Since I’ve been trading real money (actually since I decided to trade live) I have had people ask me to invest such and such money. I keep telling these people (because I think their trust in me is a bit premature/misplaced) that while I could make them money its very possible, and probible that I would loose all their money. My line of thinking is that this would discourage them – It hasn’t.
I’m outright refusing to trade other peoples money untill such time as I am confident in myself, and my ability to follow my own rules – so far I mess up atleast one day a week (from 2 weeks of live trading.)
Now If I were to do this I would be getting a monthly fee and or a percentage… and whlie I’ld be gratefull for that, finding sombody else to trade dosn’t seem to be in these peoples minds, and learning it themselves isnt somthing they are willing to do eigther… While I’ve got quite awhile to go before I trade I’ld like to know how can I trade other peoples money and my money at the same time, when you do managed accounts with one broker does it do all the math for you pr account, or how does that work… Right now I’m sticking to Oanda, but how any other broker does it is fine with me.
I just want it legall so I can cover my rear – if you catch my drift. I figure if I start looking it up on the weekends I’ll probibly know within 3-6 months (when I would know if I could invest their money or not, and do so making smart trades)
Thanks for your help! Its not somthing I really thought about when I started learning about the forex…
Simy as I understand it the spot market is unregulated no series/securities licenses needed to trade for other people. I say treat them fair and take a cut on what you make. And have a contact even if its only for deposit records.
I was thinking more in lines of how to trade 2 diffrennt accounts, theirs and mine, but from what it sounds like your saying, just trade their money in my act and divy up the results?
I’ll defintly have to keep looking into this, but thats specificly what I dont want to do. These people are known to me personally so they (would hopfully) know that I’m not going to screw them over…
Oanda offer client manaer where you can trade man different accounts. I didnt say screw them over. If the give you 5K then at the end of the month its 7K Im saying keep 10% of 2K. which is $200. They wont get $700 from a bank in a year.
I still say get something in writing that say you will manage it for them.
Why not call Oanda or use their online chat function to make a preliminary inquiry? They are your broker, after all, which does occasionally entail more than gleaning profits from the spread you pay.
I didnt realise what time it is, thought they were still closed, they gave me alot of reading material apparently its pretty easy youve just gota sign power of attorney and it splits the P&L based on the account, so I’m assuming if theres 2 accounts the one with 1000 balance gets 2x more then the one with 500… not sure if i get paid through oanda or if I have to get paid some other way but thats the least of my concerns/problems anways.
Thanks for stearing me twords the right direction again
Just make sure you get some kind of legal paperwork saying that it is quite likely you could lose up to 100% of their money, and that you will not be held liable for it. Also if you lose a friend or relative’s money be prepared for them to never forgive you for it
Yeah I will defintaly have to do that, and as far as sombody never forgivivng me… if I warned them multiple times!!! and somthing bad happens… I wont feel bad, now if I was being stupid thats a diffrent story… both people are quite adamant on having me trade money theres was a third that wanted me to and when I said theres a good chance I would loose everything you gave me – he changed his mind. Thats what I was hoping with the other 2… but… thats life I guess…
I was asked the same thing by a few friends and they kept asking. I finally figured I would draw up some legal docs, have then sign a recipt/deposit slip and then we would agree that I would keep a % of the money I made using their account.
From my research I discovered that investing other peoples funds w/o having the proper licences can result in fines and jail time…
IF YOU LIVE IN THE US. I would suggest you call a local lawyer (they or their paralegal usually give free counsel) check with them.
So who is right? Its my understanding that with power of attorney that you dont need a license, but I could be wrong… does anybody know first hand for a fact? I do live in the US
LPA (Limited Power of Attorney) will give you the ability to execute trades within a brokerage account registered in the name of another individual: it prohibits you from performing account maintenance or requesting withdrawals. LPA is a legally admissible and upheld designation - the ability to trade is delegated to you and the risk of profit or loss is disclosed to and assumed by the counter-party (the account owner). Keep in mind it’s a very good idea (read: imperative) to consult legal and tax advisors - you may find it wise to incorporate, get very clear on the tax implications of the can of worms you’re opening, etc.
This is not something to step into lightly. Trading OPM (Other People’s Money) is a great way to augment one’s profits and build your own account more quickly (if you turn any earnings over into your personal account, anyway); but you assume immense responsibility and additional psychological weight: for which anyone only beginning to trade is not ready. Learning to trade profitably with discipline and consistency over a substantial period of time for oneself should be a necessary precursor before deciding to manage the money of others - no matter how often they bug you about it.
Well this is why I figured 3-6 months I’m doing ok now but I have no trackrecord I’m still fighting myself on each trade psychologically and I wouldn’t deal with loosing OPM as good as they would, or I would with my own cash… Thats why I figure I got time, but like I said wanted to look into it now… It sounds like there is no license but I’m gona want a company to cover my rear area… that about sum it up?
company gets sued I dont kinda deal…? well if its an LLC anways (I think thats the one for personal protection)
I’m not qualified to advise you on what you should do; and neither is anyone else here. You’re going to find disparate “opinions” on this topic wherever you go on the Internet; my only admonition is to not give implicit trust to anything you read, because you have no idea of the credentials of the individual who wrote it. Gather as much information as you can, but at some point, you’ll probably need to get advice the old-fashioned way: by talking to the people who know and can provide you with the support you need if (when) you have further questions down the line or need legal/accounting aid.
I’m still on the getting my feet wet stage… If I do decide to pursue this I will ofcourse seek legal advice however thats ‘IF’ right now thats a big ‘if’ and its quite a bit down the road.
Earlier today I hadn’t even thought about where to start or what all angles need to be considerd… many peoples thoughts do help with that
Thanks for helping, I’ll still be looking into it I’m sure… well see where this ends up in a year or so…
Currency futures are regulated not spot Forex. There is no regulating body for it. So there are no licenses issued. By defenition it is speculation not investment/investment vehicles. The issue comes to neglect and fraud. I know its your fam and friends and you wont do neither to them. The law in California is to accept money from any one other than a stated purpose is illegal. As to some one giving you money and saying trade this for me with your trades is legal. As long as you use the money for what ever it was agreed upon and not for a car note its all good.Im not a lawyer so I suggest you seek one. I just stated the law as I know it.
There are legal and safe ways to trade for others and Oanda offers one of the better ways to do it. Email me luv2trade4x at traderstar dot com if you want more information on this or others, or just ask Oanda. There are also other ways to do it and you will not have legal liability. And yes, you can earn some good money trading for others.
HOWEVER … it is best not to do it until you are very sure of yourself, that means months and months of profitability with very minimal drawdown. Although you are allowed to trade for others and you would not be legally liable for losses … you could lose a bunch of friends! So for the moment just build your own account to at least $5k … then you should be in a position to feel confident about trading for others.
Right now I’m just trying to see how complicated it is… I’m not ready and I keep insisting to those people I’m not ready quite yet. Its not a matter of trading style its a matter of user error… I’m my own worse enemy… I know it and I’m working on it… I am improving though
If you are trading for other in US, you need to register as a CTA.
Normally for managed account, customer will state what is the maximum drawdown. Normally is 30%. So if the account that you manage is down 30%, then you have to close all your positions and return the money back to your customer.
Manager’s renumeration is based on performance fee. If the hurdle rate is 6%, anything more than 6%, you get a cut of 30%. This is the norm for managed account.
