![]() If the manager isn't willing to abide by your terms, then simply look elsewhere.Īudited statements and legal agreements are ostensibly worthless, as past performance offers no guarantees, and statements can easily be the result of forgery, selective account posting, or phony MM practices while legal agreements carry only as much weight as you have the resources to enforce them. The important thing is that YOU remain in control of the arrangement. If you feel that he is exploiting this situation, by trading inordinately frequently without results that justify it, then you can always terminate the arrangement and close the account. Of course he may have an IB-type arrangement with the br0ker where he is paid a percentage that's based on transaction volume. This gives the manager the greatest possible incentive to perform for YOU. on X% of profits above the previous account high, as opposed to flat management fees. Make sure that commissions are based on performance only, i.e. If the $5k is lost, you have the option of either wiring additional funds, or ending the arrangement.ģ. The manager still sizes positions as if there was $50k in the account. That safeguards you against unnecessary loss, either from incompetent trading, or should the br0ker (or his underwriting bank) ever go belly-up. If, for example, you have $50k to invest but want to reconsider your options should drawdown reach 10%, then put $5k in the trading account, and the other $45k in an interest bearing on-call account. Decide how much drawdown you're willing to accept, and fund the account accordingly. Using the br0ker as a third party to enforce these conditions is a sensible precaution.Ģ. Oanda is an example of a br0ker who offers this type of arrangement. The 'manager' is granted a limited Power of Attorney to trade funds on your behalf. Make sure that any trading account is in your name, and that only you have the authority to withdraw money. Of course it's too late as far as Jacko is concerned, but in case any newcomers are reading this, here are some basic ways to protect yourself from this type of situation ever occurring in the future:ġ. ![]()
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