a few good managed FX investments.  The key is creating a solid search plan, as we mentioned in the prior step.  By doing so, you can aggressively search for managed forex investments with tunnel vision, devoting your time ONLY to opportunities which align with your risks and goals.

4. View Contracts for Each FX Trader: Though most contracts for FX traders are similar, it is always good to analyze the contract in detail.  First, take a look and see who the contract is with.  In many cases, you will have a contract with the FX broker, and the trader will ONLY have limited power of attorney to trade the account.  In this case, research the FX broker and make sure they are legit.  In addition, make sure the FX trader has a contract with you guaranteeing a specific MAX draw down % for your account.  This will help protect you from losses, or legally recoup losses if the trader breaks the contract.   On the other hand, if you have a contract with a FX fund or trading company, make sure you feel comfortable with the contract sections covering liability and draw downs.  If you are ok with the verbiage, it is time to complete due diligence on the forex traders.

5. Complete Due Diligence on All FX Traders: To research a managed forex trader, you need to follow a few basic steps. First, you MUST speak with the trader and someone who can attest to their success.  By having a trusted reference and a sense of confidence in the FX trader, you can feel comfortable enough to spend time digging deeper.  Second, you should ask the forex trader for a track record showing the history of the performance.  When you ask them for the track record, also ask them if there is any third party who can verify the yields are accurate.  If the yields are audited or you have a credible client reference, you can once again dig deeper.  Lastly, after you have completed the first two steps of due diligence, perform a criminal background check.  If that comes up clean, “Google” every keyword related to their name, company, and geography and see what you find.  Once you have completed these basic steps, you should have a far better chance of finding a FX investment that meets your goals.

6. Choose the Best FX Trader to Invest with: After you have completed due diligence on the few forex traders that are still appealing, it is time to make the decision.  Though we know the human instinct is to go with the highest yields, remember, no investment is worth losing sleep over.  If you consider yourself to be a smart investor, and NOT a gambler, you will choose trader that matches your risk profile.  In short, if you are someone who wants returns that beat the equity markets, look for a FX trader earning less than 50% who can provide a stable track record of 3+ years.  If you are looking for higher yields, and have capital to risk, search for FX traders making 100%+ per year.  Remember, if you can find a trader with yields exceeding 100%, they will usually also have a few big losses on their track record.  By assessing these losses, and confirming the yields are REAL, you can make the right choice when it comes time.

7.  Complete Contract and Other Documents: Once you have chosen the forex trader you are investing with, it is time to do your part.  In most cases, the process of completing FX account opening documents is rather easy.  Typically, you will have to fill out a contract which includes risk disclosures, duties of both parties, and other legal verbiage.  In addition to the contract, you will also have to provide identification such as a passport or ID.  For some managed forex accounts, you may even have to get a passport notarization and send that in with the rest of the documents.  After you get all of these documents completed, all you need is to do is sign the LPOA (Limited Power of Attorney Agreement) and you are ready to roll.

8. Receive Account Number and Wiring Instructions: Once the FX broker or clearing house has received the account opening documents and proper identification, they will generate an account number.  This account number is associated with the investors name and information, and is also tied to their segregated forex account.  As soon as the number is generated, it is sent to the forex investor with wiring instructions on how to fund their new FX account.  Typically, this is a segregated account in ONLY the name of the investor, and in most cases, the investor sends the wire with “further credit” to themselves.  This ensures the funds are transferred from one account of the investor to another account they control, never putting the funds at risk for fraud.

9. Wire Funds into New FX Trading Account: After the investor has received the wiring instructions, it is time to step it up and send the money.  In a lot of instances, new forex investors get skittish right before they are going to fund the account.  The fact is, if you’ve completed steps 1-8 properly, you will have NO reason to be anything but excited.  Remember, all investments have risk, and your job as an investor is to trust your intelligence and NEVER blind yourself by looking ahead.  If you have made the choice to invest with a trader, and have completed the contract, SEND the MONEY!  If you don’t, you may burn your bridge to wealth due to baseless paranoia.

10. Forex Trading Starts the Next Best Day: At this stage, it is time to sit back and relax before you start to analyze the account and trader.  Usually, domestic wires are immediate, and international wires take 3-5 days.   Once the wire has hit your FX account, you will be notified with a statement from the FX broker or clearing house.  This statement will show your opening balance, and will serve as a receipt for your initial investment.  At the same time you are notified, the trader is notified and the funds are transferred “onto their books”.  As soon as the funds “hit the books” of the forex trader, they will start trading as soon as the market indicates it is good opportunity.

