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Starting out as a fund manager

  • #1
  • First Post: Aug 29, 2017 2:13am Aug 29, 2017 2:13am
Hi guys,

Ive been trading for the last 6 years or so. In periods full time. Though not at the moment, as I am also working as a inhouse lawyer. My results as a trader are getting to a point where Im willing to take it a step further.
I have an associate who is actually both my friend and boss ,who is rather wealthy. He would like to invest with me, I've been saying no for a while but its also a opportunity.

Do you guys have any advices on how to proceed? Like how much it is customary to charge etc?

any inputs would be appreciated

thanks!
  • #2
  • Aug 29, 2017 2:40am Aug 29, 2017 2:40am
Open a pamm account. PAMM Account manager can control the funds of other investors, earning a percent of any profit on the account, depending upon the success of their trading.
Never ever give up
  • #3
  • Aug 29, 2017 3:01am Aug 29, 2017 3:01am
Quoting andrewk
Open a pamm account. PAMM Account manager can control the funds of other investors, earning a percent of any profit on the account, depending upon the success of their trading.
Thanks Andrewk - due you have any experience how much of the profit it is customary to charge?
  • #4
  • Aug 29, 2017 3:06am Aug 29, 2017 3:06am
Arrownd 20%-30%. simply check your broker terms and conditions
Never ever give up
  • #5
  • Aug 29, 2017 3:14am Aug 29, 2017 3:14am
Bold step but these days people would seek for your previous track record mainly account history for at least a period of 3-6 months, for serious account managing 1year previous record would be highly regarded. Its q competitive market for A/M's ,just be very convincing with evidence to proof your capabilities.

All the best
  • #6
  • Aug 29, 2017 3:31am Aug 29, 2017 3:31am
Trade your own money first. Do not take your wealthy friend's money, cause that would be the end of your fellowship.

Your performance will be quite different (nothing you have experienced so far, not in a positive light), if you are trully a caring person (for other people' money)...
Maadik Hugiis. IQ 69.
  • #7
  • Aug 29, 2017 4:05am Aug 29, 2017 4:05am
Start with a small amount which your friend won't mind if it's lost.. after a few months, review the situation, if you are doing good, you can slowly ramp up every quarter.

If I were to manage my friend's account, I would split profits with him.

Make sure not to drawdown more than 10 - 15%
if amount is very small, not more than 25%
Meditate -> Workout -> Good Food = Good Life!
  • #8
  • Aug 29, 2017 4:18am Aug 29, 2017 4:18am
1st try / start with ur own free fund . then u take from other people , If ur fund will be growth monthly only 10% with maximum 10 % DD then I think automatically get fund & its standard proportion is 30% & 70% .
Hope for the best .
Regard NOOR16
  • #9
  • Aug 29, 2017 5:42am Aug 29, 2017 5:42am
Fozzy,

Your friend is truly trusting. If you have never traded your own money by all means wait until you do for a time. Your psychology will be different. I suggest that when you are ready, trade the NADEX and the spot FX market. Your losses can be minimized or eliminated with binary options as a backup. When you start with your friend's money, you can start with $5,000.00 in the spot market and another $5000.00 in the NADEX. Also you may want to invest with AssetsFX overseas since they don't have the restrictions that US brokers have. Make sure you have a written trading plan before doing anything. Trust me I have years of experience with this and the plan must be adhered to or else you will be all over the place.

/Andrew
  • #10
  • Aug 29, 2017 7:25am Aug 29, 2017 7:25am
Quoting MoneyZilla
Trade your own money first. Do not take your wealthy friend's money, cause that would be the end of your fellowship. Your performance will be quite different (nothing you have experienced so far, not in a positive light), if you are trully a caring person (for other people' money)...
I think you misunderstood, Ive traded my own money the last 6 years.
  • #11
  • Aug 29, 2017 7:26am Aug 29, 2017 7:26am
Quoting YellowFellow
Start with a small amount which your friend won't mind if it's lost.. after a few months, review the situation, if you are doing good, you can slowly ramp up every quarter. If I were to manage my friend's account, I would split profits with him. Make sure not to drawdown more than 10 - 15% if amount is very small, not more than 25%

