huge returns on managed accounts-advice needed

hi all-
hope you are all trading well,personally i never seem to have enough time to devote to the art ,so in that regard i have been seeking someone to manage an account for me,
i came across(on a wbsite that i subscribe to) a trader who is based in the usa 3 months ago,he said that he has traded eminis for the past 8 years or so and that 2 years ago ,he noticed a pattern that recurs with amazing frequency in the markets-on that basis he has honed ,tinkered with and improved the trading methodology to a point where he currently gets 90 % of his trades correct,
on that basis ,i asked him to open a demo account and trade it for a few months-so that he could prove his claims to me-he did this with an established brokerage and within 2 months had turned a demo account from 50k to 460k.
this balance did not include brokers comissions ,but i estimate that if it did ,the balance would have been 350 k approx based on comissions charged.
he sent me a number of account statements where he had done very well both trading real money and backtesting his system on an automated system.
he also noted that these were based on the original system which he had now improved,
he has now started to trade real accounts for a few people and he sends me the account statements daily ,again the results show extreme consistency and show excellent returns,
50k to 75 k in a week on one account started 5 days ago-
i am now at a stage where i would like to check out this person,
he is not sec registered as he is new to this scene and is an individual who has as he says has through years of hard work and frustration eventually stumbled across a very reliable set of indicatrors.
the deal would be that he would trade an account under a limited power of attorney agreement ,and a s ssuch he would have no access to the money in the account-he gets paid in the region of 30% of profits etc,,,
my questions are as follows
1-how can i check this guy out to ensure that he is not a scam artist?
is there an economical and reliable way of doing this in the usa?
does anyone know?
i intend to travel to meet him in a few weeks but would like to have a reliable check done on him beforehand if possible.
2-i am based in ireland-what are the tax implications on futures-is it a capital gain or income tax?
this is not a serious issue for me at the moment as i can ask a tax advisor here anyway-
q1 is more important,
3-with futures and eminis it could be possible,albeit unlikely that an account could be wiped out or even worse if the markets gapped or was suspended on a castastrophic event such as 9-11,is there any way of limiting ones potential liabilities here-i know that stop losses can be put in place but what about an llc or some such vehicle and if used what would the tax liabilities be?
i would be most grateful for your comments,
brian

i think you first need to establish your own risk profile
how would you feel if you invested 50k with this guy
and after 1 week it was worth 25k ?

fair point

ColinRiche said:

i think you first need to establish your own risk profile
how would you feel if you invested 50k with this guy
and after 1 week it was worth 25k ?

Click to expand...

yes colin-that is a very valid point and one i had thought about-i would most likely place a minimum balance stop on the account with the broker and the account would be closed if that were violated-
there is no exact figure and that would be an individual choice ,but based on previous drawdowns( max over back tested data was c 20 %,)so i think that initially i would set that figure around 35 k,
thanks for your input-brian

If you have $100k to invest then cut it and only invest $20k to see how it does.
If he trades as well as he has in the short view then you may not need to add the $80k of your other funds.
At the point you reach $40k you could take your original $20k out so that in a sense you are using "the houses money."
I have seen people pay for the first gain and then see the account go to nearly nothing...so in effect they paid for the trading that lost their money.
With more gains you have to expect more losses in general.
Some specific cases may not be that way but in general as gains increase so do losses.
For this very high return you would have to expect some potential of loss of all the funds you put in.
If you were to tell him to only go with the $100k until it reached $80k and then quit you may not get this to acctually happen. So, in a sense the total money you put in is your first "stop."
Also, be careful of losses that you are to make up beyond your original investment.
So, if he were to crash your account to where you have to add funds to correct your part of the deal, that could be painful. I am not an expert on eminis so this may be a risk that doesn't exist...but if you are going to do it or any investment...

..Risk Management and Consistency is what you want to focus on...

Limit your risks as best you can.
If the trader is a "rocket to crater" trader then he will likely fail in the long term.

It would help you to know more about his system and see if it "feels" right to you.

