Kiwi Soars To One Year High After New Zealand Cuts Rate By To 2.00%

Moments ago, in what would be a very undemonic rate cut, the 667th since the Lehman bankruptcy, the Reserve Bank of New Zealand cut its Official Cash Rate by 25 bps to 2.0% in what was a widely expected move.

This is what the RBNZ said:

Statement by Reserve Bank Governor Graeme Wheeler:

The Reserve Bank today reduced the Official Cash Rate (OCR) by 25 basis points to 2.0 percent.

Global growth is below trend despite being supported by unprecedented levels of monetary stimulus.  Significant surplus capacity remains across many economies and, along with low commodity prices, is suppressing global inflation.  Some central banks have eased policy further since the June Monetary Policy Statement, and long-term interest rates are at record lows.  The prospects for global growth and commodity prices remain uncertain.  Political risks are also heightened.

Weak global conditions and low interest rates relative to New Zealand are placing upward pressure on the New Zealand dollar exchange rate.  The trade-weighted exchange rate is significantly higher than assumed in the June Statement. The high exchange rate is adding further pressure to the export and import-competing sectors and, together with low global inflation, is causing negative inflation in the tradables sector.  This makes it difficult for the Bank to meet its inflation objective.  A decline in the exchange rate is needed.

Domestic growth is expected to remain supported by strong inward migration, construction activity, tourism, and accommodative monetary policy.  However, low dairy prices are depressing incomes in the dairy sector and reducing farm spending and investment.  High net immigration is supporting strong growth in labour supply and limiting wage pressure.

House price inflation remains excessive and has become more broad-based across the regions, adding to concerns about financial stability.  The Bank is consulting on stronger macro-prudential measures that should help to mitigate financial system risks arising from the rapid escalation in house prices.

Headline inflation is being held below the target band by continuing negative tradables inflation.  Annual CPI inflation is expected to weaken in the September quarter, reflecting lower fuel prices and cuts in ACC levies. Annual inflation is expected to rise from the December quarter, reflecting the policy stimulus to date, the strength of the domestic economy, reduced drag from tradables inflation, and rising non-tradables inflation.  Although long-term inflation expectations are well-anchored at 2 percent, the sustained weakness in headline inflation risks further declines in inflation expectations.

Monetary policy will continue to be accommodative.  Our current projections and assumptions indicate that further policy easing will be required to ensure that future inflation settles near the middle of the target range.  We will continue to watch closely the emerging economic data.

There is just one problem with this widely telegraphed rate cut (which promised that monetary police will continue to be accommodative) - it was too widely telegraphed, and the market had fully priced it in (with a 20% probability of a 50 bps rate cut) so much so that instead of weakening the currency, the shorts which had been piling in and hoping for even more from New Zealand central bank governor Wheeler, were disappointed, unleashing a massive short squeeze and stop-triggering cascade,which has as of this moment pushed the Kiwi to the highest level in the past year!

http://www.zerohedge.com/news/2016-08-10/kiwi-soars-one-year-high-after-new-zealand-cuts-rate-200

EES: Magic FX Strategy Launched

Forex trading is difficult; that is to say, opening a Forex account and trading based on price movements, fundamental factors, or market news - is almost impossible.  For this reason the majority of Forex traders rely on some signal system, algorithm, or a professional manager.

The Magic FX strategy is offered to non-US persons and entities ONLY, unless you meet ECP (Eligible Contract Participant) criteria.   For more information, visit www.magicfxstrategy.com

Features of the Magic FX Strategy:

• $20,000 Minimum
• Fully Managed Account
• Clients pay 30% Performance Fee only
• 3 years live track record no losing month
• Average return 1.5% per month
• Broker is licensed with FCA in UK, based in London

DISCLAIMER FOR US CITIZENS:  This strategy and this website is not intended for residents of the United States of America or its territories.  US Citizens and entities are prohibited from investing in this strategy, unless they qualify as an Eligible Contract Participant (ECP) as defined by Section 1a(18) of the CEA (7 U.S.C. 1a(18)).

EES: Get a VPS in Amsterdam

Is your FX broker in Amsterdam?  Get a high quality VPS near your broker's server.  Checkout tradingvps.com - with VPS in London, New York, Amsterdam, & Frankfurt.

