Leverage on managed account

[James]

Hi Jsoft

I am interested in your performance since April:

+5.31% +4.13% +5.25% +2.46% +0.81%

They show good consistency. What is the average leverage (estimate) given your various programs, and the fact the results are a combination of the various leverages you use?

Is SCM registered with any of the securities authorities in the U.S?

[jsoft]

Originally posted by James
Hi Jsoft

I am interested in your performance since April:

+5.31% +4.13% +5.25% +2.46% +0.81%

They show good consistency.

Thank you, James. We only started in April as the company, so results are since the inception.

We strive to minimize standard deviation, which is what our investors wants.

Originally posted by James
What is the average leverage (estimate) given your various programs, and the fact the results are a combination of the various leverages you use?

Our standard trade uses 2:1 leverage. We have 1, 2 or 3 trades opened at the time. So effective leverage varies from 2:1 up to 6:1 with average being around 4:1.

Originally posted by James
Is SCM registered with any of the securities authorities in the U.S?

No we are not. The reasons being: 1) money manager dealing exclusively in Spot Forex is not required to be registered in U.S. 2) NFA registration doesn't offer any additional protection to the investor; not to go into this any deeper, some major NFA registered CTA operating in Forex have had 5-6 loosing months so far this year.

Investors are looking for transparency, good performance and sound risk management. We're U.S. based company so it is also easy for anyone to visit us if required.

[jsoft]

Assuming the following scenario:

1) account size $500
2) loosing trade $50 (10%)
3) winning trade $100 (20%)
4) ratio of #winners/#loosers 2:3

What are the chances of going broke?

---

The system above is a very good winning system with +$50 expectation over every 5 trades. Over each 100 trades it will show $1000 profit on average (over the long term). Each 500 trades will result in $5000 profit on average.

Now, this is assuming we can withstand the drawdown... which was the tricky part of this quiz. I've run 10,000 simulations for 100 and 500 trade scenarios, showing the lowest equity level reached for both:

Forecast: MIN over 100 trades
Percentile Value

10% -500
20% -350
30% -250
40% -200
50% -150
60% -100
70% -50
80% -50
90% 50

As you can see there is 10% or more chances of equity hitting -$500 and 20% or more - of equity hitting -$350. If we assume our account is not tradable after equity hits -$450, the exact percentage is 12.15%

Forecast: MIN over 500 trades
Percentile Value

10% -550
20% -400
30% -300
40% -200
50% -150
60% -100
70% -50
80% -50
90% 50

As you can see there is 10% or more chances of equity hitting -$550 and 20% or more - of equity hitting -$400. If we assume our account is not tradable after equity hits -$450, the exact percentage is 13.78%

The main point was to illustrate the reltively high chances even for the winning system to go broke in because of the bad risk management.

Food for thought, SimSpeed?

[SimSpeed]

Thanks jsoft, I do appreciate your point of view even though it has a condescending tone. If that’s a misjudgment on my part, I apologize.

I have no conflict with your perceived lessons on conventional risk management theory. As you said, those concepts have been around for a long time and certainly are the practiced policy of the majority of managed investment traders. And yes you are partially correct, in that I do not manage public funds as a business enterprise; just the private currency accounts of a few family members, close friends and associates.

If you’ll read my posts closely, you’ll see that we both agree on your point that even good systems will eventually have losing streaks. You say that I keep missing how to arrive at a worst-case scenario. I believe I have clearly defined how I calculate worst-case; I identify my total possible consecutive losing trades at (various levels of risk) before my account bankrupts. How much worst-case scenario can you get? You didn’t cite your worst-case method; you just stated an arbitrary loss of 10 to 30%. If that were worst-case, what would you consider an uncontrolled loss of 80% or more?

The only historical data I consider are my actual trades. I run my system in real time, with consideration of max draw down as a function of worst-case consecutive losing trades; not dollar losses per se. I realize that may be considered fundamentally wrong based on conventional reasoning, but conventional risk/returns are not my goal.

My objective is to maximize my return on every trade possible, by dynamically calculating risk/reward/margin rules/stop loss/worst-cast parameters for each and every trade… trade-by-trade. I then use those calculations as the basis for my trade setup. Win or lose, I recalculate the parameters for the next trade based on the outcome of the last. Unconventional as that may seem; it works for me.

What’s my bottom line? Taking money out of the market and putting it in my pocket today and as many days into the future as possible. Actual daily cash-outs or account drawdowns vary according to total (+/-) pips, times the total lots traded, which my system dictates trade-by-trade according to the parameters defined above. Based on forward looking win/loss projections that I run almost every day, my potential for catastrophic loss is far less than one might think from a cursory overview of this post.

Finally, I do not necessarily define “ruin” as a loss of trading capital, but more definitively as an inability to reenter the game in the event of bankruptcy. And since as you and I both noted that no one can control risk completely; proper risk management therefore, must in my view, contain a capital reserve component. Should my worst-case scenario occur, my first priority is to make sure I can minimally refund my account from secured cash withdrawals and restart the system for the next go around.

[CGM1]

I have been reading through these threads and thought that www.nomad4x.com might be of interest for a managed option. There are 2 different programs dependent on account size. But the cool thing on the managed side is that the results are decent with a relatively low drawdown. Also the manager doesn't charge a 2% management fee. Only the 20% incentive fee. I like the idea of someone who puts their money where there mouth is, so to speak. No performance, no charge. Check it out if there is any interest.

[leeanne75]

I have just read this thread and if anyone is looking around for managed funds I would recommend the one I am using, the min is only 10k and they are very consistant in there returns. And also they dont charge unless they make money. I like that. I have turned 25k into over 45k since June this year.

if you want more info email me leanne75@iprimus.com.au

I find the more of these you look at the better as you have to feel comfortable where you put your money, and I believe personal recommendation means a lot.

Leeanne
Keep smiling.