Hello everyone. First let me say that I enjoy reading all of your forums and have found your comments and conversations very enlightening. I hope you can help me out with my situation: I am 32 and have been working in the field of International Financial Advisory with High Net Worth individuals for the last 8 years. I am currently working at one of the large Brokerage Firms. Two years ago I started trading one of my client's leveraged FX accounts on and off ( I take time off of work to trade, 3 days, 5 days two weeks, etc) The account is in the mid six figures of which I use between 5-10% to leverage 100:1 trading EUR, JPY, CHF, GPB, etc. on an intraday basis, closing out positions at the end of the day. I look for very small profits (3-6) pips per trade as my objective. I have been succesfull in doing so during the times I have dedicated to doing this. Negative trades exist but overall daily results are for the most part usually positive. I stay away from the 8:30 reports and try to catch the market when two or three hours after news has been announced. I have gotten to the point where my client has asked me to do this on a full time basis for him. I have other clients I am sure would participate in my potential role as an IB. Raising assets is not a problem. After two years of seeing positive results during the time I take to do this and weighing the pros and cons, I am considering seriously this client's proposal. I would be leaving an excellent career with good money making potential to day trade my client's accounts...... does this sound crazy? For obvious reasons I cannot obtain opinions from colleagues at work as they would more than likely think I am out of my mind for even considering it. Am I crazy for even considering this? Any similar experiences? What is to be expected? What other things should I consider? Any advice is appreciated . Thanks & Good trading to all.
What kind of returns have you made for this client? How many trades roughly? From which date to which date and how will this client handle drawdowns? Also, remember, depending on who this client is, once you leave your current employer, this guy may feel he 'owns' you since he's all you got?
This wouldn't cross your mind in the IBanking industry as you're gambling with opm, but... what is your edge? It looks to me as though you have simply gotten lucky, you have no edge, and will therefore lose money in the long run. Unless your client is paying you a hefty salary (not performance based), stick with your job; think of how many would kill for it. -- http://themarkettruth.blogspot.com/
Thanks for the response... On any given day I trade I usually end up making between 3-5 pips per day on average. At times more. Daily outcomes that end up in the red usually get made up the next day. I try to stay as long as it takes to make it up. Each pip is worth between $300-$500. I look for very short term trades (hours) and if I see a position is going against me and I have made a mistake, I close the position and start again. Like I said, negative trades exist, nonetheless, the positive ones usually outweigh them. In percentage terms it all comes out to roughly between 3%-6% per month. I did think about your second point, nonetheless, the client relationship is a longstanding client which I would even say has turned into a close friendship. Besides, I would more than likely make an effort to raise more capital. Not too much though, I'd like to stay large enough to make decent money but small enough so as to not get noticed.
Thanks Igor. My biggest inquiry has to do with the following: Is it too simplistic to come to the conclusion that the market moves in a rather recognizable range after the 8:30 anouncements that usually goes uninterrupted and tightens as the day ends. ( I am in the US) and is it too naive to say that this can be taken advantage of?
Frankly, yes. You won't find edge in trying to predict general market behavior. The morning numbers are just one of many factors effecting currencies. The strategy of selling volatility as you describe will be profitable on calm days but will lose big bucks when a piece of U.S. news rocks markets (quite often?) Not to mention that big moves in other markets will have a major impact on currencies as well -- http://themarkettruth.blogspot.com/
I'm no market guru, but you say you have been trading his money for 2 years....suppose he needs the money for something else/gets divorced and the wife takes her half, etc. Stick with the sure thing!
you can't make money over the long term with 5 pip gains! I shoot for 100 pip min with max loss 30 pip, 50-100 typical gain, few losses few trades . And don't forget those past 2 years the FX market has been exceptionnally volatile with long term trends , it won't always be like that.
Hell yes it sounds crazy. That's not to say you shouldn't do it, but yep, it's a crazy move. If it works, you're a genius. If it doesn't, you're a failure. Up to you. How much do you hate your job? If you're in Ibanking, I can't imagine you love it too much. (And if you did, you wouldn't posting here.) If you can bear your job for a little while longer, I'd recommend that. You're not going to find much else as financially rewarding as an employee, and that might be hard for you to take should your trading venture fail.
Of course the rich guys love you when you make money for them. How much will they like you if you run into a spot of bad luck? How understanding will they be? When they yank their backing, then how will you make your money? The financial world hates anyone with the aura of a loser. You know this. With the legitimacy your I-banking job provides, you can make a killing without the risk of going bust like in trading. If they ever downsize you, then you can try out trading. I must question your sanity if you are seriously asking advice on this forum from this crew of also- rans, hanger- ons, geeks and wannabes. Heck 95% of the people on this forum are deciding if the should give their last $5000 to Wisetrade, that real estate flipping seminar or try online poker.