Managed Accounts
Within a managed account the client gives the trader the permission to trade (eg Power of Attorney POA) for its (the clients) account. The trader can therefore only arrange trades but never has access to the money itself.
The POA can be cancelled anytime.
High Water Mark
Performance fees are normally connected to a so called HIGH WATER MARK. This means if the manager is not able to consistently raise his HWM on the fund, there won’t be any fees charged.
Futures
Future contracts is an agreement made and traded on the exchange between two parties to buy or sell a commodity at a particular time in the future for a pre-defined price. Since both the parties are unaware of each other, the exchange provides a mechanism to give the party assurance of honoured contract. The exchange specifies standardized features of the contract. The risk to the holder is unlimited, and because the pay off pattern is symmetrical, the risk to the seller is unlimted as well.
Money lost and gained by each party on a futures contract are equal and opposite. In other words, futures trading is a zero-sum game. These are basically forward contracts, meaning they represent a pledge to make a certain transaction at a future date. The exchange of assets occurs on the date specified in the contract. These are regulated by overseeing agencies, and are guaranteed by clearinghouses. Hedgers often trade futures for the purpose of keeping price risk in check.
Future contracts are often used by commercial enterprises as ‘hedging tools’ to reduce the risk of expected future purchases or sales of the underlying asset. If used to speculate, risk increases. So risk depends on the underlying instrument and the use of the future.
Forex
Forex (Foreign Exchange market, FX market) is defined as a global market where buyers and sellers conduct foreign exchange transactions. It is not geographically fixed but constituted thourgh the worldwide network of banks. The forex market is the largest, most liquid market in the world with an average traded value that exceeds $1.9 trillion per day.
