Do you trade Futures, Options or CFDs? Take a look at Managed Discretionary Accounts (MDAs)
Publish On 16-09-2008 , 07:35
If you are currently trading futures, options or CFDs you should consider adding a professionally managed account to your portfolio. Managed Discretionary Accounts or MDAs are accounts that are managed by an ASIC registered Managed Discretionary Account (MDA) operator. The MDA operator does the actual trading for these accounts and in return receives some combination of a management fee, a performance fee (percentage of the profits), and/or a share of the commissions.
To better understand why you should consider MDAs, it is helpful to review some common reasons why people lose money trading futures, options and CFDs:
- Unable to devote enough time to trading
- Seriously under capitalised
- Lack of money management techniques
- Poor trading discipline
- Trading for the action and not to make money
- Over trading
- Fight the market instead of going with it
- Make trades to satisfy margin calls
By using MDAs we can attempt to eliminate the reasons that the average trader loses. CDM Pacific operates a MDA trading futures and options on global commodity markets. As noted in the Chicago Board of Trade's Guide to Managed Futures, managed futures, by their very nature, are a diversified investment opportunity. The CBOT guide states that benefits of managed futures within a well-balanced portfolio include:
- Opportunity for reduced portfolio volatility risk
- Potential for enhanced portfolio returns
- Ability to profit in any economic environment
- Opportunity to participate easily in global markets
Disadvantages of managed futures:
- No participation in trading decisions
- Management fees and administrative costs
- Incentive (performance) fees
- Potential trading losses
The main concern of most investors will probably be turning over the trading decisions to another person, if you are able to do this, a professionally managed MDA maybe an alternative investment worth considering. Furthermore MDAs can be used by most entities including company, trusts, self managed supers, partnerships and of course individuals.
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