EES: The TRUTH about RUSSIA the Elite doesn't want you to know

Just like the good ol' days, Russia is now a useful 'enemy' being used to justify whatever needed from Washington, whether it be more money for NATO expansion, more spying powers on the domestic population, or more reason to justify the USA's generally jingoistic, xenophobic attitude about foreign policy.  As we explain in Splitting Pennies - Understanding Forex - the USA has created a wall of stupidity surrounding the USA via sophistocated propoganda techniques developed over a period of 60 years utilizing advanced technology, combined with bio-chemical layer through aerosol sprays, chemicals in the food, and nervous system manipulation through 1/2 Hz coming from your Television (See US Patent 6506148 here).  

The event that changed the global power structure was World War 2.  History, whether business, technical, political, or social - should be looked at through 3 prisms; before, during, and after the war.  Before & during the war, Washington had a clear agenda - engage the US population & American business in the new hot industry: war.  Hitler provided them with an easy villian and a brand; Nazi.  It was the Evil Empire, something out of a b-novel.  It gave America an easy way to paint the world in a black and white brush for the domestic US population that wasn't aware of how the world really works (pratically speaking, Europeans need to be more clued in and speak 2 or 3 languages due to Europe's density and wide diversity of cultures).

Here's a list of FACTS that the Elite doesn't want you to know.  Everything you know about Russia - is wrong.

• Russia is 25 years old.  
• Russia, and the Soviet Union, are 2 completely different countries.  They are like comparing the British colonies and the United States of America.  It's a different system, different rules, different territory, different everything.   
• The United States developed a long term strategy to destroy the Soviet Union - in order to create Russia today (an open, market based economy).  In other words, Russia today is what Washington had planned for during a 40-50 year period after World War 2, spent billions of dollars, built countless missile silos and other hardware.   
• Russia has one of the fastest growing middle classes in the world See here
• Russia is currently the #3 country ranked in terms of total immigrants in the world, closely behind Germany and the United States.  See here
• Unlike most of European powers, Russia was not a very ambitious or successful colonial power.  The extent of Russia's colonialism was Alaska, but this was really just the business idea of some fur-trappers; it wasn't supported by Moscow very much.  With a few rare exeptions, Russia never 'invaded' another country.  Mostly Russia has defended itself from invaders, at least historically speaking.  Even today, Russia's foreign policy surrounds a 'defense' doctrine, not an 'invasion' doctrine.  Being attacked nearly every 20 or 30 years throughout history, the Kremlin has reason for such a policy.  Why did every Empire throughout history want to invade Russia?  Because of the nice weather?  No, because of the vast untapped resources.  For a more academic answer, checkout Brzezinski's "Grand Chess Board" - certainly Sun Tzu would agree, controlling Russia and North America is necessary for real global domination, for a number of geostrategic, logistic, and economic reasons.
• Russia is an Emerging Market (EM) - Why is it emerging?  Because it's just starting to build economic systems.  In Russia there's no class action litigation industry.  There's no FTC.  There's no bankruptcy rules.  But all that's changing.  Change takes time - it will likely be a generation or several generations.
• The Forex software that runs the algorithmic Forex world, Meta Trader, is from Russia.  Although primarily used outside of Russia, it's built native in Russian language, from Khazan (although headquartered in Cyprus).
• Russia has massive untapped resources unlike any other country in the world, most notably but not only oil.  Russia includes 11 time zones and is one of Planet Earth's most rich and undeveloped land masses, which includes mountains, forests, deserts, tundra, and ice oceans.
• No one is starving in Russia.  In fact, due to the trade war between Russia, the EU, and the United States, they're evenburning and destroying food if it is found to come from blocked countries.

The list can go on and on.  Do your own research - unplug your TV and see what the world looks like.  Open a Forex Account.

See attached photo from a hard currency Foreign Exchange bureau in Moscow (they're on every street corner).  

If you want a quick Forex education, checkout Splitting Pennies - the pocket guide designed to instantly make you a Forex genius!

If you want to get started looking at investing, checkout Fortress Capital Forex

This repost sponsored by LIQUID CLAIMS CLASS ACTION SECURITIES

State Street forex settlement is notch in belt for Madoff whistleblower

The U.S. government finally heard Madoff whistleblower Harry Markopolos loud and clear.

Markopolos, and his whistle-blower group Associates Against FX Insider Trading, were key players in a $530 million settlement announced Wednesday against State Street Bank and Trust Company for allegedly cheating several government bodies on the pricing of their foreign exchange transactions. Markopolos declined to comment.

