If OP wanted to go the hedge fund route, the information is readily available. He asked what would be a fair deal for a trader to trade his $200K. He can make any deal with anyone he wants. Nothing is "automatically accepted."
Obviously no one serious would consider trading through an IRA under his name. He is looking for someone who is already trading, and it is no big deal to open a partnership account and he can add his $200K to whatever the trader wants to put in. The only question is why would a trader agree to take $200K from a stranger when he has his own liquid funds sitting outside his trading account and people he knows who want in? The short answer is, he wouldn't.
It is laughable to think a trader will take OP's $200K for a hedge-fund type split of 2/20. I may not know much about the hedge fund industry, but the person who thinks that's a fair offer doesn't know any traders.
The problem for OP is that people who are willing to enter into a deal with him are likely not worth giving money to. Loss sharing is an attempt to weed out the wannabes.
??? when I was a broker we sold clients hedge funds, min investment was 100k. They are LP's usually with something like 50 partners. Choosing the right fund for a client was easy, we just looked for the one that traded the most since we got a cut of the commissions.
and I agree, investors definitively need a way to filter through the traders that are highly successful and those that are not.
but if you think about the loss splitting for a moment. Why would a successful trader need to trade someone else money at all? and then split losses?
After all if he is successful he can manage his own money and not worry about investors, and how they whine and complain when there is a 5-10% drawdown and threaten to pullout, among many other headaches that investors cause.
Successful traders look to take on capital from others to increase their profit/income potential without added risk.
Look at Linda Raschke. Professional successful trader since the 80s with her own capital. Now trading other people money, or firm money. Do you know why she did this? Because she already made her millions and doesn't want to give it back trading her own money. Her track record allows her to trade others money without any risk to her.
Only two ways investor can be sure he is putting his money in the right place.
#1. Someone capital matches him and they agree on loss splitting, why a successful trader would do this I dunno?
#2. Trader provides audited track record.
In both cases though when ever you go to open a new account anywhere these days the risk disclaimer says past performance does not indicate future performance and you money is at risk and you can even go negative and lose your house! blah blah.
In any case people are faking records to get a foot in the door.
So why bother with any of this crap both for Investor, and Trader? What a headache.
Quote from icarus618:
If OP wanted to go the hedge fund route, the information is readily available. He asked what would be a fair deal for a trader to trade his $200K. He can make any deal with anyone he wants. Nothing is "automatically accepted."
Obviously no one serious would consider trading through an IRA under his name. He is looking for someone who is already trading, and it is no big deal to open a partnership account and he can add his $200K to whatever the trader wants to put in. The only question is why would a trader agree to take $200K from a stranger when he has his own liquid funds sitting outside his trading account and people he knows who want in? The short answer is, he wouldn't.
It is laughable to think a trader will take OP's $200K for a hedge-fund type split of 2/20. I may not know much about the hedge fund industry, but the person who thinks that's a fair offer doesn't know any traders.
The problem for OP is that people who are willing to enter into a deal with him are likely not worth giving money to. Loss sharing is an attempt to weed out the wannabes.
I don't know about the SEC, but TOS allows you to do anything you want, except sell options naked, if I recall correctly. May have changed under TD, don't know, but I'm sure previous account holders were grandfathered on that.
However, the OP should note that shorting is quite a bit riskier and less profitable (in the aggregate; those who are good at it would of course dispute this) than going long. Lots of reasons, but to (over)simplify, the market has a long-term up bias, which means you're betting against the house if you go short.
Regardless of whether you're allowed or not, long-only is better if you're just starting out.
90 out of 100 years that is good advice, but in this moment there is much more risk of a drop than a spike so being long is riskier
I am not trying to decide whether trading is profitable or not, or whether a trader can make money or not.
My question is how much I give to the trader for his work, what percentage of the profit?
If the trader doesn't make money, there is no profit sharing.
Risk? trading has risks, yes, I understand that. I hope you also understand that, because most of you sound so scared.
25-30%,over a $mil,20%, you control the funds, they have to trust you, you have to trust them, it's a marriage, make sure you are comfortable, first with risk, and then all the other things, if you're not, you will be in his head and haunting his decision process, hence lower profits
