Registered: Apr 2011
02-02-12 04:31 PM
Quote from unco:
I've a question for people trading friends and family account via IB (or any other small managed account)
Sorry if I'm a bit away from the raising money subject but I think it's something you need to think about when raising FF money.
Let's assume that you have a strategy trading 1 lot ES future per 200K$ of capital.
If someone gives you 100K$ to manage you will not be able to trade that strategy and respect the risk initially defined for that strategy. That's assuming that you have a trade allocation per account after you trade (and not 1 global account where you accumulate the capital from FF)
How did you / would you cope with that situation?
- ask for a minimum investment of 200K?
- trade others product with less leverage? (SPY) ~ not ideal
any other suggestions?
It is referred to as notional trading. They have only deposited $100K but you'll be trading it at a level of $200K. They must be well informed that they will experience 2X the risk of a typical account. You must also be very honest regarding the chances of a margin call, depending on the strategy. While the PnL is simply 2X normal, the chances of margin call for certain strategies increases significantly with increased leverage.