Metatrader Forex Broker
Forex Managed Account Report
Learn how to trade various forex accounts from a single platform without any
administrative or compliance issues.
- Performance Fees
A performance fee is a fee that is typically charged monthly to the investor. This fee is charged from the new net equity high, also known as a high watermark. Typical performance fees are between 20-25%, however on some more aggressive models fees go as high as 60% of net new profits. On funds of funds fees can be as low as 10%.
The way this works is as follows. Letís say the investor deposits $100,000 into the account and you charge them a 20% performance fee. If you make 10% on the account during the course of the month, you as the manager will receive $2,000 or 20% of net new profits. After the first month there is $110,000 in the account. Letís assume you lose $50,000 the next month to bring the account value down to $60,000. Because you lost money in the account you make nothing that month. You will continue to make nothing until you bring the account back over the high watermark of $110,000 which is the peak.
This has an advantage for the investor because you donít get paid unless you make money. However there is also a conflict of interest with the investor because, you as the trader may be inspired to get too aggressive because you will want a high performance fee, and thus unreasonably high profits, thereby risking more of the account than appropriate.
Forex trading involves significant risk of loss and is not suitable for all investors. While you can earn a cash bonus,
you can also lose money due to the inherent risk of trading. Read full disclosure
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