In a joint announcement on Wednesday the DOJ, SEC, and DOL said that State StreetSTT, +2.67%   will pay $382.4 million, including $155 million to the Department of Justice, $167.4 million to the SEC and at least $60 million to pension plan clients to settle allegations that it deceived some securities custody clients on when it priced foreign currency exchange transactions. The alleged misconduct took place from 1998 to 2009.

The bank also agreed to pay $147.6 million to settle private class action lawsuits filed by bank customers alleging similar misconduct, the Justice Department said.

Markopolos’ group filed its largest forex case originally in California, on behalf of the California Public Employees’ Retirement System and the California State Teachers’ Retirement System. That suit was settled last November. Additional cases filed via False Claims Act whistleblower statutes in Virginia, Florida, New York State and Washington state have also already settled. Markopolos and his group have already been paid for their whistleblower efforts based on those settlements.

The payouts conclude almost all of the investigations State Street has faced since 2009, when Markopolos filed the California lawsuit. Associates Against FX Insider Trading and Markopolos are not named in the latest State Street settlement announcements, but Markopolos has previously acknowledged his involvement in the case.

State Street safeguards clients’ securities as part of its custody business and offers indirect foreign currency exchange trading when clients buy and sell foreign currencies as needed to settle transactions, such as interest and principal payments from foreign bond issuers.

State Street admitted in its settlement with the DOJ that it generally did not price FX transactions at prevailing interbank market rates, contrary to what it told certain custody clients. State Street admitted that FX transactions were marked-up or marked-down from the prevailing interbank rate.

State Street allegedly misrepresented to custody clients that it provided “best execution” on FX transactions, that it guaranteed the most competitive rates available on FX transactions and that it priced FX transactions based on a variety of factors. Instead prices were largely driven by hidden mark-ups that maximized State Street’s profits.

Markopolos has also filed a whistleblower claim in the SEC case. It may be at least two more years before that payout occurs based on similar cases.

See also: Whistleblower award for NYSE fine goes to HFT critic

A State Street Bank spokeswoman said that the negotiated settlement agreements are expected to resolve, subject to the courts’ final approval, the pending litigation and regulatory matters in the United States related to its indirect foreign exchange business.

“Each agreement depends upon certification, for settlement purposes, of a class of State Street’s custody customers that executed indirect foreign exchange transactions with State Street between 1998 and 2009, and final approval by the United States District Court for the District of Massachusetts of the settlement agreement between State Street and the class,” she said. “Matters of this nature can drain both time and resources; so where possible and appropriate we feel it is in our and our clients’ best interests to pursue settlements. Our previously established reserve will be sufficient to cover all costs associated with these agreements.”

Since the lawsuits were filed the foreign exchange markets have gone from an opaque, manual quote market to a fully electronic market where real-time quotes and historical information is available to institutional and retail customers. Every major bank that acts as a forex dealer has its own quoting and execution platform and multi-dealer platforms have sprung up that offer competitive quoting on worldwide currencies.

Checking on rates in advance or verifying after the fact was very difficult to do in the past. Calling around for competitive rates opened a customer up to potential front-running of the trade by other dealers.

He and other whistle-blowers filed a similar case against Bank of New York Mellon Corp. BK, -0.25%   in Massachusetts. A lawsuit filed on behalf of the New York City pension funds by New York Attorney General Eric Schneiderman in 2011 against Bank of New York Mellon Corp for allegedly shortchanging the funds in foreign currency exchange transactions is still pending.

The New York City BONY Mellon suit is the last open forex case for the Markopolos group.

The SEC has already fined Bank of New York Mellon $30 million in June for misleading certain of its custodial clients about pricing when executing standing instructions for foreign currency transactions.

Markopolos spent years on Bernie Madoff’s trail and tried to warn regulators about the fraud, but he was largely ignored. It’s a frustrating experience he documented in his book, No One Would Listen: A True Financial Thriller.

http://www.marketwatch.com/story/state-street-forex-settlement-is-notch-in-belt-for-madoff-whistleblower-2016-07-27 

What If Brexit Doesn't Happen?

Summary

• There's an unlikely, but possible scenario in Britain, where politicians would not enact article 50.
• If Britain doesn't Brexit - what would happen? A GBP reversal?
• Confusion exists about where politicians stand on this issue.

Something not talked about in the mainstream financial news - the nuances of Brexit. The markets seem to think that Brexit is a 'done deal' - the people voted, and that's it. But what if Brexit didn't happen?

