Max Risk is a Managed Account that follows an unusual and at first glance bold risk approach.
The account manager of most managed accounts target a predefined maximal draw down to limit the loss that can materialise during one trading cycle. It is the investor's responsibility to decide whether to withdraw the remaining equity if this limit is reached or not. In many cases brokers' terms and conditions don't allow a single investor to withdraw funds while trades are open to protect the other investors.
As a result the intended maximal draw down as well as the incurred losses are often exceeded.
The Max Risk approach is to invest only the risk capital. This not only allows the account manager more room making trading decisions but also limits the possible loss for each investor to a predefined ablsolute value. As the account manager's only income is the performance fee they don't have any reason to take elevated risk.
So instead of investing e.g. USD 5,000 in a regular managed account targeting a maximal draw down of 20% or USD 1,000 the investor deposits only these USD 1,000 in the Max Risk account. While the value at risk in the first case is actual the full amount of USD 5,000 the Max Risk approach effectively limits the loss as USD 1,000.
Of course this approach requires regular withdrawals to keep the risk at this level.
The trader follows a set of manual trading strategies without using any automated trading systems. Depending on market conditions this can be trend following and break out strategies as well as range and news trading.
The performance of Max Risk is demonstrated as follows. The first chart shows a live account with FXPIG, the second chart a live account with Tallinex.
30% per month.
40% | High Water Mark
Deutsch / English