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Thread: Calculation of Manager's Fees/Profitshare at Rollover

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    Default Calculation of Manager's Fees/Profitshare at Rollover

    I read that Manager's fee is calculated and "paid" at each rollover.

    I have some questions:

    In a scenario such as this --> http://forum.fxopen.com/showpost.php...0&postcount=15

    if Manager's PAMM offer is based on 50% fee can u please explain with calculations what happens at each rollover in the above example.

    Thank you.
    Last edited by rwa; 05-13-2010 at 01:06 PM.

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    Quote Originally Posted by rwa View Post
    I read that Manager's fee is calculated and "paid" at each rollover.

    I have some questions:

    In a scenario such as this --> http://forum.fxopen.com/showpost.php...0&postcount=15

    if Manager's PAMM offer is based on 50% fee can u please explain with calculations what happens at each rollover in the above example.

    Thank you.
    Hi rwa,

    your questions are very interesting for understanding PAMM accounts, but sometimes I do not understand all from your questions. Could you post more details for me please ...
    1) What do you mean by manager's fee ? -> performance or management ?
    I want to know both for your example.
    2) What are minimum performance constraint for this example ?
    3) Is really correct that fee is calculated at each rollover ? -> maybe on the end of trading interval and only if there is a profit ?

    Thank you,
    Regards Mike

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    Thx Mike.

    Just trying to make sure I understand and am aware of everything I need to know before I open a PAMM account.

    1. Manager's fee refers to the " % of performance ". Not management fee. ie: the client shares a % of all profits generated for him.

    2. Not sure I understand what you mean. There are no "guaranteed" profits. No manager can make "guarantees". If there's anyone who does that then they are lying.

    So basically any profit >0% will be considered for performance % .

    Besides I don't think there's even an option in FXO PAMM to define a minimum profit before manager is entitled to charge his % fee. FXO should be able to clarify that.

    3. Yes I'm sure. Read http://crm.fxopen.com/KnowledgeBase/...0Rollover.ashx

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    Quote Originally Posted by rwa View Post
    Thx Mike.

    Just trying to make sure I understand and am aware of everything I need to know before I open a PAMM account.

    1. Manager's fee refers to the " % of performance ". Not management fee. ie: the client shares a % of all profits generated for him.
    ok


    2. Not sure I understand what you mean. There are no "guaranteed" profits. No manager can make "guarantees". If there's anyone who does that then they are lying.

    So basically any profit >0% will be considered for performance % .

    Besides I don't think there's even an option in FXO PAMM to define a minimum profit before manager is entitled to charge his % fee. FXO should be able to clarify that.
    Offer has this parameter ... Minimum performance constraint

    I've read the above URL, but there is only text ...
    During PAMM accounts Rollover the following operations are carried out:
    Trading result is updated and fixed;
    Fees are calculated and paid to the Manager;
    ...
    From my point of view this means, that if trading interval is ending this rollover, then Fees are calculated and paid to the Manager account at this rollover not at every rollover.

    And the second condition to be true is - the profit must be bigger then minimum performance constraint multiply by investor deposit on the begining of trading interval.


    In your example you did not specify trading intervals. And that's why I think FXO Investing Department is not able to answer exactly how performance fees should by calculated.
    In my opinion if there is no end of trading interval, then no performance fees are calculated.

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    Quote Originally Posted by minvest View Post
    ok

    I've read the above URL, but there is only text ...
    During PAMM accounts Rollover the following operations are carried out:
    • Trading result is updated and fixed;
    • Fees are calculated and paid to the Manager;
    ...
    From my point of view this means, that if trading interval is ending this rollover, then Fees are calculated and paid to the Manager account at this rollover not at every rollover.

    And the second condition to be true is - the profit must be bigger then minimum performance constraint multiply by investor deposit on the begining of trading interval.


    In your example you did not specify trading intervals. And that's why I think FXO Investing Department is not able to answer exactly how performance fees should by calculated.
    In my opinion if there is no end of trading interval, then no performance fees are calculated.

    This is what I want to clarify - whether manager's fee is calculated and paid "only if" it happens to be the end of an interval for any of the clients or whether it is done based on the equity at rollover.

    Also, another thing that I want to know is whether I can setup my PAMM parameters so that I as the manager get paid only if I've made profits above the last high watermark, to be extremely fair to my clients. I wouldn't want to charge my client a % fee if month1 was profitable, month2 was a small loss and then month 3 is profitable but has still not recovered the loss from month 2.

    FXO always responds irrespective of whether or not I've given them adequate information to respond. They'll always ask if there's something else they need to know to be able to effectively answer my question.

    So lets wait for a clarification.

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    Quote Originally Posted by rwa View Post
    Thx Mike.

    Just trying to make sure I understand and am aware of everything I need to know before I open a PAMM account.

    1. Manager's fee refers to the " % of performance ". Not management fee. ie: the client shares a % of all profits generated for him.

    2. Not sure I understand what you mean. There are no "guaranteed" profits. No manager can make "guarantees". If there's anyone who does that then they are lying.

    So basically any profit >0% will be considered for performance % .

    Besides I don't think there's even an option in FXO PAMM to define a minimum profit before manager is entitled to charge his % fee. FXO should be able to clarify that.