Read the whole article on Seeking Alpha

EES: The Forex Monopoly

Forex is a Monopoly, controlled by a small 'cartel' of big banks.  That's changing, and changing fast - as a number of non-bank FX participants are replacing the traditional 'big 12.'  As we explain in Splitting Pennies - the fact remains, if a small group of companies controlled and manipulated the price of any other market, they'd be shut down faster than you can say "Anti-Trust."  

A short list of things that are unique about FX:

• No "Insider Trading" rules.  Yes, that's right!  No insider trading rules.  Don't believe it, confirm it.
• Trades 24/5 - no 'market times'
• People need FX - businesses need currency to operate (People don't need stocks)
• FX is an openly manipulated market (but, each central bank can only manipulate its own currency)

The most important thing stock traders need to understand about Forex

There's a phenomenon in FX we can call ultra high latency information arbitrage.

During Brexit, it took the GBP/USD hours to go down, in total more than 20 hours from peak to valley.  If you missed the first move down, it was easy to catch the 2nd, or the 3rd, or the 4th.  Brexit is the most bright, obvious example but not the only one - it happens nearly every week. 

Coup in Turkey?  Risk on.  Failed coup?  Risk off.

In the stock market, when there's news, not a moment goes by that the market absorbs it.  In fact, the information knee-jerk in stocks is so quick and usually so severe, traders have strategies designed to buy into the panic information leak selling.

It's not possible to trade on information in stocks because it happens so quickly, even if you use algorithms and subscribe to Reuters 'ultra low latency' data service, there's almost no opportunity there.  But in FX, it can take the markets tens of hours to absorb PUBLIC information.  No one had 'insider' knowledge about Brexit.  GBP/USD went down slowly, very slowly, over a period of many hours.  Spreads widened, but not to levels that would impact trading. 

But with FX, there's good news.  You don't need to own the FX Monopoly, to generate some Monopoly money.  But in FX, you can take your profits and spend it in your local shop (Children, don't try to spend Monopoly money, it's illegal).  FX - it's like the Monopoly for adults!

If you want a quick Forex education, checkout Splitting Pennies - the pocket guide designed to instantly make you a Forex genius!

If you want to get started looking at investing, checkout Fortress Capital Forex

EES: What investors need to know about USAs FOREX rules

US lawmakers dropped a nuclear bomb on the Forex industry called "Dodd-Frank" which implemented a series of rules and regulations that killed all life in the budding Forex industry, in USA.  We explain this is detail in Splitting Pennies - Understanding Forex; the rules are widely misunderstood, and widely catastrophic for trading Forex.  You can read more about this massive legislation here, in summary. 

A summary of the rules, that impact Forex traders:

• 50:1 leverage, no cross netting (meaning, if you are long EUR/USD and long USD/CHF, it eats into margin calculation twice, even though you're nearly flat in the USD)
• No hedging (cannot BUY and SELL same pair in the same account)
• FIFO (First in, First out - this means you must EXIT each position in the same order in which you ENTERED, per pair).

A summary of the rules, as they impacted Forex brokers who offer access to the Forex markets:

• Increased and more strict netcap rules, meaning that in reality, you need $50 Million or more in free cash sitting in an account, with no liabilities (wait a minute - sounds like a public company should be in violation?? ahem)
• Increased fees to NFA, both in fixed fees and per trade transaction fees for use of FORTRESS system (which were happily passed on to the client)
• More regulatory costs and complexities, meaning that a large investment was needed in dealing with new rules, not only in money but increased operational complexity

A summary of the impact this had on traders:

• Mostly, traders stopped trading Forex, as these rules made it even harder to make money in an already difficult market
• Traders went overseas.  Those who could afford, established residency or corporations in foreign countries, in order to continue trading Forex at reasonable venues (which, in parallel, were developing new cutting edge market making technologies) in the UK, Australia, and others.

A summary of the impact this had on brokers:

• Forex brokers mostly closed their US operations.  Some closed completely, selling their operations to the remaining players.  Others, decided to go overseas (and remain living in USA).
• The remaining brokers, colluded in solidifying their monopoly on the US Forex market

But, the new Forex rules did not accomplish what they supposedly set out to do:

• The hedging rule doesn't prevent CTA accounting fraud, and it doesn't save the customer money, if anything it increases costs to the customer, as those who really want to hedge are forced to go overseas or open 2 accounts and building a system to accomplish the same thing
• PFG, MF Global were regulated firms.  PFG, had an aggressive compliance department that insisted on following rules above and beyond requirements.  Their compliance would check partner websites for potentially offensive content.  They supplied (see image below) 60 page Disclosure Documents as templates to CTAs, with over the top boilerplate and legalese:

A lot of help that was.

