OPTIMIZING FOREX RISK

Cube FX is a fully independent firm of corporate financial advisors specializing in foreign exchange risk management. We offer importers and exporters professional foreign exchange risk management services.

Our service is unique in that it is focused directly on the risk and reward objectives of each of our clients. Cube FX optimizes our clients’ risk/reward ratio for a maximum gain for a given level of risk. Our strategies are customised to each client’s risk tolerance so that no losses will be incurred while maintaining the opportunity for significant savings if the exchange rate moves in your favour.

Any importer or exporter is exposed to currency fluctuations and bears the risk that the exchange rate moves against them. These companies typically have two options:1) to wait and buy/sell the forex at spot (this option exposes them to risk). 2) To enter into forward exchange contracts (this options removes all upside potential in achieving a better exchange rate).

Cube FX removes all uncertainty with regards to what rate will be achieved but with the added benefit of enjoying any improvements in the Rand. Cube FX therefore removes the decision making dilemma that our clients face i.e. the trade off between hedging (purchasing a forward exchange contract) and the potential for achieving a better rate. Cube FX removes risk while still allowing the opportunity for increased return.

Companies are better off focusing on their core business and leaving the management of their forex portfolios to professionals that are better equipped, experienced and knowledgeable. Cube FX allows our clients to focus on their area of expertise all the while being assured that Cube FX is doing what we do best, managing foreign exchange risk.

CUBE FX’s COMPETITIVE ADVANTAGE

Cube FX’s competitive edge is the ability to increase reward and reduce risk on all foreign exchange dealings. This is achieved through:

Customised strategies: Cube FX has a standardized approach which is customized for each client unique risk tolerance level. The fundamental aspect of our service is to reduce risk while allowing for potential reward.

Technical and fundamental Analysis: To actively managing and develop strategies for our clients forex portfolios, Cube FX has devised its own unique blend of technical analysis proven to identify strong levels of support or resistance for the Rand. Cube FX also researches fundamental factors that influence forex markets i.e. interest rates, GDP growth, current account deficits etc. We at CubeFX understand the fundamentals of forex markets and stand ready to act on any market moving news in an instant.

Competitive exchange rates: Cube FX does not sell its service on getting our clients competitive rates, the very best possible exchange rates are a given for all our clients. The fees we receive are for our services of managing our clients’ forex exposures (limiting risk and taking advantage of improvements) not just for peddling a competitive rate.

Continuous live quotes: Access to and constant monitoring of forex rates allows for a better managed forex portfolio. Cube FX knows at all times what the spot rate is and what the forward points should be.

No conflict of interest: Cube FX is independent and we are not affiliated with any financial institution. Cube FX act as an agent for clients and does not deal as principle. Unlike a bank, Cube FX does not take the opposing position in a trade.

Reasonable fees: Because we are a small and lean company we can offer our professional services at a very reasonable price giving our clients the opportunity to use our services without breaking the budget.

Experience: We have many years of hands on experience in the forex / financial markets.

Transparency: All our dealings and strategies are completely transparent as all major decisions are agreed upon before being implemented as such the client does not lose control of their portfolio.

THE TECHNICAL ANALYSIS

Technical analysis which is a scientific method to analyse a financial market. We use our unique blend of technical analysis in order todevise a strategy for our client’s foreign exchange commitments. This technical analysis has been conceived and the copyright is held by Cube FX.

It is the backbone of our service since it enables us to determine technical levels where there is strong support or resistance for the rand. This enables us to stay out the market which will allow for the potential of a more attractive exchange rate. The second significant benefit is due to the saving on the cost of forward cover by not covering 100% systematically.

THE STRATEGY

Once receiving a forex exposure we determine different strategies for the short, medium and long term. We focus mainly on a strategy based on a safety net approach should the market move in an unexpected direction. This safety net will be the worst possible rate that is achieved. Orders on stop are then established in the market and should the situation improve, the stops are moved accordingly in order to maximise the potential profits. It must be emphasised that we use “orders on stop” based on technical, therefore objective parameters, as opposed to “ stop loss” based on the subjective personal financial situation of the client.

The COMMITMENTS of our clients are therefore PROTECTED AT ALL TIMES WITHOUT necessarily BEING COVERED.

REPORTING

We have devised a unique financial analysis system which procures an immediate overview of the financial situation of the portfolio. This also enables the client to have full knowledge of the situation at any time since the documents are updated on a permanent basis. The main feature is the client’s accessibility to the weighted average rates of reference – Forward, Costing – of his commitments in comparison with the weighted average rates of the client’s positions. This allows the client to get an instant clear overview of their forex portfolio’s.

DEALINGS

Cube FX deals directly through the dealing rooms at the head office of the bank.

Due to our position in the market place Cube FX has developed excellent relationships with all of the banks – Standard Bank, Nedbank, First National, Absa, Investec, Bidvest etc. Cube FX is not in competition with any of the banks we do however provide a complementary service. Due the number of clients Cube FX has at each of the banks, we can lump trades together and negotiate a closer spread. A few pips can be substantial.

Forward points quoted by the bank to specific forward dates are often incorrect due to bank system or human error. We at Cube FX know at all times what the calculated forward points should be. Again a few pips can result in a substantial saving.

All contracts are dealt directly in the name of our clients. Cube FX does not act as principal but as agent for its clients. Cube FX sends confirmation of all trades to our clients within hours.

BEHAVIOURAL FINANCE

Our system takes into account the natural psychological instinct to take profit quickly. People generally would prefer avoiding a loss than taking a profit. By having a predefined strategy Cube FX removes the emotional aspect from trading.

Loss Aversion: Taking profit to quickly and letting a loss run even further in the hope that they can at least square the position out.

Overconfidence: After making one or two lucky bets results in overconfidence. Being overly confident in their abilities people tend to make unjustified bets. They don’t relies they haven’t looked at all available information.

Representativeness: Stereotypes and rules of thumb. Thinking that rand will weaken indefinitely is a prime example of this.

Regret minimization: People try avoid the feeling of regret from making a bad decision.

Herding behavior: Being influenced by the masses and simply following what others are doing.

Cube FX is an authorized financial services provider. FSB Number 43320.

Contact InformationTel: 011 675 3432 | Cel: 082 696 8284 | Fax: 086 241 7286

info@cubefx.net | www.cubefx.net