PROPRIETARY TRADING METHODOLOGY
The MFX1 Trading System attempts to achieve consistent capital appreciation over a long-term investment horizon, while following carefully defined risk management procedures to limit investment drawdown. MFX1 is technically driven with discretion applied by the investment managers to account for specific market moving events. The system relies on a mean-reversion model adapted by our team for application to the foreign exchange markets, which attempts to benefit from price extensions away from the recent short-term ranges, adjusted for the overall medium-term trend. MFX1 applies a low leverage, high frequency trading approach to seek consistency of returns with limited volatility.

CAREFUL LEVERAGE SELECTION
Leverage is easily accessible in foreign exchange but must be used with caution, for obvious reasons.  In the MFX1 program, leverage use is generally under 2x AUM. Prior to October 2009 our leverage use was higher, consequently so was the volatility of the returns. Our experience has shown that the revised choice of leverage allows us to target above average absolute returns while maintaining relatively low levels of volatility. Although losses may occur, our goal is for returns to come from many small trades rather than from a few, highly leveraged, large trades.

CONTROLLED RISK EXPOSURE
Risk is reduced by diversifying our positions across multiple major currency pairs.  To ensure the maximum liquidity and limit the impact of geopolitical risk to the greatest possible extent we do not trade emerging or exotic currencies.  Exposure on all positions is monitored independently and as a portfolio.  Stop-loss levels are pre-defined for the individual positions and constantly reassessed according to overall portfolio development.

The combination of these three elements seeks to generate consistent capital appreciation over the long-term. Given the nature of the investment, returns have very little correlation with equities or other commonly referred indices. As a result, an investment in MatadorFX can be an excellent source of diversification for most investment portfolios.