The transfer of one trader’s trading account to another, more experienced trader is called trust management. There are different reviews of this method. In this article, we will analyse them and form our own opinion as to whether trust management is justified and whether it is possible to earn money from it.To begin with, let us understand what trust management is?
In fact, you give your funds to a more professional trader to trade and invest them profitably. For this, the managing trader takes a commission from the profits. Having access to your account, the manager does not have direct access to the money itself, which is stored with the broker. That is, he will not be able to withdraw them. A contract is drawn up, where drawdown limits, commission and other rights and obligations of the parties are specified.
Advantages and disadvantages of trust management
To fully understand the essence of trust management, let’s look at its pros and cons.
Pros of trust management
- Ease. An investor shifts his worries to a professional, for whom trading is the main way of earning money. Trading is a complicated process that requires training and constant honing of knowledge and skills, staying up nights, getting nervous and sometimes losing money. With trust management all this will not happen.
- Less risk. The probability of a deposit being drained by an experienced professional is orders of magnitude lower than that of a person who has just started learning trading.
- Free time. It will take a trader 1-2 years to reach a more or less professional level. Trading itself can take up to 8 hours a day. By transferring your funds to trust management, reviews of which we will consider below, you can do anything you like.
- High profitability. With a competent managing trader, the yield is from 80% per annum, which is much higher than from other types of passive income.
Disadvantages of fiduciary management
- You don’t control the profits, they are up to the manager.
- The need to find a professional successful managing trader with high performance.
You should also realise that trust management requires a relatively large starting capital of several thousand dollars. A solid manager will not work with a couple of hundred.
Conclusion
Not everyone can afford a personal manager. The reviews say that with a successful choice of a managing trader, trust management is the most profitable and acceptable type of passive income. Depending on the state of the market, commentators talk about returns from 50%.
Describing trust management, the reviews also touch upon the difficulty of finding an intelligent manager. They also write about the mistakes of investors themselves. The main of them concern the fact that the client himself did not terminate relations with the manager after the pre-agreed drawdown level was exceeded. It is also recommended to set the drawdown at the level of 10-15% in the contract.
It is also recommended to ask the candidate for a manager for confirmation of trading with statistics.Reviews indicate that it is better to work with managers who trade through brokers with European licences and regulators.Trust management is a profitable type of passive income, which, however, involves some risks.