Allowing another person to trade a CFD account changes who makes decisions without necessarily changing who bears the losses. A manager may select instruments, enter orders, and adjust exposure, while the account holder remains responsible for the resulting contractual obligations.
A Forex and online CFD trading broker should distinguish formally authorized management from password sharing or informal trading assistance. Its policy determines the scope of delegated authority, the controls available to the owner, and what happens when the relationship ends.
Does the Manager Have Verified Authority to Trade?
A trading password is not a substitute for documented authorization. Brokers may require a limited power of attorney, an investment management agreement, or another recognized mandate before accepting instructions from someone other than the account holder.
The manager’s regulatory status may also matter. Depending on the jurisdiction and services provided, discretionary investment management can require authorization that ordinary market commentary does not.
Review whether the mandate permits opening and closing positions, changing stops, or altering leverage settings. Withdrawal rights should be addressed separately rather than assumed to accompany trading access.
Can the Owner Set Enforceable Exposure Boundaries?
A manager who promises to risk only a small percentage per trade may still accumulate substantial exposure through several correlated positions. Verbal assurances are particularly weak when the platform has no technical controls to enforce them.
Imagine a hypothetical managed account with €18,000 in equity. The manager opens three long CFDs on European construction-materials companies, each representing €20,000 in notional exposure, for a combined €60,000.
A regional construction slowdown pushes all three shares down by 6%. Assuming equivalent exposure and no other charges, the account loses €3,600, or 20% of its initial equity. Three separate positions have not delivered meaningful diversification because the companies respond to similar economic pressures.
A policy allowing position limits by instrument but not by sector may leave this concentration unchecked. Ask whether the owner can impose aggregate notional limits, permitted-product lists, or account-level loss thresholds that the manager cannot override.
Are Performance Fees Calculated on Genuine Net Gains?
Management arrangements may charge fixed fees, performance fees, or both. The calculation basis determines whether the manager is rewarded for returns that actually survive trading costs.
A fee based on gross trading profits can overlook financing, spreads, commissions, and losses carried from earlier periods. High-water marks and crystallization dates may also affect how much is charged after a drawdown and subsequent recovery.
A lower advertised performance fee is not necessarily cheaper. A higher percentage applied only to gains above a properly defined high-water mark may cost less than a smaller percentage repeatedly charged on recovered losses.
Customers should obtain a numerical fee illustration covering both profitable and losing periods.
Who Is Responsible When Orders Breach the Mandate?
A Forex and online CFD trading broker may provide the execution platform without supervising every investment decision made by an independent manager. Responsibility depends on the contractual arrangement, applicable law, and the broker’s actual role.
A manager might exceed an agreed instrument list or open positions larger than the owner authorized. The resulting trades can still affect account equity while the parties investigate whether instructions were valid.
The agreement should explain how breaches are reported, which records establish the manager’s instructions, and whether the broker offers any enforceable trading restrictions. A complaint process alone does not reverse market losses automatically.
Does Revoking Authority Immediately Stop New Instructions?
Termination is not complete merely because the owner sends an email to the manager. Active platform sessions, automated orders, and previously submitted pending instructions may remain capable of affecting the account.
A sound revocation procedure identifies who receives the instruction, when it becomes effective, and how the broker confirms that access has ended. It should also clarify who manages open positions afterward and whether pending orders are canceled or retained.
Before allowing third-party management of a CFD position, request the broker’s approved authorization form and the proposed management agreement. Verify the manager’s status, withdrawal permissions, enforceable exposure limits, fee calculations, breach procedures, and immediate revocation method, then confirm who can close an existing trade if the mandate is withdrawn.