Last Updated Dec 16, 2009 7:53 PM ESTI got a telephone call not too long ago from yet another strang...

1. Making Money With Foreign Exchange Futures?
Last Updated Dec 16, 2009 7:53 PM EST
I got a telephone call not too long ago from yet another stranger offering to make me rich. This time,
the method de jour was Foreign exchange futures, commonly called the Forex market.
The pitch from Nobel Trading Group claimed they had a proprietary trading model that had
delivered at least a 200 percent annual return for the last three years. They boasted of success in
the Forex market, in which participants are able to buy, sell, exchange and speculate on currencies.
Betting against the dollar, for example, has apparently been quite successful over the past couple of
years.
So I bit on this one and requested that the caller send me more information. They emailed me some
documents that I would categorize as DRIP (data rich information poor). The data showed pages and
pages of trades that looked pretty impressive.
Noble Trading Group followed up with a call again claiming 200 percent returns. I thought I'd see if
they would put it in writing. To my surprise, they sent me the following email:
My team of traders and their ability to identify trends in the Forex Market have posted profits over
200% annually for the past three years. Their trading system is proven and gives us the ability to
pair currencies with a success rate that is just shy of 70%. We set very small profit targets and on a
daily basis we are able to pick up 1/2 to 1%. The dollar will continue to lose value as our economy
improves because of inflation. It is http://www.trackntrade.com/forex/ much easier to pair a
weakening currency with one that is more stable, so we expect our success rate with this trend to
continue for at least the next 24 months. When the dollar does turn around, we have the ability to
change the oscillators within the system and we should be profitable in its up-trend as well.
That fishy smell
After receiving the email, I called and spoke to a Director at Noble Trading Group. I quickly
disclosed that it was unlikely that I was going to become a client of their $5,000 a year subscription
of signals to play in the Forex market, but did think it would make a good column. He was more than
happy to talk to me.
He confirmed, as implied by the email, that this was indeed a conservative strategy. I then asked him
to reconcile his statement with his web site that stated:
FOREX TRADING INVOLVES SUBSTANTIAL RISK OF LOSS. THE HIGH DEGREE OF LEVERAGE
INVOLVED IN FOREX TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU.
According to this Director, this statement was only to protect the firm and their strategy ea builder
really is conservative.
Another thing that didn't quite smell right was the fact that they were even soliciting. I pointed out
to Noble that a 200 percent annual return for the three years they claimed, would translate to a
2,700 percent return over three years. With such astronomically high returns, why wouldn't Noble
have people beating down their doors to get in? The Noble director claimed current clients didn't

2. want to tell others.
A zero sum game
Before ending the call, I asked if Noble Trading Group considered the Forex market a zero sum
game?. After all, if some money is on one side of the future's options, there must be an equal amount
on the other side. Thus, in order to make money, one must outsmart others. Of course, the broker
always wins, just like the Las Vegas Casino. And, of course, Noble did not agree.
Fishy smell turns rotten
Still, the pages of returns sent to me by Noble looked pretty impressive. So I ea builder kept reading
until I got to the last page. The footnote at the bottom stated these were "hypothetical returns" and
"GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT." Don't you just hate those annoying
little footnotes? As is usually the case, the devil is in the details.
My advice
Forex markets are risky and leveraging risky
markets is downright dangerous. The only success
that is guaranteed in taking this approach is in
transferring wealth to brokers. It's a no-brainer
these days to say the dollar has taken a beating.
But to bet you are smarter than the futures market
is a worse bet than playing the tables in Vegas with whatever strategy you've picked up off the
internet.
The next time someone pitches an investment with both high returns and low risk, don't bite without
reading the fine print and every footnote. I'm guessing that Noble Trading Group broke no law,
which in itself is pretty sad.
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