Good luck on your results,

Steve AKA Forex5x

ho newbie

thanks for that comment newbie- i appreciate your input,
i see youre based in the states-can you advise me how i can check this guy out-
id just like to get a check done on him to ease my mind-although he seems quite genuine ,you never know-
re your comments on gains and losses-yes you arecorrect -especially in real terms,
however it shgould nt change in percentage terms -
i understand your comment about the total money being a stop-
my idea on this is that his maximum drawdown over 10 weeks actual trading and backtested automated systems would be used as a guide-
if i start with 50 and issue the broker with an instruction tyo close the account at 30 then it allows for a drawdown of 40 %-he hasnt ever come anywhere close to that in the past.
yes-i am going over in a few weeks to see the system being traded in real market hours,
i myself have some understanding of eminis but could do with some help on this aswell-any eminis traders out there feel free to say hello-i would appreciate your imput-
brian

QUOTE=forex5x;472129]If you have $100k to invest then cut it and only invest $20k to see how it does.
If he trades as well as he has in the short view then you may not need to add the $80k of your other funds.
At the point you reach $40k you could take your original $20k out so that in a sense you are using "the houses money."
I have seen people pay for the first gain and then see the account go to nearly nothing...so in effect they paid for the trading that lost their money.
With more gains you have to expect more losses in general.
Some specific cases may not be that way but in general as gains increase so do losses.
For this very high return you would have to expect some potential of loss of all the funds you put in.
If you were to tell him to only go with the $100k until it reached $80k and then quit you may not get this to acctually happen. So, in a sense the total money you put in is your first "stop."
Also, be careful of losses that you are to make up beyond your original investment.
So, if he were to crash your account to where you have to add funds to correct your part of the deal, that could be painful. I am not an expert on eminis so this may be a risk that doesn't exist...but if you are going to do it or any investment...

..Risk Management and Consistency is what you want to focus on...

Limit your risks as best you can.
If the trader is a "rocket to crater" trader then he will likely fail in the long term.

It would help you to know more about his system and see if it "feels" right to you.

Good luck on your results,

Steve AKA Forex5x[/QUOTE]

He isn't called mp6140 is he?

Best bet is to realise that a lot of these people are scam artists - if they are that good, either they probably don't need outside money, or they are able to get it through more standard means than an internet forum. Also, demo account performance should be taken with an enormous plate of salt - it is easy to trade 10 or more demo accounts at the same time, then just show the results for the best one and bin the rest.

Next, do some research - search for the guy's username on Google, trade2win, elitetrader, and as many other trading sites as you can - often you'll find some horror stories which can put you off. If you know the guy's real name, search for that as well.

Finally, if something seems too good to be true, beware.

I don't know the details of checking someone out for legitimacy in the States, but if you scan through this thread you'll probably find out how:

http://www.trade2win.com/boards/brokerages/14154-boiler-room-scams.html

hi fifty 2

thankyou for the repIy-
yes,i appreeciate that many of these peopIe are scam artists-this is why i have put the post up-in an effort to override that or at Ieast get some ideas on how to go about doing a compIete check.
re your comments i repIy as foIIows-
i have asked him about the reason that he is doing this-he saysthat this system has been partIy automated but that he is stiII adding features to it on an ongoing basis-the costs of automating have been extensive which have Ieft his funds affected ,but more so he wants to show managed accounts with good track records when he seIIs his automated system which is his goaI in a few years,i can understand the Iogic behind his thinking.as a side note hetyrades manuaIIy at the moment ,but the methodoIogy and system is obviousIy the same .
i dont totaIIY agree that an internet forum is not a reaIistic option for raising investment funds esPeciaIIy if it is mezzanine type-banks etc,, wouId not finance a projeCt Iike this and indeed many others incIuding high risk startups,etc,, -that is,in my view why there is such an extensive angeI investment business worIwide.
re your comment on the demo-i had access to the account in reaItime-it was not a series of emaiIs with performance data-we both had the same password and the demo account was traded over 2 months -there was onIy one account-not ten,so unIess the broker who is sec registered is part of the scam ,its unIikeIy that the resuIts of the demo couId have been tampered with.or is it??
i have done some searches and have found no records about this trader-
but you are correct -if something sounds too good to be true etc,,,,
thats why i posted in an effort to get some advise on how to check him out- i am going over in a few weeks,but any suggestions in this regard wouId be appreciated.
thanks again for your input-brian
OTE=fifty2aces;472654]He isn't called mp6140 is he?

Best bet is to realise that a lot of these people are scam artists - if they are that good, either they probably don't need outside money, or they are able to get it through more standard means than an internet forum. Also, demo account performance should be taken with an enormous plate of salt - it is easy to trade 10 or more demo accounts at the same time, then just show the results for the best one and bin the rest.

Next, do some research - search for the guy's username on Google, trade2win, elitetrader, and as many other trading sites as you can - often you'll find some horror stories which can put you off. If you know the guy's real name, search for that as well.

Finally, if something seems too good to be true, beware.[/QUOTE]

ikeano said:

re your comment on the demo-i had access to the account in reaItime-it was not a series of emaiIs with performance data-we both had the same password and the demo account was traded over 2 months -there was onIy one account-not ten,so unIess the broker who is sec registered is part of the scam ,its unIikeIy that the resuIts of the demo couId have been tampered with.or is it??

