Capital Management

Capital Management

“What it takes to reach the destination”

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DayForex was founded in 2000 as a specialist investmenthouse focusing on the global currency market (forex).DayForex is a founder and “Funding Member” of the Forex

Investment Association of South Africa (FIA), the only legally recognizedself-regulatory body for forex trading and investments in South Africa.DayForex is well represented in the management of the FIA.

We Offer: MANAGED FOREX INVESTMENTS ON BEHALF OF SMALLERINSTITUTIONAL AND INDIVIDUAL INVESTORS

DayForex is perfectly positioned to offer our global customer base ofindividual and institutional investors (through our association with leadinginternational forex brokers in well-regulated, first world jurisdictions)above average forex investment returns.

What is a Managed Forex Investment?A managed forex account is a specialized investment instrumentto benefit from persistent fluctuations in the forex market. It is onlyrecently that this powerful investment instrument has come withinreach of non-banking investment firms and individual investors.

The qualification “managed” refers to the fact that the investmentis made in the institution’s / investor’s own name which is thenmanaged by a duly appointed trader such as DayForexCapital Management.

Why invest In Forex?In our globalized economy, in which international capital flowshave increased exponentially since the 1980s, investors and

WHO IS DAYFOREX CAPITAL MANAGEMENT?

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plan,

“Don’t be afraidto change your plans.

Don’t be afraidto do nothing when that’s the

best thing to do.Prepare, prepare, prepare;

plan,plan”Sir Ernest Shackleton

merchants are more and more prone to risk as a result of fluctuatingcurrency values. It is exactly these dynamic changes in currencyvalues which create beneficial opportunities. The following are themain benefits of investing in this lucrative investment opportunity:

• Portfolio diversification (1): Asset classes

The main asset classes, stocks, bonds and cash form the basis ofany investment portfolio. An investment in a pure currency fund isessentially a turbo-charged cash investment.

• Portfolio diversification (2): Different markets

A managed forex account is independent from the risksassociated with a specific country’s stock or bond market. An account denominated in euro can benefit from currencyfluctuations in any country like Japan, America or the UK.

We take our lead from the greatexplorers such as Sir ErnestShackleton who led his men to safety with hisphilosophy, “Don’t be afraid tochange your plans. Don’t be afraid to do nothing whenthat’s the best thing to do.Prepare, prepare, prepare; plan, plan, plan.”

We take our lead from the great explorers

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• Very low liquidity risk

The forex market is gigantic in size. It is possible to liquidate orchange positions of tens of millions of dollars without affectingpricing. This characteristic of the forex market makes it ideallysuited for short-term speculative trading.

• Variety of instruments

Trading risk can be managed efficiently by using the spot market,options, hedging and arbitrage strategies, as well as leverage.

Why are Forex Investments now within reach ofsmaller investors?Computer and internet technology have revolutionized currencytrading, as well as most financial markets. It opened the way for“retail” currency trading, so-called because it allows trading withsmaller input and smaller transaction values. Banks and financialinstitutions customarily trade in lot sizes of $1,000,000 to $10,000,000. Recent innovations in the technology ofsophisticated order handling and execution systems now allow foras little as $10,000 trading units. This development makes itpossible for money managers to trade smaller accounts withoutthe risk of dangerously high gearing.

What is Gearing?Gearing (or leverage) can best be described as trading withborrowed money. If a trader has $50,000 in his account and hecan trade with a minimum unit of $100,000, he will be subjectto minimum gearing of 2:1. If he only has $10,000 he will besubject to trading with minimum gearing of 10:1. The implicationof gearing is that all profits and losses are amplified with the ratioof the gearing. DayForex Capital Management usesspecialised gearing strategies to produce exceptional returns forour clients, without increasing the leverage risk.

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We downsize investor risk by:• Track record of success: Since 1998 our chief trader

and strategist has built up a track record trading bonds and spot forex – showing returns of more than 80% per any consecutive (active) 12 month period.

• Prudent gearing strategies: In an environment where leverage of up to 100:1 is easily attainable, DayForex agrees to leverage levels between 1:1 – 3:1 per entry. Specialized application of gearing strategies contribute to a superior risk management regime.

• Tailor-made investment: The account is opened in the client’s name and goals are agreed upon that suit the individual client’s risk profile and investment objectives.

• Transparency: Clients may log into their accounts at any time to monitor progress. Reporting is provided by independent third parties.

• Investor expectation: Clients are assisted to formulate realistic goals and have realistic expectations with the surprise element usually on the upside.

• Scrupulous regulatory practice: Clients’ funds remain in their own name and own account. DayForex only deals withregulated entities in first world regulated environments.

• Experience: We have experience in trading amounts varying from $10,000 to several million dollar.

WHY INVEST IN A DAYFOREX MANAGED ACCOUNT?

Don’t be afraid to change your plans

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It is important to understand the dynamics of a managed forexaccount. It is different from traditional investments because it isbased on margin trading which lends itself to the applicationof leverage.

