FX markets are volatile. Sharp rises and even steeper dips. These are the daily perils of Foreign Exchange Trading. Money managers and their investors, therefore, are faced with a few important decisions. Money managers must protect their clients and provide performance and results on a consistent basis in order to keep the investors happy. Investors are hopeful for the upside potential while wary of the downside risk. Many times, investors are ready to jump ship at the first sign of them losing money. A strategy that in retrospect always seems to be the wrong one, but who can blame them?
We believe there are many changes that could be implemented to help bring better service and results within the industry while putting the client's interest first.
With the SCM back office platform and traders room, we can now bring weekly high water mark calculations and payouts. What this means is we are able to calculate profits on a weekly basis provided the trader has closed out all of his trades on the account. Comparing this to the industry standard which is monthly calculations and payouts we wee many benefits for both the manager and the investor.
- Weekly High Water Marks and payouts incentivize the trader to close out losing trades sooner so they can get paid out at the end of the week and cash in their winning trades. It also encourages traders to close out losing trades sooner and go after winning trades.
- On the flip side, weekly High Water Marks and payouts the investor from being dragged into long periods of drawdowns on their account because the incentive is with the trader to close it out before the trade gets out of control.
Way too often we see traders in the money (In profitable trades) only to see them give it back to the markets and let their stop losses be hit instead. We want to help money managers make the best decisions leading to their investors making more money, that's a real win-win situation.