hi all-
i hope you are all well- i am currently speaking with a us based trader who trades s and p eminis contracts,
i am considering having him manage an account on my behalf under a limited power of attorney contract on a pre agreed % age of profits basis,
i have been watching him trade a demo account for me for 2 months and have viewed an automated version of his trading on a backtested 2 year time frame. his success rate to date is fantastic -he gets 90 % of trades accurate consistently,however his losses are sometimes bigger than his gains -to date the max drawdown on the demo and backtested version was 20 %.but his returns over the 2 month period on the demo are in the region of 700 %.
he does not use margin.and s the account frows so too does the number of contracts traded-this is done on a pro rata basis.
my questions are really geared at eminis traders and i would be very grateful for your advice on money management and risk issues on this particular vehicle.,
1-
the traders normal wins are in the region of 2 to 3 points,he often takes less.sometimes even a tick(.25)
his losses are often only a tick but he has said that he sometimes sets stops 15 points away from his entry,and that this rarely gets hit-in the 2 months that i have witnessed it has not been hit as yet,however sometimes he thas taken losses in the region of 6,7 and 8 points.
my question is re money management-
what do you think that the largest number of contracts should be traded at a time on say a $50000 account?
he trades 10 contracts on a $50000 account ,
this means that if the 15 point stop is hit -the loss would be 10 *50*15 = $7500
-this is potentially 15 % of the account worth-
as i say this has not happened as yet and the max drawdown was in the region of 20 %-but i wonder what people think that the maximum number of contracts traded on that account size should be?
2-
my second question relates to the risks of trading the s and p eminis contracts specifically,
if we assume that the above scenario re number of contracts traded holds steady ,then if 10 contracts are traded on this account size,a drop of 100 points wipes out the acccount,a bigger drop means a call from the broker for funds,
my fear is that a catastrophic event such as a terrorist attack or some other such like may spark such a fall ,particularly if the trade is overnight,or even worse that the markets could albeit unlikely be suspended,rendering stop losses ineffective,
what are your thoughts on this?
what is the likelyhood of this happening and if such an event were to happen and for example the market gapped unfavourably,what other measure s if any could one take to minimise the downside?
3)
does any one know if an llc or some other such vehicle could be used to trade the account and thus limit liability in the event of a margin call?
4)
if a safety vehicle could be used -what arethe tax implications
i would be very grateful for all your comments=brian
iis u
i hope you are all well- i am currently speaking with a us based trader who trades s and p eminis contracts,
i am considering having him manage an account on my behalf under a limited power of attorney contract on a pre agreed % age of profits basis,
i have been watching him trade a demo account for me for 2 months and have viewed an automated version of his trading on a backtested 2 year time frame. his success rate to date is fantastic -he gets 90 % of trades accurate consistently,however his losses are sometimes bigger than his gains -to date the max drawdown on the demo and backtested version was 20 %.but his returns over the 2 month period on the demo are in the region of 700 %.
he does not use margin.and s the account frows so too does the number of contracts traded-this is done on a pro rata basis.
my questions are really geared at eminis traders and i would be very grateful for your advice on money management and risk issues on this particular vehicle.,
1-
the traders normal wins are in the region of 2 to 3 points,he often takes less.sometimes even a tick(.25)
his losses are often only a tick but he has said that he sometimes sets stops 15 points away from his entry,and that this rarely gets hit-in the 2 months that i have witnessed it has not been hit as yet,however sometimes he thas taken losses in the region of 6,7 and 8 points.
my question is re money management-
what do you think that the largest number of contracts should be traded at a time on say a $50000 account?
he trades 10 contracts on a $50000 account ,
this means that if the 15 point stop is hit -the loss would be 10 *50*15 = $7500
-this is potentially 15 % of the account worth-
as i say this has not happened as yet and the max drawdown was in the region of 20 %-but i wonder what people think that the maximum number of contracts traded on that account size should be?
2-
my second question relates to the risks of trading the s and p eminis contracts specifically,
if we assume that the above scenario re number of contracts traded holds steady ,then if 10 contracts are traded on this account size,a drop of 100 points wipes out the acccount,a bigger drop means a call from the broker for funds,
my fear is that a catastrophic event such as a terrorist attack or some other such like may spark such a fall ,particularly if the trade is overnight,or even worse that the markets could albeit unlikely be suspended,rendering stop losses ineffective,
what are your thoughts on this?
what is the likelyhood of this happening and if such an event were to happen and for example the market gapped unfavourably,what other measure s if any could one take to minimise the downside?
3)
does any one know if an llc or some other such vehicle could be used to trade the account and thus limit liability in the event of a margin call?
4)
if a safety vehicle could be used -what arethe tax implications
i would be very grateful for all your comments=brian
iis u
)
