Do managed accounts have any automatic provision to limit losses?
A. If so, this will be described in the disclosure document. A loss of more than some given percentage, or losses that reduce the account value below a specified dollar amount, may trigger the liquidation of all currently open positions and a subsequent closing of the account. This “safety valve” feature is clearly one of the things to inquire about when you are considering establishing an account. Keep in mind, however, that no one can guarantee an absolute limit to the extent of losses any more than they can guarantee a given level of profit. Performance, it bears repeating, hinges on the success of your trading advisor.