If you want to give yourself a heads up, checkout Splitting Pennies - the pocket guide designed to instantly make you a Forex genius!

If you want to get started looking at investing, checkout Fortress Capital Forex

EES: Everyone is a Forex investor

Whether you know it or not, everyone is a Forex investor.  As we explain in Splitting Pennies - Understanding Forex - just by going grocery shopping, you're trading Forex.  If you use US Dollars, you are trading Forex.  If you have a savings account based in US Dollars, you are investing in Forex.

Brexit was a great example of FX being in focus, but there are many.  Every week there's an FX event, whether it be a coup or failed coup in Turkey, an NFP surprise, or cheif traders being arrested at JFK airport.

ANY global event is an FX event, ANY market event is an FX event, but NOT ALL market events are FX events.  FX is the superset of markets.  Remember, stocks are settled in US Dollars.  That's changing, with all the Bitcoin and blockchain proposals, but we're still years if not decades away from signficiant paradigm shift in that regard.

Investors are starting to take note of FX.  Forex is becoming part of a mainstream discussion on Wall St., although behind the scenes.  This is happening in parallel with a restructuring of the market dyamics on a technical level.

Solid reasons that any portfolio should include FX strategies:

• Mainstream investments show a diminishing return
• The stock market can't go up forever
• FX provides opportunities not seen in other markets
• Although there are risks, the risks have a different nature, and there are also more opportunities 

Although everyone is a Forex investor, the majority are always losing.  They are losing slowly through the rapid deterioration of the currency.  Many investors make up for this with high yield investments - but they are rare in a ZIRP and coming NIRP.

Forex provides a means to diversify this risk, for investment professionals, investors, quants, corporations, pension funds, and basically anyone - even for the retail investor who only has $1.  Yes, you can open an account with Oanda for only $1.  This is where we derived the name for our recent book "Splitting Pennies" - Currencies in normal markets don't change too much.  Brexit was an exception.  So in order to profit from Currency trading, leverage is used, thus multiplying risks and profits too.  Forex trades are divided up so small, the smallest unit is called a "PIP" which is 1/10,000 th of a currency.  

If you're not already starting the move into Forex - don't worry, it will happen with or without you.   If you want to give yourself a heads up, checkout Splitting Pennies - the pocket guide designed to instantly make you a Forex genius!

If you want to get started looking at investing, checkout Fortress Capital Forex

HSBC Global Head Of FX Cash Trading Arrested At JFK Airport

A historic event took place moments ago when Mark Johnson, the global head of cash FX at HSBC was arrested at JFK airport for his role in a "conspiracy to rig currency benchmarks", and specifically for frontrunning customer orders. He is the first person charged by the US in the ongoing FX rigging probe.

As Bloomberg reports, a "senior manager at HSBC Holdings Plc was arrested in New York for his role in a conspiracy to rig currency benchmarks, according to two people familiar with the matter, becoming the first person to be charged in the Justice Department’s three-year investigation into foreign-exchange rigging at global banks."

From Johnson's bio:

Johnson is global head of foreign exchange cash trading at HSBC, based in London. Prior to joining HSBC in 2010, he was founding managing partner and chief investment officer at Johnson Stewart Partners. Before that, he was global head of trading at Deutsche Bank.

More details:

Mark Johnson, HSBC’s global head of foreign exchange cash trading in London, was taken into custody at John F. Kennedy International Airport Tuesday and is scheduled to appear before a judge in federal court in Brooklyn Wednesday morning, said the people, who asked not to be named because the case hasn’t been made public. He’s charged with conspiracy to commit wire fraud, the people said.

According to Bloomberg, Johnson’s arrest comes more than a year after five global banks pleaded guilty to charges related to the rigging of currency benchmarks. HSBC, which wasn’t part of those criminal cases, in November 2014 agreed to pay $618 million in penalties to U.S. and British regulators to resolve currency manipulation allegations. HSBC, which still faces investigations by the Justice Department and other authorities for the conduct, has set aside $1.3 billion for possible settlements, according to an August filing.

Rob Sherman, an HSBC spokesman, and Peter Carr, a Justice Department spokesman, declined to comment.

