Hi all… After 18 Months … I now have what I consider to be a consistent strategy providing an average 4% monthly return.
I have £40K of my own money to put in to my Brokers account, but want to know what is the best way to attract additional 3rd party funding to add to that.
As a UK Trader, this means being subject to EU regulations that were brought in in 2018 meaning leverage is restricted to 30:1 … my strategy involves using all of this leverage so the profits are restricted.
I am more than happy with 4% a month, if profits are untouched and kept in the account, then 4% as I am sure you are all aware equates to +60% profit per year… which is great… but…
As I want to make a full time living from Forex… although 60% per year is fantastic (fingers crossed things continue that way) having just £40K to invest personally means in real terms a modest amount in £££ despite it being a good profit %… and as I would need to draw profits to live off having just £40K restricts growth.
My question… What is the best way to attract 3rd party extra investments so I can trade with more and split the profit…? I looked at proprietary trading, but it seems a scam… they will give you £10K to trade with, and you split the profit… and they double their investment each time you make 10% profit… BUT… they only let you trade 0.3 Lots on a £10K account… and charge you £100 per month… it’s simple maths… you can’t easily make the £100 per month from such a small lot size… they know this and make their money from the £100 monthly fee from each trader.
I do know people who would want to personally invest, but I don’t really want to just take peoples money without a proper structure in place… I don’t want to run an unregulated investment scheme which is what casually trading with friends and families money is.
So… what are my best options ? … early next year I will have been running my strategy for 12 months which will provide a solid amount of data for investors to see… but who/what organisations etc should I be looking at?
Yes… I’ve tried to find as much info as I can about trading with friends money… but it seems a grey area… I thought I’d reach out here hoping that more experienced longer term traders will have already gone down the path of attracting extra funds. If there is an industry know collective of financial bodies that provide funds then I’d assume this would be the same in the UK as the rest of the world.? I originally (via a different post) thought that my broker would see the account results and want to add funds… but I was told that a broker would not get involved on that basis… there must be other ways/financial institutions that are well known …?
You should check with the FCA if it is legal to offer an investment service without FCA registration, and what would be their registration requirements.
Whilst its not illegal to borrow money and use it to trade, this could be prohibited by the terms of the loan. In any case, you might find that a brokerage will not accept deposits (or later will not honour profit pay-outs) if you cannot prove the funds deposited are yours and were obtained legally.
Thanks again @tommor … I’m more interested in financial institutions funds than funding via personal investment to avoid any such legal problems… but I have no idea where to start with what institutions to approach?
Your point re withdrawing funds leads to another worry that I have… you hear horror stories of brokers not releasing funds/withdrawing… I sold my apartment a couple of years back, from the profit I made I have funded myself for 18 months full time learning… and currently have £40K left over… I currently only have £10K of that in my account which I am trading with… I am very concerned about any potential hidden reasons that mean that after I deposit the full £40K then for some reason whatsoever that my Broker (I use a reputable one I am fairly confident) might not let me withdraw it. Obviously, in my case, it’s my money… and I would be able to prove it by documents showing the sale and the funds then going in to a bank account which is the same on that I fund my brokers account from… I wonder if you or anybody else has experience of any of the reasons that a broker may basically ‘steal’ your money?
If you trade under FCA regulation you definitely cannot provide any portfolio management services without having a license for that. Still, there are some ways to consider:
If the question is in leverage mainly (the reason you want to increase your funding as your profits are restricted) check if you can apply for Professional Client status with your Broker. You’re required to satisfy at least two (2) of the following minimum requirements: a/ Investment portfolio, including cash deposits and financial instruments that exceeds 500,000 EUR in value; b/ 1 + year(s) of working experience in the financial sector in a professional role requiring knowledge of trading leveraged products; c/ Trading volumes of transactions of leveraged products of significant size equal or greater to 10 trades per quarter over the past four quarters, or, 40 trades per year. So, if together with your trading history you have a diploma or working experience somehow connected to finance (it can be stated in your CV), you will be qualified as PRO with up to 1:300 leverage usually offered.
