10 Questions to Check Reliability/Authenticity of Any Fund Manager Worldwide
1. Do the fund managers provide written description of their trading system which they apply in your accounts? And written confirmation to follow it?
Note: Most of traders have no proper plan or strategy and follow their emotions and un-verified thoughts and if they have, that should be verified and tested with
complete reports and statistics and those figures should be verifiable through 3rd party. Following things should be demanded in written.
A). What would be minimum and maximum stop loss of any trade?
B). What would be minimum and maximum limit of any trade?
C). What would be minimum and maximum lot size?
Note: Most ideal is that lot size should remain fixed or it should never increase more than 5 times of the beginning lot size. For example normally most of the time if we buy 1 lot size then in case of drawdown or money management, lot size should not be 6 or higher. It should be within 1-5. If lot size is increased more than 5 then account can blow out in losses and all earned profits can be lost. Always consider the matter of lot size very cautiously and seriously.
D). What would be a distance to enter new trade in any trading instrument? If distance is small for each new trade then this is a bad sign and it shows speculation which is indeed bad thing. If distance is more than 50% of the stop limit or higher, then it is good and shows trading maturity. For example fund manager buy eurusd at 1.3550 and market comes down to 1.3540 then new trade is entered just after 10 point (which is small distance between the first trade and newly entered trade) then normally it would be considered speculation which is very dangerous. Fund manager should enter new trade at least after 50 points move or higher, only then this is good sign of trading. Distance between the trades should be at least 50% or higher of the stop or limit. If someone is interested to learn this matter and other matters in detail then trade-council.com management would be happy to assist. Just send your questions and concerns and we will answer you.
E). Fund manager should follow the same line and length of trading which is agreed between the client and the fund manager. If fund manager gives you written description of his trading strategy and later he/she does not follow it then you should take it seriously. If you set our recommended trading conditions with your fund manager then you will be safe from uncertain and un-defined losses.
2. Trading system of any fund manager is based on fixed logic or it is based on old traditional methods?
Note: Trading systems without fixed logics cannot be verified historically because they are based on assumptions, predictions, emotions, feelings and guess work and all these things change according to emotions and feelings which is seriously and extremely bad approach of trading in financial industry where most of the time market does not move according to our feelings and emotions
3. Further check that, trading system can be verified or not? If yes what are the reports of historical test and latest real account statements? Can your fund manager provide most recent 3-6 months performance of REAL account by screen sharing which is most authentic way to check the results without fraudulent possibilities?
4. Checking and keeping close eyes at historical drawdown is very important to select any fund manager. Know that what is historical drawdown? It appears in any single day or week or month?
Note: If drawdown happens quickly (like within 24 hours) then it is dangerous sign. Normally traders do not tell fairly and honestly about these things but you should clearly ask to ensure maximum safety of your funds.
5. What is the surety that account will never exceed from the pre-defined drawdown limits agreed between the client and the fund manager?
6. What are average monthly profits and average monthly drawdown?
Note: Knowing about average monthly profit/loss shows either trading strategy is speculative or stable in each month. If strategy is excellent in any particular month but as a whole it is not good regularly in each month, then you cannot make consistent money in each month
7. In case of drawdown lot size remains fixed or it is increased?
Note: Dramatically change in lot size is most disaster way of trading and normally traders increase lot size to cover losses but loose more. This is the most common problem to increase lot size in case of drawdown and we certainly avoid this type of trading.
8. What kind of money management they use?
Note: Almost 80% importance goes to money management and there are many money management systems in the market. You should ask your fund manager that either money management is applied on loss side or profit side? Or mixed? If mixed what is ratio to adjust losses while not increasing the lot size more than 3% of the account per trade. This is very tricky question but important.
9. Their selected broker is from top 10 brokers in the world by volume size or they work with normal ABC brokers due to their own interests?
Note: Working with top 10 brokers of the world has great advantages in transparency, honesty and reliability because of high trading volume with them. Normal ABC brokers create many technical and unnecessary problems because of their low trading volume.
10. Does your fund manager offer you to meet physically for strategy and investment briefing?
Note: if you are running an investment company and looking for most reliable fund manager then you should ask this question