In order to cover any potential losses, a currency trader has tooffer collateral to the bank or broker where he has his tradingaccount. This collateral is called a margin account. All thetrader’s profits are credited to the account and losses debited. Inother words, your forex managed account investment is the initialcollateral you offer to the broker in order to trade currencies.

Currencies are traded in pairs. As the relative value of thetwo currencies in the pair changes, the account manager makeseither a profit or a loss, depending on his initial prognosis on therelative change in value (i.e. which of the two he thought wouldgain or lose in value against the other).

Margin trading transactions as such lead to leverage (or gearing)practices. More than anything else, the level of leverage defines therisk in margin trading. The level of gearing allowed is agreed uponbetween the forex broker and the trader. As stated before, gearingmeans one can trade with contracts of a higher value than themoney invested in the margin account. 100:1 gearing means onecan trade up to $1 million with as little as $10,000 on margin.

Many characteristics peculiar to the forex market lend themselvesto short-term trading, i.e. having an intra week to intra month timeframe. Based on the size of the market, it is quite easy toliquidate a small portfolio in an instant without affecting marketpricing. This makes even intra-day trading part of the strategy.

HOW DOES FOREX TRADING WORK?

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THE DAYFOREX TRADING STRATEGY

This also explains why the forex market is a genuine “two-way”market, unlike the stock market which usually only delivers profits if itincreases in value and the market as such in general goes UP. In forexone currency is always going up and one down as a consequence.

The DayForex trading strategy is based on multiple low-leveragedentries. This allows us to profit maximally from selected opportunitiesbased on our proprietary Relational Analysis technique.

The trading strategy allows for multiple low leveraged entries atdifferent price levels, times, objectives and risk / rewardparameters.

The DayForex strategy comprises the following features:

• The strategy is built on four basic premises:- Focus on one currency pair- Focus on trading with a specified trend- Trading with low leveraged, multiple entries- Taking regular profits

• Trading decisions are based on our proprietary “Real-Time Analysis” technique. Real-Time Analysis accounts for variables in time, price and events affectingcurrency values and trading decisions.

• The trade selection methodology is based on a sound statistical / mathematical system called “Median Trading”

This methodology exploits the market price’s tendency to revert back tothe median price range. The “median grid” consists of several price

Don’t be afraid to do nothing

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levels, which under different circumstances can be either a “buying” or“selling” level. A suitably volatile market like the currency market allowsfor many opportunities where prices are skewed towards higher andlower extremes around a constantly adjusting median level.

Strategies to benefit from these “inefficiencies” are employed on avery short term and short to medium term basis.

The “ideal” period for an investment in a managed forex accountis longer than 3 years. An investment with DayForex CapitalManagement can be liquidated fully or partially without anypenalties.

Ideally an investment with a higher variance or volatility, likestocks, unit trusts and forex should be judged only over terms ofone year and longer. Because of the inherently high liquidity offorex investments, returns are usually quoted on a monthly basis.This corresponds with the practice of professional hedge fundmanagers of informing investors on a monthly basis regardingviews of the market and reviews of recent performance.

Managed accounts, traded on a leveraged basis, should beexpected to have high variance (or noise) if monitored over a shortperiod. This would be the result of the use of gearing and theinherent volatility in currency price changes over the short term.

The investor should not expect month-to-month consistent growth.Consistency may however be expected over 12 month periods.We invite you to allow us the opportunity to work with your fundsfor a period of at least 12 months. We are extremely confidentthat over such a period we can generate significant returns inrelation to the risks taken with your money.

WHAT CAN THE INVESTOR EXPECT?

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How does the investment process work?

• The Investor and DayForex agree on all parameters through a written mandate.

• DayForex assists the investor to apply for a trading account at a pre-selected well-regulated forex broker.

• The Investor gives DayForex Power-of-Attorney to make trading decisions on the account to be opened. This mandate is lodged with the forex broker. The mandate may be revoked in writing to the forex broker.

• The Investor now funds the account – usually via international bank transfer.

• South African residents must comply with exchange control regulations.

• After the account is funded and the in-house administrativeprocess es completed, the Investor receives a real-time internet login to the account which allows for monitoring of the account at any time.

INSTITUTIONAL ACCOUNTS• Minimum Account size: 100 000 currency units• Base currency: US dollar, euro or British pound• Minimum term: 12 months• Profit withdrawal intervals: Monthly

INVESTOR OPTIONS

when that’s the best thing to do

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RETAIL ACCOUNTSStandard Accounts• Minimum Account size: 10,000 currency units• Base currency: US dollar, euro or British pound• Minimum term: 12 months• Profit withdrawal intervals: Quarterly

Mini Accounts• Minimum Account size: 5,000 currency units• Base currency: US dollar• Minimum term: 36 months• Profit withdrawal intervals: Yearly

FEES

Management Fee• Institutional accounts: 0.02% ($20-00) per $100,000 traded.• Standard accounts: 0.04% ($4-00) per $10,000 traded.• Mini account: 0.05% ($5-00) per $10,000 traded.This fee is automatically deducted when a trade is entered.