If your strategy is based on algorithm trading (NOT manual), you may apply for Partnership/ IB programs with an ECN/STP EU Regulated Broker, for example, who have a license for portfolio management services. If your EA is really profitable and you have potential investors, you can be offered a deal and the ability to perform under their umbrella.
Even being UK Trader, you still have an option to open MAM account or a regular trading account with higher leverage with NON-EU Regulated Broker. Still Regulated. There are a lot of Brokers (including reputable ones) who have more than one operating companies (one with FCA regulation, for eg., and another one - with Australian or Mauritius regulation) under the same brand name.
Thanks @HonestTalk some great info there… Yes, If I had larger Leverage then that would resolve the issue to a certain degree… I had looked in to that but having previously read up on the criteria to attain a ‘Pro’ Trader status for higher leverage it seems pretty much unachievable … I only have $40K … not £500K… I am a full retail trader and have never worked within the financial sector in any form previously… so my performance alone I presume would not be enough as I don’t qualify for either a or b as 99.9% of traders wouldn’t I suspect.
Interestingly, my strategy is automated… it’s not an EA system, but a unique code that I have built myself to scalp economic data releases… unique and high risk I know… but there you go. I’ll research more into Partnership/IB programs… but I had wondered whether via some kind of ‘copy trade’ system linked to my account would get round things and be a away for an institution to fund an account that copies my trades… this copy trade system that links an account to my account however would have to be super super fast as are the trades that my robot makes.
I am with an Australian broker… who operates under many regulations including FCA… but I am not sure of the implications of a UK resident trading with brokers outside of EU regs… brokers seem to be very strict on a trader providing proof of residency… so not sure how that would work…?
Paul, why not concentrate your effort on increasing your ROI to average 1% per trading day? If you trade only 3 days per week that would amount to ~12% per month (I presume you are a full time trader). That way you won’t need to trade other people’s money and you can make a living trading your own funds. Build your new trading strategy on a demo first. Then open an account with a different broker and trade it.
Simultaneously, you can also try and improve your current strategy to yield better ROI than 4% /mo.
1% per trading day is certainly achievable. If you have some reserves to tide you over for 6 months or so, then accumulate the 12% for that period of time and you’ll be on your way to financial independence before you know it.
Thanks @QuadPip … as my strategy involves trading News events on the economic Calendar… then I can only take the trades that the calendar provides and know that my system will work with… many days there are no trades… I average about 15/20 trades per month. I can’t see how I can simply ‘add’ another 2nd strategy as a way to increase profit. I chose the high risk strategy of Eco News trading as I found out that I have little tolerance for looking at charts all day… yes, I am full time… but that time goes in to extensive journal keeping including video recording every trade I take so as to improve the strategy… over time I would very much hope that the strategy provides a greater %… but for me ‘doing better’ by finding a 2nd strategy is not really a workable scenario currently… I am working on a 2nd variation of my strategy… but it also works around eco news releases… this is my psychology… I use a robot that I built that auto trades for me (not an EA system) … that way it removes 99% of the emotion.
Hi. First of all congratulations you have done exceptional to average 4% a month consistently.
Now, why do you need a large account? 4% of 40k is 1600 a month. How much is your outgoing monthly expenses? Maybe you need to reduce them. Also you have all weekend and some weekdays off so why dont you get a part time job? Secondly, can you not get a loan from the bank or from someone you know?
Not sure what you’re risk management is like. But if you risk 1% a trade to make overall 4% then if you risk 2% your make 8%, so you’re looking at 3200 a month which is very good.
There is a prop fund I’ve seen a few YouTube videos on funded traders with them called FTMO. As far as I understand they dont charge an ongoing fee after you’ve been funded. Please look into it and do your due diligence though as I wasnt looking to sign up so only watched the videos.
Many thanks @Rickster99 … £1600 per month is what I will need to live on… but it will mean always withdrawing that each month and therefore my balance will never increase. I already use my maximum 30:1 leverage on all trades so can’t increase the trade size… thanks for the tip re FTMO… I’ll take a look. … update. I just took a look at FTMO… they charge you upfront for even taking their test to see if they will fund you !!! totally unacceptable !!!