Though it may seem like quite a process to open an account, it really is rather simple and can usually be accomplished in 2-3 days.  Think about it, within 72 hours you can be profiting on money that’s just sitting there, earning little to no interest.  Sounds pretty intriguing to me, but it can’t be that easy, right?

Once you have opened the managed forex account, you can get excited, but NEVER look too far ahead. The reason is, you always need to be COMPLETELY happy with your trader. Take a minute and ask yourself, are the yields satisfactory? Is the communication good? Is everything transparent? How are they about withdrawing money?  By answering these questions several times over the course of the first year, you will know if you have found the “golden egg”, or just ANOTHER oasis.

In summary, it’s ALWAYS important to implement these steps during every stage of the process.  Whether you’re starting to look for a FX trader, choosing amongst several traders, or you’ve already invested with a trader, you MUST always stay sharp. Investing in managed FX is not a decision you make “off the cuff”, successful investors understand the steps AND the purpose behind them. Hopefully this article has taught you HOW to be diligent in forex investments, because if It hasn’t, the only thing that can is LOSING your money….

InsideTrade LLC Staff
(412) 235-2855

Whether you are a client, broker, consultant, or even just a beginner, the MT 760 and MT 799 are two terms that are critical to learn inside and out!.  Many times, if you speak to brokers who claim to have trade programs, you can tell if their investment is real by asking just one question, “Explain the MT 760 and MT 799, what are the risks and fees?” If you get an answer that sounds similar to the explanation we give below, then you may want to dig a little deeper! If you don’t, recognize that these people are less educated than they claim, and may not be the best option. First things first, let’s explain the definition and application of these terms in the modern day private placement business.

The MT 799 is a swift message used between banks to communicate in written form, and is usually referred to as “pre-advice”.  For example, Bank “A” may send a MT 799 to Bank “B” stating: “We confirm “XXX” amount on deposit and are ready to block this amount via MT 760 in favor of account “XXX” at your bank.  Please confirm readiness and receipt.” Typically, the MT 799 will be needed directly before the MT 760 is issued, and there may be small fees.  Despite what most brokers may claim, the MT 799 is NOT used as collateral,and can NOT be used to enter a private placement program.  Now that we know about the MT 799, let’s take a look at it’s cousin, the Swift MT 760.

The MT 760 is a swift message used to block funds in favor of someone other than the owner, collateralizing the asset via this message, while allowing for loans and liens against it.  For example, most private placements require the investor to send a MT 760 to the trader’s account, allowing the trader to use this swift as a collateral guarantee for their bank.   Again, despite what many brokers may claim, this is NOT everything you need to know about the MT 760. Now that you do know the definitions and applications, let’s cover the key points no one ever brings up about the MT 760: the FEES, and the RISKS…

First and foremost, the fees for blocking a large amount of funds via MT 760 can be more than you would expect. In most cases, your bank will charge 1-2% of the value being blocked for this service.  For example, on a 100M bank instrument this can be 1-2M that the owner must come out of their pocket with, unless they have a special relationship with their bank. You may say to yourself, “Wow, that is a lot to spend on fees for something I’m not sure will work”! Well, even more importantly, let’s take a look at the risks if you did move forward.

If you complete the MT 760 and pay the fees, you should observe everything very closely from that point on.  Once the MT 760 has hit the account of the trader, the line of credit should become available within 72 hours.  At that time, the trader should be able to make their first bank instrument purchase, and give you a DEFINITE TIMELINE for your first profit disbursement.  You may say, “Why do I need to watch this process so closely?”  Well, here is the part that most brokers don’t tell their clients…

When blocked in someone’s favor, the MT 760 collateralizes assets in the form of a swift guarantee, and by doing so, allows the beneficiary to draw credit against it.  This means, if the loan to the “trader” was defaulted on, the bank would seize the collateral and you would be out of your money! Though this scenario is possible, I would consider it rare for two reasons…  In today’s world, no bank will loan Millions of dollars to someone they haven’t vetted, no matter what collateral is on hand.  Second, the MT 760 is quite rare, and this usually draws attention to the beneficiary of the swift.

In summary, the MT 760 can be safe, or it can blow up in your face.  As always, the key is having a real trader and most importantly, getting your payments as scheduled.  If the trader makes a statement about yields and a time line, they must ALWAYS keep in line with their promises.  Over the THOUSANDS of transactions we have been involved in, the only ones that have closed have been smooth from the start, with NO hiccups.

Remember, both RISK and FEES are a part of blocking funds via MT 760!!!! In addition, by understanding the MT 760 and MT 799, you can clear out the TIME WASTING brokers from your network, and work MORE EFFICIENTLY towards your goals.