    3. Yes I'm sure. Read http://crm.fxopen.com/KnowledgeBase/...0Rollover.ashx
    Hi,

    If you became PAMM manager you already need to setup the parameters about performance fee % and what the minimum % profit needed before manager can charges performance fees and how long the period before can count performance fees.

    Example : My best offer: 30/5/10–6/4-10 000/1 000/100

    1. Performance fee (0-100%). 30/5/10
    The manager will need to setup before make offer.
    1st A performance fee specifies the percent from the Investor’s profit, which the Manager gets when profit is distributed between the Manager and the Investor at the end of the Trading interval.

    3. Minimum performance constraint (0-100%) - 30/5/10
    2nd A Minimum performance constraint is the percentage rate of return which has to be exceeded before the Manager gets his Performance Fee at the end of the Trading interval. The Performance fee will be calculated based on the profit made over the minimum performance constraint.

    Example:
    According to the Offer parameters the Manager wants to be paid a fee of 30% from the profit that exceeds the 10% profit made from the managed funds. Let’s say the managed funds are 10,000 USD and the Investor’s profit for the Trading Interval be 50% or 5,000 USD. The Performance fee = (5,000-10,000/10010)/10030 = 1,200 USD. The profit left to the Investor after the the Manager’s Performance fee has been deducted is 5,000-1,200 = 3,800 USD.

    That mean if manager make more than 10% profit then performance fee will charges if not investor will dont need to paid the performance fees

    9. Trading interval

    Trading interval — a time period, during which the Manager of a PAMM account trades to take profits and after which the Manager's Performance fee is calculated. The Trading interval is selected by the Manager on creating a Manager’s Offer and cannot be changed in the future, after the Offer is activated.

    You also will need to setup trading interval, so the performance fees will based on that period either 4 weeks (28 days) or 12 week (84 day) which available.



    Thanks

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    Quote Originally Posted by nonamer View Post
    Hi,

    If you became PAMM manager you already need to setup the parameters about performance fee % and what the minimum % profit needed before manager can charges performance fees and how long the period before can count performance fees.

    Example : My best offer: 30/5/10–6/4-10 000/1 000/100

    Thanks for the explanation.

    Can u also explain the remaining figures (which are in red) : 30/5/10 - 6/4-10 000/1 000/100

    I'd also like to know whether it is possible for me to setup an offer like this :

    Lets say client's starting balance : $10,000

    balance at 1st interval (after all fees are paid to manager at rollover) : $12,500

    balance at 2nd interval (due to loss no fees) : $9,000

    balance at 3rd interval : $11,000 (I do not want to charge any fees although profits have been made, because I have not recovered the entire loss made in the previous interval)

    balance at 4th interval : $15,000 (I want to charge fees only on the amount above the last high watermark which is $12,500. So my fees should be calculated only on $2,500 portion of the profits made)

    Is this possible ?

    Thanks.

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    Quote Originally Posted by rwa View Post
    I read that Manager's fee is calculated and "paid" at each rollover.
    The Performance fee calculated and paid only at the end of Trading interval. Or if Investor make withdrawal before end of Trading interval - at the rollover of execution of this request.
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    Quote Originally Posted by rwa View Post
    I'd also like to know whether it is possible for me to setup an offer like this :

    Lets say client's starting balance : $10,000

    balance at 1st interval (after all fees are paid to manager at rollover) : $12,500

    balance at 2nd interval (due to loss no fees) : $9,000

    balance at 3rd interval : $11,000 (I do not want to charge any fees although profits have been made, because I have not recovered the entire loss made in the previous interval)

    balance at 4th interval : $15,000 (I want to charge fees only on the amount above the last high watermark which is $12,500. So my fees should be calculated only on $2,500 portion of the profits made)

    Is this possible ?

    Thanks.
    PAMM accounts already work exactly this way.

    Last edited by FXOpen PAMM; 05-14-2010 at 09:20 AM.
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    Quote Originally Posted by rwa View Post
    Thanks for the explanation.

    Can u also explain the remaining figures (which are in red) : 30/5/10 - 6/4-10 000/1 000/100
    What is Offer parameters.
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    Perfect.

    Thanks.

    I think all my questions are answered for now.

    If there's anything else that crosses my mind I'll be sure to post.

    Thank u once again.

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    The managers determines what he charges to manage your investments with him. He sets his charges

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    Quote Originally Posted by janknoah View Post
    The managers determines what he charges to manage your investments with him. He sets his charges
    Then the clients will also see the performance of the managers for sure as no one is going to give bigger charges for low performing managers.

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    As I understand it the management fee is paid no matter what the performance fee is. So even if the manager fails to make any money then they still get a fee. Is this fee based on the current equity under the investors account or is it calculated some other way?

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    Quote Originally Posted by cfxsignals View Post
    As I understand it the management fee is paid no matter what the performance fee is. So even if the manager fails to make any money then they still get a fee. Is this fee based on the current equity under the investors account or is it calculated some other way?
    Hi

    you may refer the example here -->
    http://crm.fxopen.com/KnowledgeBase/...r%20parameters
    Check on the
    2. Management fee (0-100%)

    30/5/10 – 6/4 - 10 000/1 000/100

    A management fee is a certain percentage of the current Investor’s balance. It is calculated and transferred to the Manager on a daily basis. The management fee is displayed in percent per annum. So, the amount that is daily paid to the Manager is 260 times smaller (260 being the average number of trading days per year).
    Its will depending Investor balance on the current rollover ..

    Thanks

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