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After you are profitable - Now what?

  • #61
  • Jul 24, 2009 6:35am Jul 24, 2009 6:35am
Quoting Takisd
You show a valid point about managing funds. But the idea of being a trader is being filthy rich and having the lifestyle to match. working for others doesn't promote this. It infact pulls you back, down. You work for others, you have to consider what they want as well as what you want and its a way to increase stress levels.

Its fine for additional funding whilst small, I never said "Dont do it" its just a step back from the true goal.

As I mentioned earlier the only reason to trade for a firm is for additional capital. The people who...
you don't understand how the industry works. However, i agree that most people would trade for themselves if they could.
  • #62
  • Jul 24, 2009 8:02am Jul 24, 2009 8:02am
Quoting daytrading
If you are a self backed trader, you have with some shops the opportunity that the firm doubles your stake (you bring £500K and for 10% of the overall profits, they double it by letting you trade as if it was £1M).

So, for the opportunity to be able to trade twice the size, or amt. of contracts etc., you pay a small fee. For the firm not much outlay for a good deal of money and any trader with some brain would give 10% away for potentially doubling his profits.

Example:

If you have £500K and you make an avg. of 3% per month,...

I can't get these numbers to add up and make it profitable for the shop, that's my problem, they must be getting revenue or benefit from somewhere/something else. For the trader sure, it's a great deal, better than great in fact, it's a giveaway!

Using your numbers of 500k at 3% (average low risk/size return I guess). The shop adds 500k and takes 10% of the 3% profit on 1m. So for their 500k investment they get a measly 0.6% return per month. Assuming it's money which belongs to investors, out of that 0.6% they have to pay overhead, wages, investor returns, and the tax man. There's not a lot left for profit. If you add in risk (do they assume half the risk or 10% of risk?) the risk:reward is worse than skewed, it's diabolical! If you take everything into consideration they could likely get a better return from a more mainstream investment without the risk.

I'm always skeptical of what looks like a great deal on the face of it, everyone needs to earn and I simply can't see how the shop can make any money on a deal like this.

Like I say, I must be missing or misunderstand something.

Thanks for your time anyway, I'm going to find out more about it for sure.
  • #63
  • Jul 24, 2009 8:24am Jul 24, 2009 8:24am
Quoting pipmutt
I can't get these numbers to add up and make it profitable for the shop, that's my problem, they must be getting revenue or benefit from somewhere/something else. For the trader sure, it's a great deal, better than great in fact, it's a giveaway!

Using your numbers of 500k at 3% (average low risk/size return I guess). The shop adds 500k and takes 10% of the 3% profit on 1m. So for their 500k investment they get a measly 0.6% return per month. Assuming it's money which belongs to investors, out of that 0.6% they have to pay overhead, wages, investor...

I'll make it short:

1. The firm has no outside investors - only own capital. What you bring in (if you do as a self financed trader is safe).

2. Only a very small amount of traders have the luxury of trading remotely, i.e. no desk fees. The others (approx. 40 per office) pay £2.5K per month desk fees. That is about £100K before cost.
(trainess don't pay those fees until they go live)

3. Combined trading P&L is positive on an annual basis (for 14 years now).

4. Accredited certificates and diploma is another (small) revenue stream.

But honestly, forget all that. If you want the best deal - provided you can trade profitably - save up some cash and start out for yourself....what do you care about the (or any) firms status as long as your money is safe. You only pay for a service (access to more capital than you have yourself)...and if they go under, you trade somewhee else.

I couldn't give a monkey's from my position. I have accounts with more than one firm since I am an independent trader.

regards
daytrading
Enter Signature
  • #64
  • Jul 24, 2009 8:31am Jul 24, 2009 8:31am
Quoting Takisd
Eventually you will walk away from trading and get into venture capital type roles and then retire.
Music to my ears ! Thats my master plan.
- nick andre -
  • #65
  • Jul 24, 2009 8:39am Jul 24, 2009 8:39am
Quoting daytrading
I'll make it short:

1. The firm has no outside investors - only own capital. What you bring in (if you do as a self financed trader is safe).

