Too good to be true?

deemy2004

xerxes wrote:

My details seem to have found their way onto a database, somewhere and every now and then I get contacted by companies all over the world with amazing investment opportunities, offering me fabulous returns.

The latest, from Mercantile Sterling Management was offering me options on the Euro. Minimum investment $5000.00. According to the sales pitch, every cent the Euro rises against the US Dollar, I make $1250.00 - surely not!

Everything I know about trading could be written on the back of a postage stamp, with space to spare, but surely, if it where that easy we'd all be doing it, rather than putting money in banks and building societies.

Is it for real?

You'l be stopped out in a matter of days (if they use stops!)... all lost ! Plus whats their commission ? 10% ? 20% ?

Are they actually trading the euro on a futures exchange or are they using their own internal market.... BIG conflict of interest !

Trading currencies, spot or futures is the biggest gambling game in town... And mercantile will be dealing you their FIXED cards :eek: !!!!

If you do put your money up, I'd guess at the position lasting 4 days before they call you up for a margin call.

Yeh there is a chance 50/50 if they buy you into one position and you hold it for 100% then you could either make 100% or lose 100%.

My guess is that they will trade you in and out of numerous positions so thta you $5000 is eaten away by high commissions.

Paul_Varjak

Here is the only Google hit of a company called Firstmax Investments Ltd:

http://www.targetnewspapers.com/updates/articles/Articles%202003/0306/030606C.HTM

deemy2004

The domain name msman.net was only registered in January of this year, so not surprising that there nothing much on the net, as its not been indexed by google yet.

It does not quite gel that the companies been around since 1992, but they only setup a website in 2005 :rolleyes:

MrZen

As I said before I have had no problems with Mercantile they have been very good for me. What is all this about margin calls they dont offer futures they offer options on futures so there are no margin calls.

Everest

Options and futures should only be touched if you have the money to lose (as a private investor) and you know what you are doing...otherwise you seriously risk losing your shirt. Only take up such an offer if you are prepared for such losses.

You must aks yourself an important question about this Mercantile company: if they are so excellent and well established, why are they making cold calls like this to you - a small private investor?

Sounds very dodgy...sorry Zen, glad you report profits from this company, you must be very astute and knowledgeable in derivatives trading and for this I congratulate you, but I would never promote investments in such risky trades without knowing an awful lot more about someones personal circumstances and without telling them that derivatives, except to the very few who spend their lives learning about derivatives (professional traders etc), are the way to ruin.

Hope this helps.

Paul_Varjak

deemy2004 wrote:

The domain name msman.net was only registered in January of this year, so not surprising that there nothing much on the net, as its not been indexed by google yet.

As I understand it, Google index every day or two. That means that Mercantile Sterling Management did not have a website more than 48 hours before the OP posted!

Amazing then, that a second poster said they had actually used their services!

MSE gets several people doing this - in fact someone was advertising conveyancing on another thread and then, amazingly, a second poster came along saying he had used their services in February! In that case the URL was not even registered until March 7, 2005 and the website was, again, probably set up in the last day or two!

Incidentally, Mercantile Sterling Management is now indexed on Google, and the only other reference to it is on MSE would you believe? And by two people on MSE - amazing for a company based so far away!

notsobadone

previous posts are right that this is a highly leveraged bet, but you cannot lose more than your original stake (was it 5k ?), so it's not as dangerous as an outright position in the underlying. They wont call you for any margin (extra cash) if the euro goes against you, as your option will just be worth less. The thing to check is what level you are getting into the trade i.e. close to where eur is trading now, or does it have to go up 10 cents before you see any pay off, and how long the option lasts. The closer the entry level to the current market rate, and the longer the option (in time), the more you will be paying for the option out of your 5k stake (probably all of it and the brokers fat commissions). If nothing moves and the euro has not risen above your entry level, you'll lose your stake. The beauty of options IS that the market can go massively against you, and all you can lose is your original stake, but if the market then reverses massively, you're quids in again, no margin call and no panic. They're are a much safer way to play the currency market than taking outright positions in the underlying, however you pay a premium for this "insurance".

Another less complicated way to play the currency markets is to use spread bets with guaranteed stops which prevent you losing more than a specified amount. This limits you "downside" like an option, but if the market recovers again...sorry your out and dont recover any of the money you lost. A cheaper method for obvious reasons.

People should read up about this stuff and research the instruments carefully, but not be afraid of trading currencies, bonds, commodities themselves. They will probably see how hard it is too make more money than Bank of England rates on money, but also get much more fun out of investing than dumping your money with some overpaid, overlunched, and underqualified investment advisor who after fees, commissions and inflation would do well to beat a decent ISA savings account.

Probably the best site to investigate is FXstreet.com, IGindex.com and for the tightest spreads capitalspreads.co.uk. You can trade options on currencies with an IG index account probably a lot cheaper than thru the MSM guys you mentioned. You can also trade in shares more cheaply than thru usual brokers, on a leveraged basis.

deemy2004

MrZen wrote:

As I said before I have had no problems with Mercantile they have been very good for me. What is all this about margin calls they dont offer futures they offer options on futures so there are no margin calls.

Trading Futures is very high risk !

Trading options is X times higher risk than trading futures , and will probably generate many times more commission i.e. you can buy a zillion out of the money penny options that will expire worthless for $x commission per option.

Whereas a futures contract would require x margin, thus the number of contracts that can be purchased and thus commission generated is much more limited.

How come they don't state the commission charged on their site ?

Really, a proper brokerage / online trading platform would give exact details as well as enable you to log on and test the system with sim trades before any real cash would every be committed...

Any money sent to mercantile is as good as flushed done the toilet... really there is nothing on the site to suggest that anyone has made any money from having Mercantile place your bets for you.

Most trading platforms whether managed or self trade have many discussion topics and forums about them all over the web. Mercantile have NONE ! Well apart from MSE, why ? Do they have any REAL customers yet ?

deemy2004

Paul_Varjak wrote:

As I understand it, Google index every day or two. That means that Mercantile Sterling Management did not have a website more than 48 hours before the OP posted!

Google indexes using its page rank formula (very hush, hush), but typically new sites get sand boxed for anywhere from 6 months upto a year !

It all depends on incoming and outgoing links to and from the site...
So highly likely the site was created in Jan or Feb, just its not out of the box yet.

deemy2004

HEY ! They have been added to the FSA website

Under the ALERTS area


Unauthorised firms / individuals
This list contains the names of unauthorised overseas firms known to be, or to have been, targeting UK investors. Investors should be aware that if they put their money with unauthorised firms they will not get the benefit of the UK compensation and complaint schemes.


http://www.fsa.gov.uk/pages/Doing/Regulated/Law/Alerts/overseas.shtml