Performance FeeA performance incentive fee based on net new equity gains sinceprevious calculation / payment - adjusted for any withdrawals ordeposits made by the investor - is calculated and payable monthlyon the month’s ending “completed trades” balance. Institutional accounts:Performance fee: 20%On certain accounts a hurdle rate and other measures to tailor-make theperformance fee and suit the investor’s needs and objectives can bearranged.Standard & Mini accounts:Performance fee: 30%

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HOW DO I ACQUIRE A DAYFOREX MANAGED ACCOUNT?

For further information and all necessary forms to be completed,please contact your DayForex Capital Managementrepresentative or e-mail us at [email protected]

The target we set for our program is to deliver consistent returns thatoutperform long-term international equity market indices.

• Forex market analysisAn e-mail service containing the text of daily briefings (CET07:00 – 08:00) by our Chief Portfolio Manager. These briefingscontain relational analysis and practical trading strategies on adaily and intra week basis.

• Training for aspirant tradersOur Chief Portfolio Manager is a professional currency fundmanager. He assists aspirant and inexperienced traders to gainthe necessary experience and expertise in the currency market.Training is Internet based, continuous and can be done from thecomfort of the trader’s home or office.

• Training for South African regulatory purposesDayForex is a FIA accredited training provider. The South AfricanInstitute of Financial Markets (SAIFM) offers a benchmarkqualification for participants in all the financial markets, theRegistered Persons Examination (RPE). Recently a qualification forthe forex market was introduced to the RPE. Dirk du Toit, ourChief Portfolio Manager, prepared the Forex Module studymaterial and the examination question database for the RPE.

DAYFOREX ALSO OFFERS

Prepare, prepare, prepare; plan, plan, plan.”

• Educational forex market reading• An Introduction to the Forex Market: This

e-Book by Dirk du Toit considers all aspects of the forex market including the history, structure, role players, instruments and practical aspects of trading and investing in the global currency market.

•Bird Watching in Lion Country: Desktop Currency Trading Explained: This very practical e-Book by Dirk du Toit is a must read for all aspirant, struggling and professional currency traders. It addresses head-on the difficult question why so many day traders fail and offers a solution that is practical and profitable.

For more information contact us at [email protected]

Dirk du Toit’s expertise was gained partially in the equity market, the bond(treasury / gilt) market and the forex market. Dirk traded bonds professionally forhis own account. During the period 1998 – 2000, he made 350% gains on hisbond margin account. This translated to an average consecutive 12 monthperiod gain of 85%, i.e. every 12 month period was spectacularly successfulalthough single months may have been either positive or negative.

During the period 2001 – 2002 Dirk changed his focus to the forex market, andalso took a break from professional full-time trading, planning and preparing (plan,plan, plan, prepare, prepare, prepare) the managed account fund, now known asDayForex Capital Management. The most important change was to adaptfrom taking high risks, due to higher leverage with own funds, to limiting the risk bylimiting leverage but still attaining exceptional, but more stable, returns.

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MULTI MARKET EXPERTISE

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Month #

$ value of profits on initial $10 000 unit deposit

Over a ten month period the $10,000 grew with $6,800 or 68% to $16,800.

Synthetic 12 month period track record

Blue = 12 month periods ending before start of DayForex Capital Management fundOrange = 12 Month periods including DayForex Capital Management fundGreen = Average of 12 months periods.

DayForex Capital Management historic returnsThe fund started April 2003

Synthetic 12 Month periods returns

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“Past performance is no indication or guarantee of future performance”

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Dirk du Toit founded DayForex and DayForex Capital Management aftermany years in the financial services industry and as a trader of his owncapital. He is an independently minded critical thinker, taking nothing

for granted, especially not the “obvious”.

He is the Chairman of the Forex Investment Association of South Africa. Heholds the globally recognized International Capital Markets Qualification ofthe Securities Institute of London, which qualifies him as a “Registered Person”with the South African Institute of Financial Markets. He compiled the ForexModule of the Registered Persons Examination offered by the SAIFM, and isan Associate of the Financial Planning Institute of South Africa. Based on hisown experience and day-to-day trading Dirk developed a highly successfulmentor programme, training self-directed traders in the forex market. He is alsothe author of “Introduction to the Forex Market” and a book on currencytrading, Bird watching in Lion country - Desktop Currency Trading Explained.As forex portfolio manager Dirk managed the DayForex Capital Managementfund towards an internal rate of return well in excess of 100% duringits first year.

www.dayforex.com [email protected] (0861) - DAY-FRX

Whatit takes to

Reachthe

DestinationDirk du Toit - CEO and Chief Portfolio Manager