Why would you NOT trade for others? | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

How many of you, still prescribe demo trading to others? 55 replies

If You Didn't Need the Money Would You Still Trade? 15 replies

why indicators work with some brokers and not others? 11 replies

Why an EA works for some currancies and not others? 10 replies

Why would you NOT trade for others?

  • #1
  • First Post: Edited 2:19pm Dec 14, 2012 10:02am | Edited 2:19pm
I have been contemplating an idea for a while. I have 4 other people that I trade for and I am not licensed. I live in Canada and I'm not even sure if this kind of trading (trading forex for others) is illegal (the total amount put in partnerships is under $50,000 CAD).

I am wondering if anyone can sum up, or come up with all the negative's of trading for other people. I like to get all the feedback you can possibly think of before I move ahead with my plan. I need to be 100% sure I'm not overlooking something. So, again think of the most desastrous thing that might happen and/or share your thoughts. I will really appreciate this.
Argue for your limitations, and sure enough, they're yours. Richard Bach
  • #2
  • Dec 14, 2012 12:04pm Dec 14, 2012 12:04pm
Quoting pipsel
I have been contemplating an idea for a while. I have 4 other people that I trade for and I am not licensed. I live in Canada and I'm not even sure if this kind of trading (trading forex for others) is illgal (the total amount put in partnerships is under $50,000 CAD).

I am wondering if anyone can sum up, or come up with all the negative's of trading for other people. I like to get all the feedback you can possibly think of before I move ahead with my plan. I need to be 100% sure I'm not overlooking something. So, again think of the most desastrous...
One negative is that although you may have spent years developing your psychology, your investors haven't. You will have to deal with the mindsets of folks who aren't traders, and try not to let this effect your trading psychology.
  • #3
  • Dec 14, 2012 1:36pm Dec 14, 2012 1:36pm
I think title says it all!

I mean investment bankers trade because they make money off other peoples money through fees and percentage of winnings but like if your profitable why would you trade other peoples money when you can trade your own?
  • #4
  • Dec 14, 2012 1:46pm Dec 14, 2012 1:46pm
Quoting jibjib210
I think title says it all!

I mean investment bankers trade because they make money off other peoples money through fees and percentage of winnings but like if your profitable why would you trade other peoples money when you can trade your own?
Duh to make more money

2% of 10k compared to 2% of 500k

Tell me your trolling
  • #5
  • Dec 14, 2012 1:56pm Dec 14, 2012 1:56pm
Quoting Acroix70
Duh to make more money

2% of 10k compared to 2% of 500k

Tell me your trolling
I doubt he is playing w 500k if he got 3 people. Say you play with 10k of your own money and make 5 percent on a trade that's 500 dollars compared to like 50k when you have a small group of people pooled in. 5% return from a trade gets you 2500 that you have made your customers and you get a measly 2% 50 dollars??!!?
  • #6
  • Dec 14, 2012 2:06pm Dec 14, 2012 2:06pm
Quoting pipsel
I have been contemplating an idea for a while ...
Will the thought of losing other people’s money have a negative effect on your psychology?

Will you have to deal with feelings of guilt if you don’t do as well as expected?

Will the emotional highs be higher, and the lows lower?

Will you feel more pressure to perform than before?

Will you feel increased fear during losing streaks?

If yes to any of the above, can you bounce back in time for the next trading session, so they don’t interfere with your trading decisions?

If you lose all or most of their money, are you sure you’ll be able to deal with it honestly and openly? Hopefully you can, and your aspiring business doesn’t turn into another “shell game” or “disappearing trader” act.

  • #7
  • Dec 14, 2012 3:02pm Dec 14, 2012 3:02pm
Quoting pipsel
I have been contemplating an idea for a while. I have 4 other people that I trade for and I am not licensed. I live in Canada and I'm not even sure if this kind of trading (trading forex for others) is illegal (the total amount put in partnerships is under $50,000 CAD).

I am wondering if anyone can sum up, or come up with all the negative's of trading for other people. I like to get all the feedback you can possibly think of before I move ahead with my plan. I need to be 100% sure I'm not overlooking something. So, again think of the most desastrous...
It is illegal in most countries to pool funds for trading. Pooling is accepting their money, putting it in your account and trading it.

You overcome this legally by getting your friends to open their own accounts, and using the brokers PAMM software to duplicate your own trades onto their accounts. The broker has them sign and lodge LPOA's allowing you to trade their accounts.

