I had a long discussion with Peter Tan last Friday night. Peter is a very successful FX United member, who early over $20,000 per month from FX United (ie on top of his day job as a financial adviser based in Penang). Peter was presenting at a preview night held in Burwood (a suburb of Sydney).
I said that I had some lingering doubts about whether FX United really exists, and whether the CGAT system could continue to produce the returns that FX United pays so far - and provide a capital guarantee (ie monthly top-up).
He said he had met the representatives from FX United when they were in Malaysia, and that they were clearly smart business people who knew what they were doing. He explained to me how all major trades by FX United are effectively hedged by a counter trade, which they are in a position to place in the wholesale market (ie if we buy, then they sell) - so that if our accounts lose, they gain by the equivalent amount ... while all the time earning spread (or commission) on the trade. That is why FX United is in a position to top up our accounts if they make a loss.
However, he said that he did not think that CGAT was the whole story. FX United is undoubtedly holding millions of dollars, for thousands of traders, so they are in a position to place funds and earn interest on the overnight money market, and to make very large profits just from this investment. He pointed out that if anyone is in a position maximize advantage from the the financial system (for our joint advantage) then it is a foreign exchange broker.
However, Peter agreed that none of us fully understands all the business dealings of FX United. All that Peter could say with certainty is that they have never missed a payment on his account since he joined in August 2015, and similarly for his boss since 2013.
He also pointed out that given the very high returns provide, any trading capital placed with FX United is effectively repaid within 9 months, and if we introduce other people, then that period can be reduced down to just a few months. At the end of the day there is risk in this investment (like any business), but the risk diminishes quickly over a very short period of time.