Thank you for the input. Its appreciated!
  • #12
  • Aug 29, 2017 7:28am Aug 29, 2017 7:28am
Quoting Noor16
1st try / start with ur own free fund . then u take from other people , If ur fund will be growth monthly only 10% with maximum 10 % DD then I think automatically get fund & its standard proportion is 30% & 70% . Hope for the best .
Thanks! Im not that familiar with free funds, as I have been focusing on my own trading. But I will definitely look into it.
  • #13
  • Aug 29, 2017 7:31am Aug 29, 2017 7:31am
Quoting theFXGoods
Fozzy, Your friend is truly trusting. If you have never traded your own money by all means wait until you do for a time. Your psychology will be different. I suggest that when you are ready, trade the NADEX and the spot FX market. Your losses can be minimized or eliminated with binary options as a backup. When you start with your friend's money, you can start with $5,000.00 in the spot market and another $5000.00 in the NADEX. Also you may want to invest with AssetsFX overseas since they don't have the restrictions that US brokers have. Make sure...

Hi FxGod, thanks for your reply.
Ive traded currencies the last 6 years. Ive rejected his offer many times, but since its something that interesting to me on a longer perspective, the idea is slowly growing on me.
  • #14
  • Edited 8:24am Aug 29, 2017 8:10am | Edited 8:24am
typical fees: 1-2% of capital, 20-25% of gains

Read all you can on the turtle traders; see Michael Covel, Curtis Faith. Read about Jesse Livermore.

Richard Dennis was a highly successful trader who brought novices into his group and taught them how to trade (the turtle traders), making barrels of money. He then opened a fund for the public and suffered serious loses. Trading professionally for others is not the same as trading your own account.

If you do this, follow advice of YellowFellow and start with small amounts from your friend.

Couple of years ago I chatted with a lady at Starbucks--she was very interested in my trading experience and asked if I took on clients. I told her I absolutely do not trade with other people's money. (I'm sure that would drive me into a nervous breakdown.)

This part is funny, giving advice to a lawyer: I would set up a LLC partnership with you as primary partner--a very flexible approach. Clients/partners can come and go as they please. Set up a private web site where they can see the share value at any time.

Best of luck if you do this!

PS: some of the turtle traders did go on to become successful fund managers.
  • #15
  • Aug 29, 2017 12:12pm Aug 29, 2017 12:12pm
Hello Fozzyboy,

The going split in prop shops is 50/50 of the profits. From banks also I have also been paid 50% of the profits.
Now the higher the returns the better you can squeeze... ... I have also heard others getting paid 60% and 70% but I am
talking pros here with high returns.
Also this guy is your friend so you might want to give him a discount 25/30% of profits....

Now aso if he is your friend and you want to keep him you better be a good trader...

Good Luck
4x
  • #16
  • Edited 2:10pm Aug 29, 2017 12:55pm | Edited 2:10pm
i would say go for it!

we are all looking for new challenges, and if they happen to be rewarding one too, not see why would not take up on it!

i think you have been told the fees, they really vary on a larger scale, the standard hedge fund 2%+20% till 50%, anything goes.
the middle and more common is something like 25-30% profit share.

if you arent thinking in a larger scale operation -at least for now- the best setup you will find probably is a simple copy trade arrangement.
( no need for PAMM, MAM, or anything fancy)
the advantage is that once it is set up, you dont even notice it much really, trade your own account just as before, see your own balance only, just as before....it has the least emotional strain on you!
responsible money management and caring for client money was mentioned - and they are very important points!
i do manage some funds for friends, and investors alike, and from my experience the copy solution has the least of stress over me!! ( and i do care the managed money).

some advised that start out with a smaller amount of managed money, and scale it up, also a very sensible idea.
my own suggestion is usually the same toward the ones interested.
get their feet wet, and once the profit amount to something, scale in the investment gradually.
works both way, you wont have a sudden mental change also that now you manage more money, they have a limited loss potential, win-win.

limiting drawdown was also mentioned. that helps with the trade management, and once set an amount, gives a sense of safety for your investors too.
also helps with the point above, scaling into an investment gradually.
for personal example, i use a max. 10% dd limit, where if reached trading stops.
thus it is easy math that after how much gain can be funds added and stay at or above one's BE level.

and finally, keep things real.
no investor wants a daily newsletter, but my experience that they appreciate some sort of communication, i use a short weekly summary to the few i have.

