Corporate IFAAB Currency Hedging

Our targets for all monitored currencies are established well in advance.

As our targets are reached, further analysis determines whether the trend will continue through the target, or whether a reversal will take place. The accuracy and timeliness of this advice is unique.

Across many currency crosses, reversals have taken place eerily close to our targets.

Alerts concerning impending targets are given in a timely manner.

Our advice is often at odds with generally held views of market commentators, yet has been shown to be correct.

Our client businesses benefit significantly from knowing these price levels.

We are always on a buy or a sell (long or short) in any currency cross that we monitor, and we advise our clients of the reversals. From a hedging perspective if the currency is moving in your favour then you run with it, but at the reversal that is the time to lock in your forward cover.

We actively discourage our business clients from becoming traders. Business strategy must be about managing risk. This is why we do not provide reports on anything less than a weekly time frame, but we do issue intra week alerts when reversals are triggered.

When our clients put their forex orders into the market they are able to do so on an informed basis that in the majority of instances is very accurate.

Traders operate on margin and in a very volatile market the traders constantly get stopped out on their margin risk. Hedging strategies operate on a longer time frame than daily and we are not a day trader business.

The fact is that we are consistently on the right side of market moves and the forecasters are consistently wrong.

COMMONLY ASKED QUESTIONS and ANSWERS

Q. The use of our asset levels and then testing market action when/if the market gets to our presubscribed levels is straightforward/understandable. However, are you able to give me any insight into how the levels are calculated? While you obviously don’t want to give away trade secrets, are you able to provide a conceptual description of the methodology used to calculate the levels.

A. Our levels are based on a sequential mathematical progression not unlike the Fibonacci sequence that goes from zero to infinity. Indeed some of the ratios are similar to Fib ratios but much more exact. Our ratios are applied to individual charts so each level is a fractal of previous chart swings in the same way that you would use a Fib ratio to measure a previous swing and extend it on the Fib ratios.

Q. How can you pick a point that the currency will move to over a preset period of time in the future? There must be instances when the targets are not reached because the currency goes in the opposite direction? What do you do then? Are the target levels always reached in the preset time frame?

A. We make no claim that the program can forecast future price movement. Like everyone else we have no idea what the future holds. There is no element of forecasting in our process. What we do is define the trend on different time periods (Quarterly, Monthly and Weekly) and provide a definitive point and methodology at which the trend will be determined to have failed. Until the "failure" signal is elected our assumption is that the prevailing trend remains in force. "Failures" can and do happen at any time and at any price and may simply be signalling a consolidation, retest or just acknowledgement of the our levels. It is only when we get a failure at premeasured and fully disclosed levels in a number of different currency crosses that the conditions exist for a trend reversal. All our monitored currency crosses reverse at our exact levels (+ - < 0.5%). Occasionally the levels are off very minor swings that we don’t see until the secondary signal is made but over 85% of turns are made at our targets.

We have no preset time frames and the program says nothing about "time". Nor do we know which targets will be reached. As one level is overcome, the next level becomes operative. It is the conjunction of several processes at our targets that determines if a trend change is a high probability. When all these processes line up we look for a trend change but we need price action to trigger that signal. We do not say "Price is at our targets; go short". We do say "Price is at our target and there is a high probability of a trend reversal; a trade and close below xx.xxx will elect the reversal signal". In other words we always need the market to give a definitive signal at our premeasured targets.

Q. How are you any different from the forecasters who occasionally do get the outlook right by chance.

A. The key point is that we are not forecasting but over any 12 month period there are several significant reversals in the market. We have identified these and companies have been able to lock in forward cover at these points. The bank forecasters on the other hand have led the market to believe that a particular trend was going to continue and companies that followed that advice have largely been left in an unhedged position with the subsequent consequences.

Q. The commentary accompanying the charts contains a level of fundamental commentary rather than clinical commentary related to your methodology. Are you picking your target levels based on fundamental analysis rather than based on a systematic methodology.

A. As described above our targets are based on a defined methodology. We do on occasions provide some general market comment from a “fundamental” level, but only when it supports our analysis, and we only do it because people are so bound to their fundamental concepts. Interestingly people acknowledge that Bank and Chartist forecasts are historically hopeless, but they still want the comfort of seeing our analysis supported by a level of fundamental analysis. We have been very cautious about providing fundamental commentary as this is exactly what forecasters and the Banks do, and we know the results.

We have no expectations about future price movements. That is exactly what gets you into trouble. What we are determining is what is happening on any time frame, not what someone thinks should happen. This is the fundamental difference in our methodology. This conceptual understanding is critical, and it is the opposite view that is so ingrained in Economists and most CFOs. We have generally found that most people take a bit of time to understand our concept.

SERVICES

• » The charts and associated commentary are provided on a weekly basis.
• » Intra-week alerts whenever there is something of significance in the market.
• » Initial training on reading and interpreting our charts.
• » Ongoing client support and advice.
• » Training structured to the clients requirement.

CONTACTS

Gareth E. Cookson gec@ifaab.biz

Niels Herlevsen nh@ifaab.biz

Scott Campbell sc@ifaab.biz

Nathaniel T. Ginson ntg@ifaab.biz