Quote:
Originally Posted by Hooya
am I right in thinking you do the profit split monthly? I have seen this before and this does not work in the clients favour. As and example
On a $5000 account you make a monthly profit of $1000(20%). $700 to the client and $300 to yourself. The client pays you leaving his account as $5700. Now just say the next month the account suffers a loss of 20%..the account will now stand at $4560. So the account has made a loss of $440 but the account managers have made $300 profit?
Monthly management charges are just not done in this day and age..
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management fee is always charged on new net profits. Here is the part from our FAQs:
What is the management fee for using the Forex Exclusive Club Managed Accounts?
Management fee is 30% on monthly net performance. Simply: if you don't earn money - we don't earn money!
Note: "Net new high equity" with regard to the Performance Fee for each system means that if losses occur, those losses must be made up before any additional performance fee is charged.
How do you calculate monthly net profit?
Monthly net profit is calculated as the difference between the closing balance last month and the closing balance this month. Positions not closed at the last day of the month (floating positions) will be taken into the profit / loss calculation over the month in which the positions are closed.
If the difference is negative (ie the account did not make a profit this month), there will be no fee to pay. Should a trading loss exist from preceding months, it must be recovered in full before any additional profit share amount is debited from the account holder’s account(s) paid to Forex Exclusive Club. Forex Exclusive Club does not charge commission or annual fees.
How do you calculate your monthly performance fee?
All Managed Accounts operate according to the following fee schedule: Monthly Performance Fee = 30% of net new profits. The 30% performance fees are taken on a high-watermark basis. A high watermark is the previous high in the account-participant's account (adjusted for deposit, withdrawals, and fees). It ensures that the fees are only deducted based on new performance, rather than just recovery from poor performance. In other words, if an account loses money over a period, the account must first recoup previous losses and then any profit above the high watermark is subject to a 30% performance fee.
For example (assuming no management fees for simplicity): Your account opens with an initial investment of $50,000. At the end of the first month, the account makes $5,000, bringing its equity up to $55,000 on which there is a 30% performance fee of $1,500 deducted; correspondingly, the watermark is raised to $53,500 ($5,000 profit less a $1,500 fee). Then, at the end of second month, it loses $2,000, lowering its equity to $51,500, on which a performance fee is not charged. At the end of third month, the account makes $1,000, bringing its equity up to $52,750, on which no performance fees are charged because the watermark was not reached. Lastly, at the end of the fourth month, it makes $7,000, bringing the equity up to $59,500, which is a new-equity high by $6,000 over the watermark of $53,500 in the first month, on which there is a 30% performance fee of $1,800 deducted. The watermark is now raised to $58,700.
Note: All numbers presented in this example are arbitrary and are presented for illustration purposes only. They in no way reflect trading performance either good or bad.