Also on Tuesday, the U.S. Federal Reserve banned former UBS Group AG trader Matthew Gardiner from the banking industry for life for his role rigging currency benchmarks.  Gardiner used electronic chat rooms, with names including The Cartel and The Mafia, to facilitate the rigging of foreign-exchange benchmarks and to disclose confidential customer information to traders at other banks, the Fed said in astatement Tuesday. That matter is separate from the one involving Johnson, the people said.

Recall that DOJ unwillingness to prosecute HSBC was the ultimate catalyst that prompted former AG Eric Holder to admit thatsome banks are "too big to prosecute." Perhaps with this arrest things are slowly starting to change.

Now, if frontrunning clients is officially an arrest-worthy offense, we can't wait for the DOJ to unleash a crackdown on criminal HFT algos whose only purpose in "life" is to do just that.

http://www.zerohedge.com/news/2016-07-20/hsbc-global-head-fx-cash-trading-arrested-jfk-airport

8 Types of Investors That Entrepreneurs Need to Avoid

Don’t assume that all investors are the same, just because their money is always the same color. Every entrepreneur should do the same due diligence on a potential investor that smart investors do on their startups. Check on their track records, values and management style. Taking on an investor is a long-term relationship, like getting married, that has to work at every level.

Let’s just say that every investor is different, without trying to define what is good or bad for you and your startup. Investors are human and subject to human tendencies, whether they are your rich uncle, an angel investor with personal funds or a venture capital investor with institutional money. Here is a summary of some key investor stereotypes that generally need to be avoided:

1. Investment sharks

I’m not talking about the Shark Tank TV show, but some might say the panel fits the definition. While the majority of investors are looking for a win-win deal, there are investors who like to prey on entrepreneurs who have little financial experience, don’t read the term sheet or are simply desperate for a deal. Seek out advisors to help you avoid these investors.

Related: 5 Lessons From Commercial-Real-Estate Financing for Entrepreneurs Seeking Funding

2. Investors who love to litigate

We all know that startups don’t have money to fight in court, so it’s easy for a few unscrupulous investors to jump to the conclusion that intimidation and lawsuit threats can improve their returns and control after the money changes hands. Here is where checking the track record pays off. Don’t assume you will be the exception.

3. Imperial investors

These are investors with such massive egos that they expect to dictate both the terms of the investment as well as all future strategic decisions of your startup. Unless you are preparing to work for Donald Trump someday, I recommend that you skip this investor in favor of a more equal partner.

4. Legal eagle investors

Negotiating terms is normal before the investment, but once the check is cashed, you don’t want to be second-guessed on every action. Be wary if the term sheet is a document longer than your business plan. Violation of abstract clauses may be used as a way to push you out, take over the company or pull the investment.

5. Academic coach investors

Coaching should be expected and appreciated, but you don’t have time for constant tutorials on how to run a business. A good advisor and mentor will tackle questions and then offer key insights. If an investor spends more than a day at your office before the check is written, it may be time to check your patience meter.

Related: A 3-Point Blueprint for Getting Noticed by Venture Capitalists

6. Pretend investors

These are “wannabe” investors who don’t have the means, or former entrepreneurs who don’t want to leave the arena. They always have one more issues to investigate or another set of questions, but never bring the checkbook. After a rational allocation of your team’s time, ask for a definitive close and be willing to walk away.

7. Investors without a clue

Many wealthy people make poor startup investors. They have long forgotten (or never knew) the challenges faced by a startup business. Many great real-estate people and doctors fall into this category. A synergistic long-term relationship in your business is not likely. Ask them for an introduction to wealthy business friends.

8. Investors for a fee

These are people who rarely invest their own funds, but promise to find the perfect match and live off a percentage of the action and preparation fees. They may be licensed investment brokers or consultants cold-calling real investors. The challenge is performing due diligence on the real investor.

Proactively seek out and build relationships with investors who interest you, rather than passively wait for potential investors to approach you. Finding investors is best done by talking to peers and attending networking events. Cold calling or emailing strangers will likely get you a sampling of all the eight stereotypes defined here.

Finally, you need to learn what investment terms make sense for your startup and craft your own term sheet, rather than rely on one being presented to you. Start with some legal advice from a source you trust. Do your homework and networking, but don’t chase investors like a one-night stand and expect it to lead to a mutually beneficial long-term relationship.

https://www.entrepreneur.com/article/251164