2. Only a very small amount of traders have the luxury of trading remotely, i.e. no desk fees. The others (approx. 40 per office) pay £2.5K per month desk fees. That is about £100K before cost.
(trainess don't pay those fees until they go live)

Ah ok, that makes it a bit better, I guess the carrot for paying desk fees is the opportunity to eventually trade their money. I've seen a similar thing with trader training companies, the bulk of their revenue comes from training fees.

In comparison to managing a fund I don't think it's as profitable or offers the same freedom, plus there's a risk element which is an important factor.

Thanks for explaining it, I can see it would work for some traders but I don't think it's for me.


ps - it's not me snipping your quoted post, it's this stupid quoting system they have here!!
  • #66
  • Jul 24, 2009 9:15am Jul 24, 2009 9:15am
Quoting pipmutt
Ah ok, that makes it a bit better, I guess the carrot for paying desk fees is the opportunity to eventually trade their money. I've seen a similar thing with trader training companies, the bulk of their revenue comes from training fees.

In comparison to managing a fund I don't think it's as profitable or offers the same freedom, plus there's a risk element which is an important factor.

Thanks for explaining it, I can see it would work for some traders but I don't think it's for me.


[color=blue]ps - it's not me snipping your quoted post,...

You can just click on 'reply' instead and you won't get the quote business in your post.

regards
daytrading
Enter Signature
  • #67
  • Jul 24, 2009 10:58am Jul 24, 2009 10:58am
LOL go pro and make a killing. Get more seed capital (doesnt matter how you do it, just do it - OPM, whatever) and do the world a favor and actually provide a reputable business service to others. Nothing better than doing what you love for a living.


Quoting andrewnair
Now what?


Now that you have been successful in trading, after sometime of learning and struggling, you have made it. You are now making consistant profit. You have taken looses before and now you are better than most.


Now what? What's the next step?


Think about it, you have a 50k account and are trading with returns of 10% which is about 5k a month (this kind of returns are much better then most pros out there; in percentage i mean). Is that enough? Can 5K buy you that boat you wanted or that car of your dreams? I used to think about that,...
  • #68
  • Jul 24, 2009 2:25pm Jul 24, 2009 2:25pm
yap, tats what i am doing and have been doing for a few years, but your missing my point, saying to get more capital does not get more capital.

how much capital can one raise by himself? 1m, 10m, 100m...... 1m might be easy, 10m much harder, 100m hmmm...... how to get to the 100m mark? how do the greats do it? i hope u know where i m coming from? there are many ways to raise money......but trying to be a salesman will take time away from the real thing, trading. thats why i have a partners that bring in accounts or try to bring accounts. is there a place where investors can log in and see which manager is making money and place money with them or something like that?

andrew


Quoting BillyRayValentine
LOL go pro and make a killing. Get more seed capital (doesnt matter how you do it, just do it - OPM, whatever) and do the world a favor and actually provide a reputable business service to others. Nothing better than doing what you love for a living.
  • #69
  • Jul 24, 2009 2:50pm Jul 24, 2009 2:50pm
I'm sorry.. but I don't understand why you can't just compound if you are a consistent trader.

For a business to increase profits, it needs to increase revenue or lower expenses. If you want to be able to compound your money, you need to cut your living costs. Everyone has something they can spend less on.

If you only made 30k a year would you survive? Yes. So, pretend you make less, and live at the same standard of living as someone who makes a little less. Invest the difference, and it will pay off. It's really simple and just takes self discipline.

Compounding is the secret to wealth, and do you really think having 100 cable channels or going out to eat every weekend this year is really more important than having the wealth/freedom you desire for the rest of your life?
  • #70
  • Jul 24, 2009 2:59pm Jul 24, 2009 2:59pm
hi,

you'r missing the point too. i uses a few brokers for the manage accounts, and at the same time trade for myself for example i place a trade lets say 5% of all accounts (inc my own) per position i am in the market with all the accounts. so if i make money on my account and i make money on the com. its not really like a fund manager i would say, more like a money manager.

i am just doing what i am doing but making more money doing it. Get it? its not really working for others, its your own biz. when you say being filthy rich, my question is how does a normal trader do it?

think abt it for a few mins, you have a 100k acc, make 5%, you have 5k. everyone knows that compounding is the way, what abt life's cost? house, car, food..... and much more.........ok lets say u use 4k, keep 1k, how long to make the account 100m? u see wat i am looking at?