Click to expand...

You may be one of ten people watching ten seperate accounts. If he manages to make one of those accounts profitable over 2 months, he has a victim. Which seems more credible? I don't know.

hi ahardy

thanks for the input-yes-that wouId be a possibiIity but the account was reset twice-
initiaIIy the originaI demo was for 2 weeks,
then after the initiaI triaI period on the 1st demo another demo was set up using the cIosing baIance as the new starting baIance, with a seperate password-
after another 2 weeks a 3 rd demo was set up and traded for 3-4 weeks,
at that stage i asked him to send me reaI account statements (that was onIy a week ago)which he had started trading for other investors-he now sends me these daiIy by emaiI - these are reaI accounts with reaI money-
i need to verify these with the broker ,but the resuIts to date stiII remain as consistent as they were on the demos-
so i think that the trades are reaIistic and an accurate refIection on how he has or wouId have traded-
thanks for the comment though,its something not everyone wouId have thought of or considered-i appreciate the input-regards-brian

ahardy66 said:

You may be one of ten people watching ten seperate accounts. If he manages to make one of those accounts profitable over 2 months, he has a victim. Which seems more credible? I don't know.

Click to expand...

Ikeano,

The only thing that springs to mind as raising suspicion is the intention he has on getting your money. If he is as good as he claims he would have people throwing their hard earned cash at him.

It seems he is going a fare bit out of his way to please you and get you on board. Big hedge fund clients dont get as much attention as you seem to be getting.

Let the idea go for 6 months or a year and see if he's still around, one thing for sure is, by doing this, your money will be. If he is as good as claimed he will still be around and you could then make a better judgement.

In 6 months to a year, check his address with inland revenue or whatever country equivalent, check where he lives on google earth, ask for full statement of accounts with real money, not demo accounts that ALWAYS get filled with NO slippage. Best of all, go and meet him, let him comp you for the night and see what level of entertainment you get. Meet his family, colleagues, see his house, his car ect.

Good luck with your endevours but this is one opportunity that needs to be put on the backburner for a while.

To be honest I would be much more concerned about what his risk is on the account at any given trade. For him to make those gains he must be risking astronomical amounts. If you are happy to take that risk than that is fair enough. Just to give you an example, I know of an established trading firm based in Turkey. They do not charge a % of profit, but a small amount per trade. They have returned in excess of 100% a year for 4 years straight; but their exposure is 10% of the account in any given trade. Still do you trust the performance to continue or do you look at the risk and only invest 2-5% of your assets. Either way do not risk any money you cannot afford to loose.

One way to check on this guy whether he is real is to get the actual statements and conformation from the broker/bank. As an investor you have the right to receive direct correspondence from his broker at his expense, to confirm he is in fact an honest manager. I would stay away form somebody managing a small account < $500K. With the risk he is taking on, the account should be mid 7 figures, with at least 2 years worth of records.

You can also ask him for a description of his risk management and his worst DD for at least 4 time periods starting at dailys. Have a look and see if you would feel comfortable with risk such as that.

Regards.

hi Iee

Iee
thanks for your comments-
yes i do pIan to go over to meet with him in the next few weeks-
i get the impression from him that he is an ordinary enough joe-married with a few kids ,runs a smaII business -enjoys a few days fishing here and there-etc,,,he certainIy doesnt come a cross as a high fIyer with the matching Iife style,,,there has been no hard seII at any time-and i ve stiII onIY spoken with him on skype-by text.
i dont expect Iavish entertainment by him when i go over-in fact if i receive that i wouId then be suspicious,i am going over to find more out about him,his background and and his system.
i wouIdnt think that hes going over board trying to get me on board-he has just traded a demo and now is sending me reaI accounts -
remember-this guy is onIy starting out trading accounts for peopIe - he did trade a few accounts for friends etc,,, in the past,but at this stage he is just reaIIy starting out-
re putting on the back burner-maybe you are right.
but in any event i want to go overto meet him-thanks for the comments-brian


The only thing that springs to mind as raising suspicion is the intention he has on getting your money. If he is as good as he claims he would have people throwing their hard earned cash at him.

It seems he is going a fare bit out of his way to please you and get you on board. Big hedge fund clients dont get as much attention as you seem to be getting.

Let the idea go for 6 months or a year and see if he's still around, one thing for sure is, by doing this, your money will be. If he is as good as claimed he will still be around and you could then make a better judgement.

