How to Choose a Good Trader
The concept of "trust management" places a major emphasis on "trust". You need to cooperate not only with a successful player, but also with a credible and trustworthy partner. We'll give you some good pointers on how to do more with less, that is how to choose a trader in order not to lose money.
First and foremost, investors should be able to evaluate themselves as potential investors. So you must make up your own mind: why do you need a trader? What exactly do you hope to get out of him? What standards do you expect? Are you ready to master the market and trade independently in the future? The answers will shed light on what you need – a personal trader, PAMM account or just additional training.
Making a judicious choice with regard to a trader, you need to obtain as much information as possible: strategy, goals and possible guarantees. Our principal observations and recommendations are as follows:
- The professional experience of a trader - at least 1-2 years. It should be accompanied by any supporting evidence. Even if someone recommends to you a "brilliant" novice speculator with less trading experience - don’t buy it. Let him first be financed by someone else, and you can see the result. You’ll always have a chance to invest your money.
- The maximum drawdown should not exceed 30-40% of the amount of the primary balance. And regardless of the overall result, trading asset, strategy, and any other factors. If you know the value of your money, then a trader who bears losses is the wrong choice.
- A person should have his own capital, both trading and guarantee. He should also be ready to assume financial loss. There is a chance a trader will work more carefully risking his own money.
- A reasonable interest rate and transparency of payments to the trader. Avoid collaboration with "unappreciated genius" (more than 60%), people that are too conservative with finances (below 20%), or others who require any “abnormal" conditions for cooperation. The best option is: 30-35% of the profit - to the trader, 15% - to the platform.
- Mandatory trust management agreement. You need to carry out a far more thorough analysis of the situation before you sign. Determine the rights and obligations, the legal status of such a document, possible disputes, distribution schemes, interest of profits to the investor. If necessary, you can contact a lawyer for the review of the contract.
- The psychological aspect is equally important. In a perfect world, the best option is to communicate with the trader face to face or observe his actions during trading. If this is not possible, then you'd better obtain reasonable assurance on the adequacy of the person.
We remind you that our goal is to protect our clients from the pitfalls of investing. When the person you want to collaborate with provides screenshots, it's not safe. When you need to install a program for traders or perform other complex actions, it’s inconvenient. We solve both problems. With Equite, the need for an app disappears, and investment risks become lower. Just ask the trader to create a portfolio and learn about all its ups and downs. More details on our website.