ok some say doing biz, i ran and owned several biz b4 trading, i sold most of them and closed the rest to go trading full time, knowing that i can make more in trading, which i think is still true. what kind of biz can you get with this kind of returns?

think about this is another way, if i start a restaurant say 100k capital, if it does not make it how much of this capital can i get back? 10k or so? but look at trading, in my trading plan i have a cut limit, if i loose 30% of my account, i will stop all trading and review my system / trading plan or stop trading forever. so let say i have the say capital 100k, i can get back 70k, and i will not have liquidity problems as in today i close the account i can get the money in 3 days or so. thats not the case with other bizs.

i hope you realise where i am coming from. i hope i did not offend anyone.....

ok now lets talk about working for a fund, ok you work for someone, a company, you most likely making more that 5k, you get exposure, your "resume" looks better (to get more clients later) and if your good, pple will know, much faster than doing it yourself. some of the best money managers came for firms like GOLDMAN SACHS that started on their own.

there are many angles to look at this from, open your mind and see it all. its not about making a mark in the world, its about growth, i take trading like a biz and to thrive, we have to look to expand and expand we must.

Andrew

Quoting Takisd
You show a valid point about managing funds. But the idea of being a trader is being filthy rich and having the lifestyle to match. working for others doesn't promote this. It infact pulls you back, down. You work for others, you have to consider what they want as well as what you want and its a way to increase stress levels.

Its fine for additional funding whilst small, I never said "Dont do it" its just a step back from the true goal.

As I mentioned earlier the only reason to trade for a firm is for additional capital. The people who trade...
  • #71
  • Jul 24, 2009 3:18pm Jul 24, 2009 3:18pm
hi,

the 5k was only an example, what i mean is that a trader needs take profit out, whether its 1k 5k or even 10k. you have to account for the losing mths tat will happen, so ............ dont think most are getting me, this is not about compounding, its about growing an account(s) to higher levels. to grow say 100k at 5% to 100m lets say, takes donkey years......

even if you save every penny......donkey years!!! ok just did the calculation 12 years with 100k at 5% per mth assuming you dont lose and if you dont take a single penny.................now tats a big assumption

see where i m coming from?

Andrew

Quoting Cbh123
I'm sorry.. but I don't understand why you can't just compound if you are a consistent trader.

For a business to increase profits, it needs to increase revenue or lower expenses. If you want to be able to compound your money, you need to cut your living costs. Everyone has something they can spend less on.

If you only made 30k a year would you survive? Yes. So, pretend you make less, and live at the same standard of living as someone who makes a little less. Invest the difference, and it will pay off. It's really simple and just takes self...
  • #72
  • Jul 24, 2009 3:59pm Jul 24, 2009 3:59pm
Quoting Takisd
You show a valid point about managing funds. But the idea of being a trader is being filthy rich and having the lifestyle to match. working for others doesn't promote this. It infact pulls you back, down. You work for others, you have to consider what they want as well as what you want and its a way to increase stress levels.
Hi,

There is no single goal in becoming a trader. Certainly being "filthy rich" is not the be all and end all of an occupation. I know one daytrader who 'only' earns between on the high end of five figures and the low end of six figures per year, pretty consistently for the past decade now (pre-tax). I know he loves his life, and given where he lives, $90-120k is not filthy rich. Not even close.
  • #73
  • Jul 24, 2009 4:36pm Jul 24, 2009 4:36pm
It is a very basic topic and something we should be be clear about while learning about trading. Its a part of a business plan and money management.

My thinking is to go for a yearly package..meaning, before going full time live first save enough money for your one year expense, this money will take care of your current financial yr's expenses. Then when you start making profits accumulate them till they equal your next year's estimated package. Once you reach that target take them out and put in low risk account for next year. If this happens before the current year end then you need to decide whether you want to buy something special or want to secure money for the 2nd year with the profits you make in the remaining period.

With your improving skills you will reach your targets quicker then before and thus will have more money which you do not want to secure for future.

I think that your current monthly profits are probably not meeting the needs. But a monthly return is never fix. For me I can not trust that market will provide me a steady source of income, markets are just not that kind of thing. Some months you will make more than 5% may be 10 or 20% then what to do with that extra money. Have a target, a strategy. Once you are making profits you should secure funds for rainy days. My target is to always reach my next years fund amount within this year at least, its a question of survival and hence naturally challenging.

