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What would you do with a working strategy, but need capital?

  • #21
  • Jan 4, 2016 11:17am Jan 4, 2016 11:17am
Quoting skillz16
{quote} The formal structure for managing OPM that I have seen the most is this: LLC created and used as a general partner to an LP or LLP. The investors will come invest through the LP. Your salary is paid through the LLC General Partner management company. I have also mostly seen/heard about the traditional 2 and 20% structure from the few hedge fund managers that I have talked with. Personally, I prefer 5% hurdle rate (I [will hopefully eventually ]) guarantee investors 5% annually) and any gains over that, I am compensated with 25% of the...
Excelent post, I was looking at something similar few weeks ago not in US but in Malta. Thanks for sharing and good luck with the rest of the stages.

PS: Please let me know if you get to stage 2.
  • #22
  • Jan 4, 2016 11:26am Jan 4, 2016 11:26am
Quoting Sandmann
Hi, The purpose of this thread is not a debate about different trading strategies or expert advisors. The sole purpose of why I created this thread is that I seek advice on what should be my next steps. So let me explain my story so far, I`ll make it as short as possible so I don't want to waste anyones time as that's our most valuable commodity ... so --> I've started trading 3,5 years ago. I've had my ups and downs, and about a year ago I've learned MQL4. I've did my 1st EA, then second and now I have several working EAs. I've rented a VPS where...
If you are testing on Demo, then you are not fully testing. You weren't clear on that so I thought I might throw that out there. It's fine for working out the bugs but until you run it live the success or failure of the EA is just theoretical.

Take 400-500 or so dollars and open an account and let it run on that account. If the returns are steady and you are patient enough, then using other peoples money will be the last thing on your mind. The headache of dealing with whiny people who don't understand that not every month will be a 50% gain month, some months will lose is not fun. Trust me I have been there. If the EA continues to have success, slowly add more money to the account to speed the growth.
  • #23
  • Jan 4, 2016 11:34am Jan 4, 2016 11:34am
Quoting DonPato
{quote} I am a fan of this option. Your dilema is exactly the same as anyone who has blown out their account. You study and improve your method but still lack the funding to proceed. Many of us have been there, myself included. My solution was to liquidate everything else. As trading is my profession, I didn't have a job and my prospects for employment where (are) dim. So I sold everything I didn't absolutely need, and cancelled services I didn't absolutely need. Sold my car, my motorcycle, and my home (renting was fine for a while). I cancelled...
Thanks for sharing your story, this was really interesting to read. Just a few points from my perspective - I haven't blown up my account. I've liquidated as I've needed the money. I do have a full-time job for an international company for the past several years. Takes a lot of courage to sell everything you had, I don't possess much. I have a minimalist mindset, I only have quality things I need and frequently use. Great decision on dumping Starbucks. I was never a fan of overpriced coffee, sometimes when I travel I visit their coffee shops as was the case this November in Thailand. Coffee shouldn't cost more then 1.50usd that's for sure.

Again thanks for sharing

Good luck and my hats off to you. Great story
  • #24
  • Jan 4, 2016 11:53am Jan 4, 2016 11:53am
You're welcome. I didn't mean to imply that you blew up your account, but wanted to point out that the situation is very similar. It sounds to me like you can have the best of both worlds. Funnel off capital to build your business and maintain your employment. If it's all automated it will most likely not require the same attention as being in front of the screen like discretionary trading does.

Best of luck
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  • #25
  • Jan 4, 2016 11:54am Jan 4, 2016 11:54am
Quoting magnumfreak
{quote} If you are testing on Demo, then you are not fully testing. You weren't clear on that so I thought I might throw that out there. It's fine for working out the bugs but until you run it live the success or failure of the EA is just theoretical. Take 400-500 or so dollars and open an account and let it run on that account. If the returns are steady and you are patient enough, then using other peoples money will be the last thing on your mind. The headache of dealing with whiny people who don't understand that not every month will be a 50%...
Thanks MagnumFreak. Do you still manage other peoples money or that's the song of the past?
  • #26
  • Jan 4, 2016 12:08pm Jan 4, 2016 12:08pm
Quoting DonPato
Skipped the Starbucks coffee and made my own with Costco beans.
I tend to itemize my expenses very closely and Starbucks alone was $1500/yr minimum back in the day. Now I guess I spend $15-20/month on coffee.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #27
  • Jan 4, 2016 12:13pm Jan 4, 2016 12:13pm
Quoting Sandmann
{quote} Thanks MagnumFreak. Do you still manage other peoples money or that's the song of the past?
Way past. I tried it once while managing a friends account that had a balance in excess of 1 million. It only took me a few weeks to figure out I wanted no part of it. I stick to my own accounts and trading styles now. Much less stress.
  • #28
  • Jan 4, 2016 12:14pm Jan 4, 2016 12:14pm
Quoting The Fool
{quote} I tend to itemize my expenses very closely and Starbucks alone was $1500/yr minimum back in the day. Now I guess I spend $15-20/month on coffee.....
madhouse... imagine putting that money into an automated EA kidding ofc

I spent about 12e per month (2 coffees a day). The only investment was a proper coffee machine which was about 700euros... at least I know what I`m drinking and what coffee beans are selected
  • #29
  • Jan 4, 2016 12:19pm Jan 4, 2016 12:19pm
Quoting magnumfreak
{quote} Way past. I tried it once while managing a friends account that had a balance in excess of 1 million. It only took me a few weeks to figure out I wanted no part of it. I stick to my own accounts and trading styles now. Much less stress.
Glad to hear. Do you trade all your funds or did you invest anything with anyone else just to diversify?

