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managing assets from family & friends

  • #1
  • First Post: Aug 14, 2009 7:42am Aug 14, 2009 7:42am
Hey everybody,

I know here are many experienced traders, who trade not only for themselves, but manage also other people's assets.

As I want to furhter develop my trading to a higher level on the way to make a proper business out of it, I figure the next step is to get more "investors" and I am considering if it is smart to include also my family into this (they want me to!?). This would be a first step, with some small amounts at first.
My experience is now almost 2 years in this market, was successful at paper trading, now live since march and after getting my pschology and money management more strict (tightening the rules) in the last 3 months constant positive trading.

So guys/ladies, I need your advice on taking the next step. Are some small assets from family&friends a good way to start? What "rules" of invested money should I set (profit/loss sharing),...? Any comment would be helpful.

Best regards and lots of green pips!
T
  • #2
  • Aug 14, 2009 7:44am Aug 14, 2009 7:44am
I hope this helps

http://www.forexfactory.com/t/189902...-broker-1.html
  • #3
  • Aug 14, 2009 7:52am Aug 14, 2009 7:52am
for the link.

I am not so active on this forum, but I am following comments on E/U thread very closely. So I appreciate your input there!

Well the fact is, I am not looking for a broker. I have a broker and am pretty satisfied with. I am more interested in your personal experience (others) in trading family's and friend's assets, or possible other steps to expand this business.

T
  • #4
  • Aug 14, 2009 7:53am Aug 14, 2009 7:53am
Hi,
Are you sure that making a profit for 3 consecutive months is sufficient proof of your LONG TERM ability ?????.
As a rule of thumb it takes
approx 3 years for a new business to become established properly.
Furthermore do you really want the stress and hassle associated
with taking risks with someone else's money, ESPECIALLY when
these people probably don't understand the risky, volatile nature
of the FX market !!!!
TREAD VERY SLOWLY.
  • #5
  • Aug 14, 2009 7:57am Aug 14, 2009 7:57am
Quoting forexplorer
...2 years in this market, was successful at paper trading, now live since march.....last 3 months constant positive trading.

Are some small assets from family&friends a good way to start?
First congrats on your progress! As far as friends and family member's money, my advice would be don't do it!

Wait until you have a year of two of consistent profits behind you and are totally confident in what you're doing. When the time comes to take on investors then make it on a professional level, even with family. Draw up some ground rules about your respective obligations and confirm they understand the risks involved. It's business, treat it seriously.

Trading for other people, especially family members who you'll want to impress, can really screw up your trading psychology!

Get a little more experience behind you, there's plenty of time
  • #6
  • Aug 14, 2009 8:05am Aug 14, 2009 8:05am
I don't know about your success level/rate. So, when to start or how long to wait - I'll leave that to you.

I am in US and therefore, writing as to how it is here.

If you are trading, for example, for your spouse or with yours spouse's money, you can start a general partnership with you and your spouse as partners. There are some benefits to this arrangement.

You can take care of the trading side while the spouse can manage the admin (withdraw profits and spend it ).

Once this works fine and you are able to handle this setup, then you can move up the ladder to form other entities such as LLC or those kind of things.

Hope this helps.
  • #7
  • Aug 14, 2009 8:32am Aug 14, 2009 8:32am
Never do business with family or friends. Ever.
  • #8
  • Aug 14, 2009 8:47am Aug 14, 2009 8:47am
Quoting NewstraderFX
Never do business with family or friends. Ever.
Could't agree more. Rule one in trading ethics:
never trade money for family nor friends.

There are various reasons why you shouldn't, but the major one that comes to mind is, money and family don't mix. Families have had major fallings-outs because of money problems and gains.

Never put yourself in a situation to take from your family or friends.
  • #9
  • Aug 14, 2009 8:53am Aug 14, 2009 8:53am
Avoid managing assets for family and friends. Take your series 3, get your CTA license and get an institutional account. If you really believe in your strategy then you should put a good fraction of your wealth in there. If you demonstrate good, stable performance after a few months, the prime broker will deposit a nice starting sum as a trial amount. If you grow that money in the same way they'll deposit more from their CPOs and Fund of fund investors. If you have enough $ to seed your account and you can continue your performance then you have nothing to worry about. It may take some work, but you will be able to attract funding.

Kris Matthews
  • #10
  • Aug 14, 2009 9:24am Aug 14, 2009 9:24am
thanks Kris for your input.

