Wrap it up and make loads a money...?

Chance meeting with a guy who turns out allegedly to be working for a hedge fund. Seriously, who knows. So many blaggers about these days.

But his detailed knowledge of the markets, detailed because he seemed to know what he was talking about and i usually dont, was a tad bit impressive.

He says: 'What kinda return are you getting?'

So i says: 'Somewhere between 5 and 10% per month' (i've been known to stretch the truth a little myself)

So he says: 'Whats your risk capital?'

So i says: 'Around 5-10% of my account'

So he says: 'Look here, your risking 5% of your account for a 5% return. Thats good stats. Your return might be 5% on investment capital, but actually its 100% per month on risk capital. Thats impressive and beating the curve for most hedge funds.'

So rather quickly i'm getting impressed with my self. I didnt tell him i'm hedging and martingaling; and one day my account will be blown. oooh no.

So i says: 'Do you think i should start my own hedge fund then?'

So he says: 'With a record like that investors should be chuckng money at you, but they won't. Bottom line is you're uninvestable'

So i says: 'Huh?'

So he says: 'Whats the guarantee?'

So i says: 'Whats the guarantee of what?'

So he says: 'Whats the guarantee that only 5-10% of your account is at risk?'

So i says: 'Huh?'

So he says: 'No savvy investor will ever be interested in you. You'll have his money and he'll have no guarantee of a return, and worst still, he'll have no guarantee that only 5% of his money is at risk. For all he knows you could be an aspiring Nick Leeson.'

So he says: 'If you want to do it right, you need to get a wrap.'

So i'm thinking chicken wrap? My mind wonders on to food easily.

So he says almost as though he heard my last thoughts: 'Wrap the stop loss. Insure it.'

So i says: 'Aaahaa... How does that work then?'

So he says: 'Let me tell you how real moneys made. You say your risking 5% for a 5% return right. So if you risked 30%, do you think you could pull in a 30% return?'

So i nods my head in affermation.

So he says: 'Get yourself an investor who'll accept 5% return on 5% risk. Get yourself a wrap to cover losses on 30% of client funds. Trade clients funds risking 30% for a 30% return. Pay said client his 5%. The balance is yours. If it goes to the wall, the client covers the first 5% of liability, the insurers cover the balance, and you'll cover the cost of a premium which'll be what... 5 or 6% of the stop value, and you will have had your chance.'

So i does the math. 100k client funds. Client covers first 5k in losses. I wrap another 25k of clients fund for a cost of 1.25k (monthly). I can now trade using 30k as risk capital seeking to net a return of 30k monthly. Pay said client 5k, pocket the balance.

Any one know a good wrap agent, a 100k client and some free office space in Mayfair?

I was hoping some one could explain if this type of wrap facility is available to retail forex traders.

It would add an interesting dimension to trading.

This is the bit that doesn't add up.

But if you happen to own the insurance company....

your better off investing in a ponzi scheme.. good luck

I do... but first let me tell you about this bridge in Brooklyn I'm trying to sell

The scrutiny you would have to endure for an insurance company to "write" this wrap for you, it would be very thorough I imagine.

I think it might be easier as a "little guy" to find more capital to trade with in general from family, friends, etc. Guarantee their $25k or $50k with your $5,000 or $10,000 against loss. Pay them 20% of profits, you take 80% using their extra margin money. (hedge fund style)

Post some pics and i'll think about it.

There was an article recently on ff news section about how traders were insuring their long positions on euro/usd and how the premiums had risen.