No need to answer if you don't feel like it, thanks for the input and I`m glad so many experienced traders came to this thread.
  • #30
  • Jan 4, 2016 1:08pm Jan 4, 2016 1:08pm
Quoting Sandmann
{quote} ...Do you trade all your funds or did you invest anything with anyone else just to diversify? ...
I know you didn't ask me but this concept is a very important and one I believe does not get enough discussion. As part of the overall plan (which includes Forex), I do devote 10% of all net worth to "hard" assets. The plan is pretty much like this: (1) Futures trading for income. 1%/Day. Yes this is day trading. (2) Forex Trading for "investment". Looking for 50% annually. I take 10% of Futures net income and devote that to Forex Trading using longer time frames like daily and weekly charts. (3) 10% of Total net worth (calculated quarterly) is then pulled out of investment capital and placed into "hard" assets. Like, physical Gold and or Income producing real estate (when I get enough). This strategy has me buying physical gold into the lows...like now and then selling it again as it rises...while maintaining a constant 10%. Any proceeds from selling gold will go toward other "hard assets". Self sufficient energy production is also one of my hard assets, ie solar panels and wind generation. Then the "excess" energy is sold back to the energy company, for even more profit that goes back into the forex trading.

So far (after 3 years) this plan is working well...

The point being that trading is only ONE means to an end, and that the incredible potential for income should not be the only goal. Creating net worth via "hard assets" is (for me) the ultimate goal, and eventually, the income producing real estate and energy "sales" should be enough income allowing me time to just "invest" with forex.
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  • #31
  • Jan 4, 2016 1:46pm Jan 4, 2016 1:46pm
Quoting DonPato
{quote} I know you didn't ask me but this concept is a very important and one I believe does not get enough discussion. As part of the overall plan (which includes Forex), I do devote 10% of all net worth to "hard" assets. The plan is pretty much like this: (1) Futures trading for income. 1%/Day. Yes this is day trading. (2) Forex Trading for "investment". Looking for 50% annually. I take 10% of Futures net income and devote that to Forex Trading using longer time frames like daily and weekly charts. (3) 10% of Total net worth (calculated quarterly)...
exactly, you've hit the nail on the head. Well said and interesting thoughts. Feel free to comment on anything, after all this is an open discussion and all the ideas are welcome. Regarding gold I`m not sure if it's a safe heaven as it used to be but, but one will never know. I would be more inclined going into properties especially here in Europe where the price is rapidly increasing. And the lease on the properties is skyrocketing in the last years.

You got it all planned out. Excellent, hopefully the plan will continue
  • #32
  • Jan 4, 2016 1:57pm Jan 4, 2016 1:57pm
Quoting Sandmann
{quote} Glad to hear. Do you trade all your funds or did you invest anything with anyone else just to diversify? No need to answer if you don't feel like it, thanks for the input and I`m glad so many experienced traders came to this thread.
I don't mind at all. I do all of my own investing but I do not limit myself to just FOREX. I believe in keeping a wide array of income streams. I have software that I lease to different companies that converts old industrial control systems to new modern systems nearly fully automatic. It converts an OpenVMS Sybase database to a new format needed in the modern control systems. This is software that I wrote. I have small business ventures that I have purchased a part of locally. Just small portions though so I don't have to participate in the day to day operations. I have stock in several different utilities (Southern Company, etc) that pay a reasonable dividend each quarter. I figure we will always need the power companies.

FOREX is about 45% of my total income with the rest coming from the different sources listed above. By the way, most of the income from FOREX comes from 2 EA's that I wrote several years back that produce a slow steady income stream for me. I am just now getting back into manual trading. I missed the excitement of the hunt and the kill.
  • #33
  • Jan 4, 2016 2:01pm Jan 4, 2016 2:01pm
Quoting Sandmann
...Regarding gold I`m not sure if it's a safe heaven as it used to be but, but one will never know. ...
The point with hard assets is NOT that they are a "safe haven" or that they will "make money" per se. They are an asset that will never (at least not in the last 6,000 years) go to zero. The same with real estate and energy. They are assets that can produce income, but more importantly have value outside of any monetary system of the day. While we express them in terms of money, they are assets that will never lose ALL of their value.

