Managed accounts: how to check a fund manager before you hand over your capital

The eight checks at a glance

What is a managed account, and how is it different from copy trading and PAMM?

A managed account means you hand money to a manager who decides which trades to open. You receive reports and the result minus the manager's fee.

Copy trading keeps the money in your own exchange account, and the chosen trader's trades are mirrored on it automatically. You can stop copying at any moment.

A PAMM account is a pooled account at a broker: several investors fund it and one trader trades the whole pool. Results are split by share.

In all three the question is the same: can you check how this person trades before you give them money?

1. Ask for the full history of closed trades

Any trader can show ten good trades. The question is how many came in between. Ask for the complete record in a row, with no gaps, and check three things:

• whether there are losing trades: over a long stretch everyone has them, and a 100% win rate means cherry-picking or fiction;
• whether dates and prices match the chart: the entry price must sit inside that day's candle;
• whether leverage and holding time are shown: without them you cannot tell how much risk produced the result.

2. Find the maximum drawdown

Maximum drawdown is the deepest fall of the account from a peak to the following low. Example: an account grew from $10,000 to $14,000, then dropped to $10,500 and recovered. The drawdown is (14,000 − 10,500) / 14,000 = 25%. Even with an overall gain, at one point the investor was down a quarter from the peak.

Compare drawdown with return: a 30% yearly result with a 60% drawdown means the manager earns by risking too much. And ask when the drawdown happened: a deep loss in a calm month is more worrying than one during a market-wide crash.

3. Look at monthly returns, not the best period

"+180% in a year" may have come from two months followed by half a year of losses. A month-by-month table shows how even the results are and what the manager does after a bad month: cut risk or try to win it back with bigger positions.

The same gain every month is the clearest sign of invented reporting. Markets do not pay like that.

4. Find out where the money sits and who can withdraw it

There are two models.

• The money stays in your account. You open an account at an exchange or broker, and the manager gets trading access without withdrawal rights. You keep maximum control, but not every manager works this way: running one strategy across dozens of separate accounts is hard.
• The money is transferred to the manager. You send the funds and the manager runs a pooled portfolio. Here the protection is verifiability: reporting on your share, a history of operations, working withdrawals and clear terms.

Neither model makes investing risk-free; they differ in what the trust rests on. It is a bad sign when you are asked to pay into an employee's personal card or into a wallet that changes from one time to the next.

5. Test a withdrawal with a small amount

The most reliable test is to withdraw part of the money a month after depositing. Find out beforehand how a request is filed, how long it takes, and whether there is a fee or a minimum.

If you are asked to "pay the tax", "insurance" or an "unlock fee" before withdrawing, it is almost certainly fraud: any legitimate fee would be deducted from the amount withdrawn, not paid with new money.

6. Work out where the income comes from: the signs of a Ponzi scheme

These things give a Ponzi scheme away:

• income is guaranteed and does not depend on the market;
• you are paid for recruiting members, with levels, "teams" and bonuses for your downline;
• you cannot tell what exactly the money is made on;
• you are rushed: "offer ends today", "three places left";
• the main argument is payouts to earlier members rather than trades.

Financial regulators in many countries publish warning lists of unauthorised firms, such as the FCA warning list in the UK; check the company name and website address there.

7. Ask about the licence and the agreement

Rules for managing other people's money depend on the country: some require a licence, others only a contract. Find out whether there is a licence and in which jurisdiction, and what the terms say about fees, withdrawal times and liability. If there is no licence, your protection is the terms, a verifiable history and working withdrawals. Understand that before you send money, not after.

8. Talk to the person who trades

Ask questions that cannot be answered from a script: why was the last losing trade closed, how is position size chosen, what happens to the account if the market drops 30%. Someone who runs the trades personally answers concretely and names their own mistakes.

How it works at Sufics

Sufics is a managed-capital service across five markets, from gold and oil to crypto. You can check it before opening an account: the closed-trade feed on the home page runs in order with the losing trades left in, and each trade has its own page with entry and exit prices, leverage, holding time and a chart. Trades come from the Binance API rather than being typed in by hand.

Sufics uses the second model: the client transfers funds, the manager runs the portfolio, and the client sees every trade, accrual and account operation in the dashboard. Withdrawals are requested in the dashboard: the amount is held until the transfer is made, and the available balance is always visible. An account is opened after a conversation with the manager on Telegram.

Trading in financial markets carries the risk of losing part or all of your money. Past returns do not guarantee future ones.