In 6 months to a year, check his address with inland revenue or whatever country equivalent, check where he lives on google earth, ask for full statement of accounts with real money, not demo accounts that ALWAYS get filled with NO slippage. Best of all, go and meet him, let him comp you for the night and see what level of entertainment you get. Meet his family, colleagues, see his house, his car ect.

Good luck with your endevours but this is one opportunity that needs to be put on the backburner for a while.[/QUOTE]

Tread carefully, 1001 of one of these chancers around, always have been.

If it was me I wouldn't invest in a million years, simply because to make those returns you've got to take on too much risk which probably means he's a pretty amatuer trader, ie he thinks the game is all about returns.....

Tread carefully, 1001 of one of these chancers around, always will be.

If it was me I wouldn't invest in a million years, simply because to make those returns you've got to take on too much risk which probably means he's a pretty amatuer trader, ie he thinks the game is all about returns....

Perfect!! My point exactly.

what point are you agreeing with

smarks-what are you agreeing with exactIy?
brian

smarks999 said:

Perfect!! My point exactly.

Click to expand...

With the regards to the fact that it is a very dangerous situation and in all honesty staying clear of it could be the more rewarding option. However referring back to my first post above. If you can get the correct info it might be worth a shot. But still, be cautious of any US investments. The US regulation is tighter and more awkward than any country's.

There are other much more reliable investment boutiques out there who are closer and more established.

Just my opinion.

re risk on account

hi smarks-
the maximum stop which he uses is 15 points-
however i have never seen him take a Ioss of that magnitude,
in most cases he does tend to Iose higher points than he wins-
but the Iosses are normaIIy anything from 0.25 to 3 points
his wins are generaIIy about the same but a bigger percentage are on the Iower end,
if one takes the stop of 15 points-which as i say i have not yet seen him use in the3 months or so that i have witnessed,and if we say that he trades 10 contracts per 50 k account-in effect he wouId be risking 15*5*10 =7500 which wouId be 15 % of the account -as i say i have never seen him do that,but this was a figure he mentioned as an absoIute maximum-
i imagine as he trades the methodoIogy himseIf,on a discretionary basis that he gets out faster.
yes you are correct -i think about 3 % of ones assets wouId be enough to put into such a venture-obviousIy that depends on ones individuaI attitude to risk-
however i stiII have some questions that i need cIarified-
1-how difficuIt is it to get confirmation from the brokers?
i assume that they wiII not just respond to an emaiI-Do I need to meet them or what is the best way of doing this?
2-he does not trade on margin,so a margin caII is not a possibiIity,but as i said before i dont fuIIy understand s and p eminis and as such i need some guidance-what are the chances of the market gapping on very bad news such as a 9-11 type catastrophy.and a pre set stop becoming obsoIete.if the market gapped 100 points my account wouId be wiped out-(he trades 1 contract for every 5000 equity-so 50*100 =5000)if any more than a100 point drop-then i wouId have to pay money to the broker-
is this possible in your opinion?
3-if it is a possibiIity aIbeit a sIim one -can one be protected IegaIIy on the downside using an IIc -
i wouId appreciate aII comments on this.thanks again,brian

smarks999 said:

To be honest I would be much more concerned about what his risk is on the account at any given trade. For him to make those gains he must be risking astronomical amounts. If you are happy to take that risk than that is fair enough. Just to give you an example, I know of an established trading firm based in Turkey. They do not charge a % of profit, but a small amount per trade. They have returned in excess of 100% a year for 4 years straight; but their exposure is 10% of the account in any given trade. Still do you trust the performance to continue or do you look at the risk and only invest 2-5% of your assets. Either way do not risk any money you cannot afford to loose.

One way to check on this guy whether he is real is to get the actual statements and conformation from the broker/bank. As an investor you have the right to receive direct correspondence from his broker at his expense, to confirm he is in fact an honest manager. I would stay away form somebody managing a small account < $500K. With the risk he is taking on, the account should be mid 7 figures, with at least 2 years worth of records.

You can also ask him for a description of his risk management and his worst DD for at least 4 time periods starting at dailys. Have a look and see if you would feel comfortable with risk such as that.

Regards.

Click to expand...

Ikeano,

I think in all seriousness...

Seek independant legal and financial advice.

Do this before you get too deep. I still remain with my thoughts of you taking a back seat with this and see his colours come out in time. In short, it sounds extremely high risk/high reward and he also sounds a very 'new trader' (take that as any time definition you feel fit).

You may also be getting a bit blinded and excited about the possibilities of easy money, but of course you will deny this as you wont see it yourself.