Well I used to be a broker, have a broker licence, but now more focused on sales&marketing in this industry, more in direct contact with clients, doing seminars etc. I want to grow in area of trading forex market and want to go step by step to make it my basic business.
  • #11
  • Aug 14, 2009 9:34am Aug 14, 2009 9:34am
damn, if you make money for them. they will ask, why so less???

damn. if you lose money for them. they will ask and screw you. why did you lose?? you promised this and that...blah blah blah

reconsider this, my friend. is it worth your effort and the hassle of putting up with shit.
  • #12
  • Aug 14, 2009 11:04am Aug 14, 2009 11:04am
Quoting kristdm
Avoid managing assets for family and friends. Take your series 3, get your CTA license and get an institutional account.
I am a South African citizen will Oanda allow me to manage multiple accounts without CTA license? There has to be a way around certification issues.
  • #13
  • Aug 16, 2009 11:00pm Aug 16, 2009 11:00pm
Hi Stephanus et al,

I believe Oanda's "Fund Manager" platform will allow you to do that now, but as I said earlier, you may run into trouble from new legislations that require everyone to be reg'd with CTA, CPO, IB license or equivalent.

Just another idea that popped into my head: you could start an account with a service such as Collective2 which allows you to charge a monthly fee for your trade signals, and your clients would start an account with a broker that integrates with it (there are many) and your trades would automatically be reflected in their accounts. C2 is pretty transparent and respected.

Lastly, there is no rule that says you can't do power of attorney on your clients accounts and then charge them an invoice each month. The issue with most brokers nowadays is that they just won't take the performance fee out of your clients' accounts automatically without certification.

I hope these thoughts help you out!

All the best,

Kris Matthews

Quoting StephanusR
I am a South African citizen will Oanda allow me to manage multiple accounts without CTA license? There has to be a way around certification issues.
  • #14
  • Aug 16, 2009 11:56pm Aug 16, 2009 11:56pm
I thought this might be useful to those who want to trade other people's money.
Attached File(s)
File Type: pdf How-to-become-a-CTA.pdf   423 KB | 2,509 downloads
  • #15
  • Aug 17, 2009 10:35am Aug 17, 2009 10:35am
Quoting kristdm
Hi Stephanus et al,
Just another idea that popped into my head: you could start an account with a service such as Collective2 which allows you to charge a monthly fee for your trade signals,
Thanks so much for the info, I already made a real-time trade there
http://preview.collective2.com/cgi-perl/system42507057 profit of $4!
  • #16
  • Aug 19, 2009 1:45am Aug 19, 2009 1:45am
You're welcome Stephanus, I hope you attract a big following. Good luck on your venture!
  • #17
  • Aug 20, 2009 12:53pm Aug 20, 2009 12:53pm
Quoting NewstraderFX
Never do business with family or friends. Ever.
i absolutely agree with this. no matter how good you are, at some point in your career you will lose a big some of money. that money is going to be people's retirement and college funds, or their life savings. you dont want to be responsible for losing a large chunk of grandma's retirement fund.

best bet is to stay away from business with family. at the very LEAST losing will cause tension between you guys. you never want tension like that. at WORST, you coul lose your best friend or never talk to your sister again.
  • #18
  • Aug 20, 2009 1:03pm Aug 20, 2009 1:03pm
Quoting kristdm
Avoid managing assets for family and friends. Take your series 3, get your CTA license and get an institutional account. If you really believe in your strategy then you should put a good fraction of your wealth in there. If you demonstrate good, stable performance after a few months, the prime broker will deposit a nice starting sum as a trial amount. If you grow that money in the same way they'll deposit more from their CPOs and Fund of fund investors. If you have enough $ to seed your account and you can continue your performance then you have...
Thanks, Kris, for yor posts, & I hope you won't mind a really dumb question: what is an "institutional account", & who offers them in the USA?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #19
  • Aug 20, 2009 1:12pm Aug 20, 2009 1:12pm
Quoting The Fool
Thanks, Kris, for yor posts, & I hope you won't mind a really dumb question: what is an "institutional account", & who offers them in the USA?
institutional = next step above retail. it usually means very large forex accounts. the general number is 100K plus accounts (varies person to person). most large brokers will have them, banks are better. look at DBFX, FXCM, Citi Bank (horrible but they have it), Currenex, Lava (or Hotspot or something), Interactive Brokers, Ducoscapy (spelling?), and i think Oanda even does it. check out any of those. i personally suggest DBFX, just because they have great customer service and i've had 3 years of trading with them with no problems.
  • #20
  • Aug 20, 2009 1:28pm Aug 20, 2009 1:28pm
Thanks, Blacksun. Is it more or less understood, or even explicit, that when one opens an inst. account, then one is open to trading with the Bank's funds for the Bank's clients at some point? Or is that a proposition that arises after one has been in the inst. account for a while....?
"If The Fool persists in his Folly he will become wise." - William Blake
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