Let’s face it, very few people know as much as you do after reading this article. Use it to your advantage to qualify the private placement investments you come across, and it will make life a lot easier.  Ask yourself, if someone can’t explain the MT 760 and MT 799 in thorough detail, do you think they have ever closed a deal?  Then ask yourself, do I want to risk Millions with someone that has NEVER been successful?  It’s not hard to see, education is the key!

InsideTrade LLC Staff
(412) 235-2855

Since forex has become the biggest investment market in the world, we thought that an introductory FX video would do many of our readers some good.  In this video, they will cover the definition, application, and evolution of currency exchange, as well as the law changes which have lead to its growth.

After reading through the key points listed below, and watching the video, you should have a good idea of what forex trading is, and how it can possibly benefit you.  First things first, let’s review some important points from the video.

Key Points of Forex Currency Trading Video

1. Forex or Currency Trading can be Traced Back to the Babylonians who First Created Bills of Exchange
2. Egyptians Were the First to Use Metals as Currency, Defining Value in Gold, etc.
3. In 1930’s, London became the Leading Center for Foreign Exchange (FX) and the British Pound Served as Reserved Currency for Most Nations
4. After World War 1, the USA emerged as the Country Least Effected Financially by the War
5. Due to the Global Economic Downturn After the War, World Leaders Held the Bretton Woods Convention (1944) and Created the IMF (International Monetary Fund)
6. Bretton Woods Agreement Fixed Each Country’s Currency to Gold Values Held by that Country (“Gold Standard”), and Chose the USD as the Base Currency for the World
7. People Realized the “Gold Standard” was Preventing Global Recovery and Efficient International Trade
8. The “Gold Standard” was Abandoned from the Bretton Woods Convention and the “Floating Exchange Rate” (FX) was Developed and Mandated by the IMF
9. In 2000, CFMA (Commodities Futures Modernization Act) and Internet Trading Make a Big Impact, Allowing Almost Anyone to Start Trading Forex
10. In 1977 there was 5 Billion Traded in the Forex Markets Every Day, in 1987 there was 600 Billion, in 1992 there was 1 Trillion, and Now Today there’s Over 2 Trillion Traded Per Day in the Forex Markets

Scroll down and press play. We hope you enjoy the video!

InsideTrade LLC Staff
(412) 235-2855

As with every other investment market, there are people in the same business, but with completely different approaches. In the private equity market, it is no different. In fact, each private equity fund has its own strategy, and their unique formula is what makes them different from other funds.

In this article we will explain private equity investment strategies by providing examples, allowing you to understand how each private equity fund creates their niche.  In addition, we will provide a chart which will help explain private equity diversification, while also listing common investment strategies. What are you waiting for?  Scroll down and take a look!

Examples of Private Equity Strategies

Private Equity Firm 1: This private equity firm ONLY invests in pharmaceutical, healthcare, and information technology companies.  Also, they invest ONLY with companies that are considered to be “late stage” venture capital opportunities.  By creating a strict set of rules, the firm reduces risk and focuses on perfecting their niche.

Private Equity Firm 2: In this equity firm, the manager will only invest with companies in the Biotechnology Industry.  Though he is strict with that requirement, he will invest with companies at ALL different stages of their development.  By investing with companies at different stages of their development, they can diversify amongst the varying strategies.  In this case, the private equity fund manager is an EXPERT in Biotechnology, so he feels comfortable analyzing any opportunity in that market.

Private Equity Firm 3:  This private equity firm invests with other private equity firms, not directly with companies.  In most cases, this is referred to a private equity “fund of funds”, which is becoming the most popular structure in the private equity market.  By investing with other private equity firms, which then diversify within other firms, this firm achieves a more balanced yield for their investors.  The key to success with this strategy is simple, making educated decisions which focus on growth BUT diversification.

To help you understand the strategies of private equity firms even better, we have provided a chart below.  In this chart, you will see a diversified investment strategy from a successful private equity firm.   In most cases, top private equity firms will have a strategy that is very similar, since proper diversification is the goal of any fund manager.

Despite the information in the chart above, remember, this is just an EXAMPLE of diversification and every private equity firm has their own “secret sauce”. As you would expect, each private equity manager has an EXPERTISE, and certain markets they know best. In short, their duty is to follow information affecting their investment, perfect their niche, and keep the investors happy.  Unfortunately, many fund managers fail to do one of these three things, and for that reason, they never make it to the top.

In summary, private equity is a market with great promise, but finding a manager whose “secret sauce” tastes good year after year is tough to do. Remember, patience and education will be your best tools in finding a private equity investment. Though there are good private equity firms around, you MUST be aggressive AND diligent if you want to find one…

InsideTrade LLC Staff
(412) 235-2855