stop losses limit for managed accounts

[traianpavel]

Hi,

I would like to start a colaboration with a money manager.

I would like to know if there is any platform where I can setup a lose limit which can't be changed by the money manager.

By example he stated in his offer he will stop if the account arrive to 75% from equity so a lose of 25% from the account.

Thanks

 

[Pharaoh]

That's not going to be easy.

Talk to the broker. Explain that you are setting up an agreement with the account manager that has a drawdown limit. Ask the broker if there is any way for them to flag the account if drawdown exceeds a certain limit. Whether or not this is possible will depend on what sort of software they use on their backend. Another possibility would be to ask if it's possible to hold any commissions (from profits and per trade, if applicable) in escrow for 3 months, with those automatically reverting to you if the manager breaks the agreement.

Place the drawdown limit in the LPOA agreement. That at least creates a true contractual basis for the limit and would make seeking compensation legally simpler. Of course, if you are trading with some guy who works only through a free web-based email account and is otherwise untraceable, going after him legally would be difficult. Sticking to someone who is licensed to trade other people's money by a well known regulator would improve your chances of recovery significantly.