I absolutely don’t intend to advertise any broker or anything, but you can try with Darwinex.
The mechanism they use is quite smart. They have the license to offer public investments.
You trade your own account. When you open your trades, they pass through Darwinex, who owns the license, and then will be forwarded to investors’ accounts.
Legally, Darwinex should be able to do so because they manage the risk through a tool that they use, which intervenes if the trader is risking too much or ended up in a delicate situation. In this way, they act as the provider of a fund in which people can invest in.
Hope I didn’t violate the spirit of the thread. I have no affiliation with Darwinex and I’m not even 100% sure that what I wrote is correct, since I don’t work for Darwinex
Haha, I just thought that’s standard practice, Theres a few prop funds who do that . The others you pay every month but not sure what broker they use so might be their own platform. Your only easy option would be a loan from bank or friends.
There is no trick to attract out side investment, you have to convinced someone for reason of profit that how they can be profitable with your investment.
4% monthly return for everything you really described here is totally great for whatever reason out there, I do hope it will really make you happy. Honestly I have read your scheme, but I would give it even more time for yourself and maybe all the rest will not be needed anyway, what do you say ?
I also think that you have made a huge success. My congratulations. Still, I would like to hear from you what exactly is your final target when you are trying to attract 3rd party funds? How much you are willing to earn on a monthly basis?
hey paul. u could look up ENFOID, com, they have a policy where they don t charge u, but u have to be active in theyr channel for a while and pass some free tests for them to consider u for a live account. ftmo, topstep are legit, but i m pretty sure u can t trade during high impact news with them for starters. also there s a a site springboardyourtrading . com that covers mostly that(news trading) but theyr returns are way bigger then 4% a month, maybe u could look into that see how u can improve. on a different note, it is possible in my humble opinion to make way more then 1.6k pounds a month with a lower sum then 40k pounds. with 1single lot on each trade with targetting atleast twice the risk u could easily do even better then that ofc depending on ur aproach to the market. i d suggest to look into a decent daily aproach (ofc if u have the time) taking only high probability trades. even 20 pips a day at an average of 10 pound per pip let s say, that s 200 to 300 ponds a day( and that s being conservative). so find a high probability scenario that more often then not can give u ur 20 to 30 pips a day on average(cos u might not have perfect conditions everyday) and ur set. u should be more then capable imo since u was able to come up with a way to trade news( when most have trouble in less volatile times let alone news trading). cheers
If I were you, I would have carefully considered the following:
is it really 4% every month? Or you have a month with huge success followed by a few with negative results? What would be the result if you exclude the best month and/or the best trade?
how much risk do you take to get that 4 %? More leverage might kill your system.
adding more funds/leverage to the equation might mean a conflict with your broker. If the broker can hedge your positions everything is fine. But with scalping around the news, I don’t think it will be possible. You will be labelled “toxic flow”. That could lead to a lot of things but I wouldn’t be surprised if your strategy collapses. Think how would results change with some execution delay?
Now about the money
you want to manage money but are you prepared for the additional psychological pressure of having to explain every step you take or why the Non-farm payrolls hadn’t produced the same result as last month?
most of the funding offers you might find on the internet are a scam. “We will fund you but first open account with us and trade for SOME time… or we’ll fund you but buy this first…”
There is Money out there who are constantly searching for new talent. But they seek to fund a strategy which is different and shows no correlation to those already funded. Now, since trading around news is probably the most popular approach they may have already funded such strategies
don’t think they will fund your account. You have to very, very cautious if they propose to wire you the money
I am sorry for bringing so much bad news, especially before the holidays but it is better to think about it before you take the next step
Few tips:
don’t sacrifice the security of a well-regulated broker for more leverage
better to have more than one account with different brokers
consider currency futures
find yourself a temporary job which can be combined with trading
publish your results somewhere online where everyone can see them
. The others you pay every month but not sure what broker they use so might be their own platform. Your only easy option would be a loan from bank or friends.