This of course means that your net worth will also never be zero. In fact when things in any monetary system break down, hard assets always rise in value.
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  • #34
  • Jan 4, 2016 2:08pm Jan 4, 2016 2:08pm
1. Proved history on LIVE acc is a must
2. Use cent account if you don´t have much - 100 is 10.000 in cents (1k is 100.000)
3. If your EA won´t fail in 12 month or so and you have steady growth, low DD and you are visible (myfxbook, mql5.com, signalstart etc) people start to get interested and you can sell your signal.

I have seen cent acc-s that make several k-s per month from signals.

Or you wanna get rich tomorrow?
Please add more indicators, I still see the real price! Thanks!
  • #35
  • Jan 4, 2016 2:11pm Jan 4, 2016 2:11pm
Quoting magnumfreak
{quote} I don't mind at all. I do all of my own investing but I do not limit myself to just FOREX. I believe in keeping a wide array of income streams. I have software that I lease to different companies that converts old industrial control systems to new modern systems nearly fully automatic. It converts an OpenVMS Sybase database to a new format needed in the modern control systems. This is software that I wrote. I have small business ventures that I have purchased a part of locally. Just small portions though so I don't have to participate in...
Thanks for sharing. This is exactly where I want to be in several years. Great to meet folks that trade EAs and make a living out of it. When you have a working EA you can always trade manually on the side that's the beauty of it. And all the psychological stuff is set aside. That's what I like about EAs
  • #36
  • Jan 4, 2016 2:18pm Jan 4, 2016 2:18pm
Quoting DonPato
{quote} The point with hard assets is NOT that they are a "safe haven" or that they will "make money" per se. They are an asset that will never (at least not in the last 6,000 years) go to zero. The same with real estate and energy. They are assets that can produce income, but more importantly have value outside of any monetary system of the day. While we express them in terms of money, they are assets that will never lose ALL of their value. This of course means that your net worth will also never be zero. In fact when things in any monetary system...
yeah I agree on all the points made. This reminds of a book I've read a few months ago called DEBT by David Graeber , or was it The Capital. I don't remember, but one of those two for sure.
  • #37
  • Jan 4, 2016 2:21pm Jan 4, 2016 2:21pm
Quoting Crackpot
1. Proved history on LIVE acc is a must 2. Use cent account if you dont have much - 100 is 10.000 in cents (1k is 100.000) 3. If your EA wont fail in 12 month or so and you have steady growth, low DD and you are visible (myfxbook, mql5.com, signalstart etc) people start to get interested and you can sell your signal. I have seen cent acc-s that make several k-s per month from signals. Or you wanna get rich tomorrow?
tomorrow is too late, yesterday is over and now is exactly the right moment

just kidding...

Your point number 3 is basically one of the things I was looking for. Thanks for sharing
  • #38
  • Jan 4, 2016 2:35pm Jan 4, 2016 2:35pm
Quoting magnumfreak
By the way, most of the income from FOREX comes from 2 EA's that I wrote several years back that produce a slow steady income stream for me. I am just now getting back into manual trading. I missed the excitement of the hunt and the kill.
If you do not mind me asking, what percentage return a month do you usually hit on your EA's? If you do (and do not want to tell), then no worries.
  • #39
  • Jan 4, 2016 2:43pm Jan 4, 2016 2:43pm
Quoting skillz16
{quote} If you do not mind me asking, what percentage return a month do you usually hit on your EA's? If you do (and do not want to tell), then no worries.
the most balanced one hits about 4-7% per month, without any significant drawdowns. It is still in testing phase so I`m still tuning it. When I was designing it I wanted to keep the drawdowns to minimum and also to avoid market closes and market gaps. No positions are carried over night and the system does over 200trades per month and there's a set SL on each position.
  • #40
  • Jan 4, 2016 2:44pm Jan 4, 2016 2:44pm
Normally I advise people NOT to trade, I personally found it a losing proposition. However, if you really feel you can make a go of it, then by all means do so.
You stated that you're undercapitalized - save enough money to properly fund an account. The main cause of blowing accounts (IMHO) is traders using accounts that are way too small and taking risks that are way too large. A decent account should be at least $10-15K (again, IMHO) and risk should be limited to 0.5 to 1 % ( $50 to $100 per trade).

Someone posted that demoing is a waste of time. I disagree. The MT4 demo at Oanda ,afasik, tracks the market in real time - the quotes are exactly the same as live trading. I do question the value of back-testing, however. There is always the temptation to "curve-fit". A good EA should be robust in (almost) all market conditions over a range of currency pairs ( I would avoid trading CHF after last year's fiasco). But the proof of the pudding lies in forward-testing. Run your EA in a demo account (until you can properly fund a live account). Do this for several months so you get a feel for the EA's true track record.

Just my opinions. Best of luck! Hope it turns out OK. Oh, One more thing - avoid the temptation to place trades outside the EA. Just let the robot do its thing. It follows set rules and doesn't get emotional, unlike human traders.
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