There is one other way I guess, and that is registering a trading club, but why bother when the brokers offer a better option with the PAMM software.
In the days of old when sailors were bold, and seldom if ever contented.
  • #8
  • Dec 14, 2012 6:45pm Dec 14, 2012 6:45pm
Quoting jibjib210
I doubt he is playing w 500k if he got 3 people. Say you play with 10k of your own money and make 5 percent on a trade that's 500 dollars compared to like 50k when you have a small group of people pooled in. 5% return from a trade gets you 2500 that you have made your customers and you get a measly 2% 50 dollars??!!?
You don't know how managed accounts work

First of all if your pool is 50k you need to stop trading and go get more clients

Second of all the standard for managing accounts is a 2% managing fee and 20% of whatever you earn your clients. Proficient traders who can attract clients make insane amounts of money
  • #9
  • Dec 14, 2012 6:55pm Dec 14, 2012 6:55pm
Quoting Pips_Cruiser
Will the thought of losing other people’s money have a negative effect on your psychology?

Will you have to deal with feelings of guilt if you don’t do as well as expected?

Will the emotional highs be higher, and the lows lower?

Will you feel more pressure to perform than before?

Will you feel increased fear during losing streaks?

If yes to any of the above, can you bounce back in time for the next trading session, so they don’t interfere with your trading decisions?

If you lose all or most of their money, are you sure you’ll...
Like your comment. Though mind games…
Fuck Forex Factory.Wake up people.
  • #10
  • Dec 14, 2012 7:03pm Dec 14, 2012 7:03pm
Quoting Pips_Cruiser
Will the thought of losing other people’s money have a negative effect on your psychology?

Will you have to deal with feelings of guilt if you don’t do as well as expected?

Will the emotional highs be higher, and the lows lower?

Will you feel more pressure to perform than before?

Will you feel increased fear during losing streaks?

If yes to any of the above, can you bounce back in time for the next trading session, so they don’t interfere with your trading decisions?

If you lose all or most of their money, are you sure you’ll be able...
Yes this very good!In the current agreement all these people know that there is a possibility they will loose all their money. I set up an agreement like Warren Buffet did and this comes down to that I will trade for them on my account and they don't interfere in any regard. I was nervous in the beginning but I find that as long as they realize what are the real pro's and con's it makes it easier for me to trade, it feels like I am trading only my own money.
Argue for your limitations, and sure enough, they're yours. Richard Bach
  • #11
  • Dec 14, 2012 7:14pm Dec 14, 2012 7:14pm
Quoting pipsel
I have been contemplating an idea for a while. I have 4 other people that I trade for and I am not licensed. I live in Canada and I'm not even sure if this kind of trading (trading forex for others) is illegal (the total amount put in partnerships is under $50,000 CAD).
In the US there is a maximum number of clients that a non-licensed fund/trader can have. Not sure about Canada. Call your local regulator to find out.
Fuck Forex Factory.Wake up people.
  • #12
  • Dec 14, 2012 7:15pm Dec 14, 2012 7:15pm
Quoting pipsel
Yes this very good!In the current agreement all these people know that there is a possibility they will loose all their money. I set up an agreement like Warren Buffet did and this comes down to that I will trade for them on my account and they don't interfere in any regard. I was nervous in the beginning but I find that as long as they realize what are the real pro's and con's it makes it easier for me to trade, it feels like I am trading only my own money.
But you're not trading your own money, and if and when you lose it all, if only one of them gets upset, you will feel like an aresole and lose a friend at best, or find yourself in court and possibly behind bars at worst.
In the days of old when sailors were bold, and seldom if ever contented.
  • #13
  • Dec 14, 2012 9:26pm Dec 14, 2012 9:26pm
Psychology has nothing to do being a good fund or money manager. I keep hearing about this and it make me sick. Having a good mindset is good but stressing to much on psychology is so misleading.

From my experience, most important things are you need to know how to manage the money, manage your client.. if you are profitable throughout the year and year before, the is no reason your client keep bugging you. They treat you like king and when you want to stop, they beg you not to. But in order to do that you must have a proven method. In trading the most important thing is being in right place at right time doing the right thing.
I am bored..
  • #14
  • Dec 14, 2012 10:26pm Dec 14, 2012 10:26pm
Quoting pipsel
I have been contemplating an idea for a while. I have 4 other people that I trade for and I am not licensed. I live in Canada and I'm not even sure if this kind of trading (trading forex for others) is illegal (the total amount put in partnerships is under $50,000 CAD).

I am wondering if anyone can sum up, or come up with all the negative's of trading for other people. I like to get all the feedback you can possibly think of before I move ahead with my plan. I need to be 100% sure I'm not overlooking something. So, again think of the most desastrous...
I think you should do the following:

1. Define your services - Don't trade arbitrarily. Explain your strategy and methods to your clients and state exactly how you will be trading, mentioning max/min risk, max/min reward, trade sizes, trading sessions, situations requiring pre-approvals, etc. That will define your limits. Now just take the trades falling within these defined parameters. You will be paid for execution. There is less chance of a dispute if you execute trades according to pre-defined parameters. If you don't want to disclose your complete strategy, write the terms in such a way that defines your role while protecting critical features of your strategy.
2. Sign a contract and keep written record of client approvals/instructions when they consent to trades outside standard terms
3. Stictly follow your limits and scope of work
The Thief of Wall Street
  • #15
  • Dec 15, 2012 10:30am Dec 15, 2012 10:30am
In regards to the people I'm trading for: I have shown them how it works and explained how I trade. The very first time a good friend gave me $1000 and I said "You need to consider this money lost" and he put it out of his mind. I put this money in my account and I gave him weekly overviews of how much his equivalent was making. That's when he gave me more money and over time four more people entered my 'pool'. I did the same with them, showed them how it worked and what the risks are, I gave them a basic contract that states that they acknowledge that they can loose all the money the put in and that they won't interfere with my way of trading. They all agreed.
My trading isn't anything special, I bet the majority of you guys trade like I do.