I just hope I understood your perspective and helped somehow
The only way to get smarter is by playing a smarter opponent.
  • #74
  • Jul 24, 2009 5:40pm Jul 24, 2009 5:40pm
Quoting andrewnair

how much capital can one raise by himself? 1m, 10m, 100m...... 1m might be easy, 10m much harder, 100m hmmm...... how to get to the 100m mark? how do the greats do it?
Exposure, publicity, recommendation, socializing at the country club and on the golf course, polo in the Hamptons!......I think you need a certain kind of personality to get the type of funds the greats get, I mean you're talking billions in some cases. If you watch Wall Street Warriors you'll see the stark contrast between how the pros do it and how jokers like Tim Sykes do it, mind you even he managed to get a few million before he screwed up!

For the likes of us who would settle for a few million under management it's enough to get exposure through live tracking websites (Collective2, Striker Brokerage, Attain Capital brokerage, Robbins World Cup of Trading, MT4 Stats, FXManagers etc etc etc), like I said if you're any good the money will come to you, word travels fast. Don't even bother cold calling, besides I think being illegal it's a waste of time!

So did you register on Xaron's website? I bet you didn't!
  • #75
  • Jul 25, 2009 12:27am Jul 25, 2009 12:27am
Quoting andrewnair
hi,

the 5k was only an example, what i mean is that a trader needs take profit out, whether its 1k 5k or even 10k. you have to account for the losing mths tat will happen, so ............ dont think most are getting me, this is not about compounding, its about growing an account(s) to higher levels. to grow say 100k at 5% to 100m lets say, takes donkey years......

even if you save every penny......donkey years!!! ok just did the calculation 12 years with 100k at 5% per mth assuming you dont lose and if you dont take a single penny.................now...

Andrew.. i tink i know where you are coming from. but, wats the motive of having so much money? as in whats ur final destination? i tink i'm same like you.. managing client money to trade forex.. so in singapore, i'm consider unemployed. i tink you must 1st be clear what is the final thing you want.
  • #76
  • Jul 25, 2009 12:47am Jul 25, 2009 12:47am
Quoting Holypendant
i tink you must 1st be clear what is the final thing you want.
a healthy cash flow to supply my coke and women habit
Grabbing the bull by the horns!
  • #77
  • Jul 25, 2009 1:06am Jul 25, 2009 1:06am
Quoting whitegoodman
a healthy cash flow to supply my coke and women habit
Yea that part's fine, but how can you make sure you won't waste the rest of the money on something dumb ?
  • #78
  • Jul 25, 2009 3:04am Jul 25, 2009 3:04am
This is what I do on the weekends with all my beautiful money
Attached Image
Boxing clever since 76.
  • #79
  • Jul 25, 2009 4:11am Jul 25, 2009 4:11am
hey man,

what i mean is the growth of funds not really on expenese. and growth not only in making money trading.

somthing like tat

andrew


Quoting NewFX
It is a very basic topic and something we should be be clear about while learning about trading. Its a part of a business plan and money management.

My thinking is to go for a yearly package..meaning, before going full time live first save enough money for your one year expense, this money will take care of your current financial yr's expenses. Then when you start making profits accumulate them till they equal your next year's estimated package. Once you reach that target take them out and put in low risk account for next year. If this happens...
  • #80
  • Jul 25, 2009 4:24am Jul 25, 2009 4:24am
hey buddy,

thanks for the really good info, as always, in this thread at least, ur post hit the spot. i have gone to the website, but the entry has already closed, the one where the best can win a job at a trading firm. i hope tats the one ur talking about, cause thats the only one i can find looking at his posts.

looks like i have to put on the charm........think the best charmer is madoff.....ahahhah....if only we had just 1%.........too bad he did not even place a trade.

Thanks again mate,

Andrew


Quoting pipmutt
Exposure, publicity, recommendation, socializing at the country club and on the golf course, polo in the Hamptons!......I think you need a certain kind of personality to get the type of funds the greats get, I mean you're talking billions in some cases. If you watch Wall Street Warriors you'll see the stark contrast between how the pros do it and how jokers like Tim Sykes do it, mind you even he managed to get a few million before he screwed up!

For the likes of us who would settle for a few million under management it's enough to get exposure...
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