What do you think of this

Greetings Babypip friends.

Thinking about investing for other people what do you think about this idea/structure to raise funds:

[B]
Mediums[/B]
[ul]
[li]Place adverts in the national press
[/li][li]More info presented on website
[/li][li]Dedicated (outsourced) inbound Call Centre to field further inquiries
[/li][/ul]

[B]Deal[/B]

[ul]
[li]Risk Free Investment - I use my funds to cover their losses
[/li][li]3 month Lock-in on investment
[/li][li]50/50 profit split
[/li][/ul]

Advantages for me = I leverage up my account balance by using my funds only to secure against any losses so a £40,000 trade with £8,000 risk means I risk my £8,000 for 50% of the return on £40,000.

Advantages for investor = risk free investment proposition

[B]Structure/Security[/B]

[ul]
[li]Minimum investment of £250
[/li][li]Investment structured as a loan agreement - Notary Witness
[/li][li]Trading performance published on MyFxbook
[/li][li]Independent invigilator (EDIT: Fiduciary or Custodian) to monitor trading account balance/performance
[/li][/ul]

[B]Note: this is not a pitch for investment,please let me know your thoughts though if this was presented to you

Thanks[/B]

I’d say:

You must be confident in your trading results if you’re willing to offer me a risk-free investment? Why not just trade your own account with a bigger lot size, compounded daily for a year? A 1% return daily compounded over the year is around 800%, why do you need my money to increase your leverage?

I’d be very sceptical of a “risk-free” investment with a minimum deposit of only 250 GBP.

I think it is terrible and so far from any thing professional that it may attract some poor souls. As far as I am concerned it was good for a laugh.

it mean we need invest to you. you will pay for us. i think you can open paam account. when you can show your ability on paam account. you can attract many investor for your. you can open paam account in liteforex. i has invest money with some manager account in here.

Hello ‘Ropunzel’!

I would say that when I read your thread and then went on to look up some basic advice on starting, say, a hedge fund

(e.g. 7 Hedge Fund Manager Startup Tips), I see how difficult

it can be to provide a competitive advantage to attract investors…

Perhaps you may be better considering a trading partnership to begin with, provided that you have a published record

that you can show someone…

Good luck.

Thank you for the reply. Vis-a-vis the skepticism, the deal is simple enough and comes in risk free because I absorb all the risk and split the return. on 20% risk,I would be looking at a minimum 90% return with probability (60%) and loss probability of (5%).

So to use my example above: £40,00 invested = £8,000 risk (at 5% probability) and £36,000 return (at 60% probability). That means that my Reward : Risk is 18,000 : 8,000 = 2.25

(Note: £0 to 35,999 return probability is 35%)

I set the minimum deposit very low because I personally would not want to commit a lot of money to an untested investment/people so it would be a good way to test it out and upscale if needed. Plus with right advertising I would hope to secure maybe 160 people on a ‘trial run’ £250 for a total £40,000 invested.

Well thank you for the comments, I assume it was your honest appraisal and it would be constructive to know what aspect of the deal you find laughable.

The leveraging up gig is pretty much what all traders currently do with their broker (With a deposit to absorb the -ve PnL).

using that analogy and my example in the OP; £8,000 is my deposit to trade with £40,000 on an effective 1:5 leverage.

I have a reasonable trading strategy - I am confident in it but most importantly in being able to price the risk on every trade accurately, so I would now like to commoditize my system into a win-win package I can push to a retail investor.

The problem in that case then becomes, how to structure that deal; technically, legally and with sufficient safeguards for an investor to have faith in the system.

Thanks for the info,I use MyFX Book ATM to publish trading performance but only started using it recently. Trade Copiers would not work with my system (too slow) I would either have to receive funds and trade through my account in the way you suggested or commoditize my EAs in some way

Thanks for the feedback, I was thinking about joining an a trading Arcade, I think some of those deals come with Equity contributions equivalent to leveraging up.I think it is very difficult to move from private trader to public, even or maybe even especially on the small scales i’m talking about. if you have any ideas on whereto look for partnerships please let me know, thanks again.

you can’t offer a risk free investment because it simply isn’t risk free. you’ll go broke within a year.

Not risk free for me. Going broke may happen; to me.

Plus you can get Index-Linked bonds and other retail investment products which are essentially risk free, minus the opportunity cost of capital provided you hold on to them for the full term.