My problem is now that the word got around and more people want to get in. On one side I want to do that, I get commission and I just let this money compound in my account, it is a steady growth. On the other side, I felt comfortable with this small group of people, they are good friends and I think they understand what they are getting into. If I'd take on more people there must be just that one rotten apple that might spoil it. That takes away the fun of it. So I'm wondering if I can set up a small in and out strategy. They give me money (and I would give them a certificate or something), have them sign an agreement and when they want out they can get their money back after so many weeks.
Any thoughts on this?
Is anyone actually trading for others?
Argue for your limitations, and sure enough, they're yours. Richard Bach
  • #16
  • Dec 15, 2012 12:25pm Dec 15, 2012 12:25pm
Quoting pipsel
Is anyone actually trading for others?
Hi Pipsel,

I do, here's how.

Before they "lend" me their money I show them my returns, I don't explain them when or how I do this it's none of their business. If they are happy with what they see, I explain them my rules:

- I copy & read "fx is risky" stuff, you can find it on any brokers website
- Minimum $1000
- My comm is 50%
- P/L and some other stats are updated every Friday evening on a private web page
- If they are 'taking' or 'adding' they have to notify me between Friday evening and Sunday afternoon, no exceptions

I have one rule for myself - strictly only people I personally know. I will only speak to outsiders when I have all my 'legalities' sorted.
.
  • #17
  • Dec 15, 2012 4:13pm Dec 15, 2012 4:13pm
Quoting manniMe
Hi Pipsel,

I do, here's how.

Before they "lend" me their money I show them my returns, I don't explain them when or how I do this it's none of their business. If they are happy with what they see, I explain them my rules:

- I copy & read "fx is risky" stuff, you can find it on any brokers website
- Minimum $1000
- My comm is 50%
- P/L and some other stats are updated every Friday evening on a private web page
- If they are 'taking' or 'adding' they have to notify me between Friday evening and Sunday afternoon, no exceptions

I have one...

If you are in the US you guys are playing roulette with the SEC, or with whatever eqivalent authority exists in your country.

It is much easier and much safer for you and your clients if you get them to open their own accounts and use PAMM.

Oh... and you are paying your taxes on the profits before you pay yourself and your friends, aren't you?
In the days of old when sailors were bold, and seldom if ever contented.
  • #18
  • Dec 15, 2012 5:32pm Dec 15, 2012 5:32pm
Quoting manniMe
Hi Pipsel,

I do, here's how.

Before they "lend" me their money I show them my returns, I don't explain them when or how I do this it's none of their business. If they are happy with what they see, I explain them my rules:

- I copy & read "fx is risky" stuff, you can find it on any brokers website
- Minimum $1000
- My comm is 50%
- P/L and some other stats are updated every Friday evening on a private web page
- If they are 'taking' or 'adding' they have to notify me between Friday evening and Sunday afternoon, no exceptions

I...

Yes I do this the same way. All of the people I trade for are close friends as well so I feel much more comfortable trading. So far none of them has pulled out any money and I keep my commissions in there as well.
Argue for your limitations, and sure enough, they're yours. Richard Bach
  • #19
  • Dec 15, 2012 11:53pm Dec 15, 2012 11:53pm
Quoting pipsel
I have been contemplating an idea for a while. I have 4 other people that I trade for and I am not licensed. I live in Canada and I'm not even sure if this kind of trading (trading forex for others) is illegal (the total amount put in partnerships is under $50,000 CAD).

I am wondering if anyone can sum up, or come up with all the negative's of trading for other people. I like to get all the feedback you can possibly think of before I move ahead with my plan. I need to be 100% sure I'm not overlooking something. So, again think of the most desastrous...
I would be careful pipsel, if you have 1 year in this and your trading others cash. I think you moving to fast, you haven’t seen enough of what can come at you. this and added having to perform well. I have had people ask me about management but I have always said no cuz even after 7 years I’m not ready to do that. nothing to do with how much I can make, all to do with emotionally being able to handle it.

hope it works out for u.
  • #20
  • Dec 16, 2012 10:07am Dec 16, 2012 10:07am
It is so much better to make from other people's risk than from your own risk. It is infinitely better to lose someone else's money than your own.
0 traders viewing now