Risk Averse Investor or Money Laundering

[chancellor87]

Hello,


would like to know your opinion about this. If there is a case, a so called hedge fund manager and a so called regulated one. It is pointing other trader to manage the fund, worth $1,000,000. And guess what, the risk tolerance only 2%, it would be $20,000. Generally, they cannot affor to any losses that might occur in trading. When they see the fund is in losses, the leverage will be raised in order to make "fast profit" to maintain the equity.

Let me know your opinion. Thank you, member FPA.



Best,

 

[Pharaoh]

A thousand dollars or a million dollars doesn't matter. Jacking up the leverage to try to grab "fast profit" is a sure way to end up with "fast losses" sooner or later.

 

[Rambo35]

I don't think leverage is the issue, risk management is.

 

[willforex]

Hello,


would like to know your opinion about this. If there is a case, a so called hedge fund manager and a so called regulated one. It is pointing other trader to manage the fund, worth $1,000,000. And guess what, the risk tolerance only 2%, it would be $20,000. Generally, they cannot affor to any losses that might occur in trading. When they see the fund is in losses, the leverage will be raised in order to make "fast profit" to maintain the equity.

Let me know your opinion. Thank you, member FPA.



Best,

If the leverage increases when the fund is in losses worst case scenario you will lose your fund very quickly.