PS:
of course, lot depend on your trading style, if you prone to carry positions a longer time, or to get into larger drawdown swings then a copy trading where investors get daily statement and might get nervous or tempted to bombard you with questions not the best option, and maybe better of with a PAMM account where i think they also get the closed trades summary, and not the day to day operation.
there is always, always another trade!!
  • #17
  • Aug 30, 2017 12:56am Aug 30, 2017 12:56am
Quoting FoZzyBoy
Hi guys, Ive been trading for the last 6 years or so. In periods full time. Though not at the moment, as I am also working as a inhouse lawyer. My results as a trader are getting to a point where Im willing to take it a step further. I have an associate who is actually both my friend and boss ,who is rather wealthy. He would like to invest with me, I've been saying no for a while but its also a opportunity. Do you guys have any advices on how to proceed? Like how much it is customary to charge etc? any inputs would be appreciated thanks!

To avoid the PAMM or copy trade examples which are good ideas but may attract regulatory hurdles dependent on your domicile you could consider a non-recourse loan arrangement where losses are treated as loan write-offs and profit redemption as variable interest and principal payments. Under Australian tax law this can be favorably treated by your friend and yourself. Just an idea when arrangements are kept small and off the regulators radar. Your profit cut can then be totally up to you and your friend.
  • #18
  • Aug 30, 2017 1:22am Aug 30, 2017 1:22am
Quoting FoZzyBoy
Hi guys, Ive been trading for the last 6 years or so. In periods full time. Though not at the moment, as I am also working as a inhouse lawyer. My results as a trader are getting to a point where Im willing to take it a step further. I have an associate who is actually both my friend and boss ,who is rather wealthy. He would like to invest with me, I've been saying no for a while but its also a opportunity. Do you guys have any advices on how to proceed? Like how much it is customary to charge etc? any inputs would be appreciated thanks!

Hi,

Already there are some good posts with many valid points made by experienced members here.
First, important thing is to comply with the laws in your country when you want to manage funds and trading other people money.
I am sure with others input so far, you can work out a business model and make your proposal to your investors to accept. Business competition will dictate if your proposal is better than others.

Attach a report by Dr Van Tharp which is an interesting read. He is well known coach and author of several books, such as Trade Your Way to Financial Freedom, Super Trader, Trading Beyond the Matrix. You can search them using his name.

Good luck.
Attached File(s)
File Type: pdf Money Management Report (Van Tharp) (1).pdf   1.1 MB | 1,717 downloads
Honesty is a very expensive gift. You wont find it in cheap people.WBuffett
  • #19
  • Aug 30, 2017 1:27am Aug 30, 2017 1:27am
Quoting FoZzyBoy
Hi guys, . Do you guys have any advices on how to proceed? Like how much it is customary to charge etc? any inputs would be appreciated thanks!

Hi Fozzy.
I about 3 years ago had a company with a partner who developed a found-- and we are still friends ;-)
Some of our busines- partner were professionals with wealth management companies and we met sometimes afterwork as well.

There are different kinds of fee you can charge.
The most famous is the performance fee.. (larger than 25-30% isn t serious).
But you can also do a management fee or a trading fee (20$ for the account and 1-10$each traded lot).

The most important thing are the regulatories.. not that easy..
In my country you can come to the prison when you "touch" other people money without a license.
For these questions I´d ask a lawyer, not a forum.

The idea isn t bad.. you just need to do it professional.

Stay tuned
Guido
Risiko birgt immer auch die Chance.
  • #20
  • Aug 30, 2017 3:31am Aug 30, 2017 3:31am
Thanks to everyone who posted and commented here! I have been super busy, but I really look forward to looking through all the comments and I will reply asap.

Thanks again everyone
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