my friend wants to start a trading school with me, and i'm wondering if anyone has any idea how much people would pay to go to these? i'm a yield curve spreader that has averaged over 100% returns per year for the last 6.5 years, so it was never something that really interested me because i figured i'd make more trading than i would teaching classes anyways (kind of like how i laugh when people buy books to learn how to trade because i ask myself "what winning trader would actually spend the time to write a book?" and assume that it is the failures that produce the vast majority of literature). my friend though, he seems to think people would pay an awful lot for training. what kind of fees do you think you could charge to train someone? i could teach someone generally what i do in less than 10 hours if it was in person, and since i trade yield curve i'm not really worried about getting crowded out of the trades. when i started it was during historically low volatility and i managed those returns and now we are in quite volatile markets and my performance has improved- assuming more people spread yield curve it would only mean we would trend back to the markets i learned in and i wouldn't be upset if that happened.
Wow if you started with 10k, you are now making over 1 million per year. Why bother with a trading class, in 2 years you will be making over 5 million in 5 years over 40 million. Can I ride on your plane?
well if you started with 10k and your cost of living was 0$ that'd be true- but if you looked at it more realistically and said well when i started trading i traded someone else's money (my cut 50% of profits) and then paid taxes (down to 35%) and then paid for my cost of living for the first 5 years before starting to trade my own money... well then you realize things don't compound nearly that quickly in reality if you also eat what you kill. i also have diversified away a bit in my investing, so i do not use 100% of my money in my trading account, but closer to 40%. on the other hand if i had a 2nd income and was just trading on the side and never dipping in you might be closer to right (still didn't count taxes though). also must realize that as you make more money you spend more money (at least my wife does) so that last hurdle gets bigger each year by a fair amount. (this year for example i'm up 85% ytd but after factoring in what i'm paying myself for the entire year and taxes my account is only up about 10% so far) my 100%+ returns do not factor in taxes or cost of living- but i assume when people talk returns they generally don't count those in. the spirit of your post, though, is kind of what i'm getting at. if i can get a 2nd income from teaching that i can live off of, then my money would compounds at a rate much closer to your math and i'll get to where i want to be significantly quicker.
Ok I will bite, even if you kept 50% of your 100% and you started at 10k then you are still making over 150 per year and in 5 years are at 1.3 million per year after taxes and expenses.
i'm already beating these numbers- but it doesn't change my original question which basically boils down to how much they'll pay... or in other words, "is it worth my time to bother teaching anyone or should i just keep doing what i'm doing?"
Don't some prop shops charge like 5-10k for "training" ? I think Online Trading Academy charges 2k-5k for a week of class. 5k x 10 clients a month =50k a month. Not too shabby.
this is exactly why i ask, my friend thought trading academy was about 5k for less than 10 hours of class. sounds like something i could do if there were several people interested, but it really would have to be a fair sum to warrant the distraction it would cause me from my trading. i also don't know that i'd want to start a "prop firm" where i'd have to hold people's hands forever. ideally i could just teach them what they need to know then they could go off on their own and make an account somewhere to start trading.
just to follow up for all the disbelievers (who still won't believe this)- here are my stats and how i have (ab)used leverage throughout my career, all numbers given are in dvar's: yr 1 (jul 05 - jun 06) dvar = 15% month avg = .98 month var = 4.39 tot returns = 11.78 biggest dd = -4.00 yr 2 (jul 06 -> jun 07) dvar = 15% month avg = 1.74 month var = 3.97 tot returns = 20.94 biggest dd = -3.32 yr 3 (jul 07 -> jun 08) dvar = 15% month avg = 2.79 month var = 5.01 tot returns = 33.44 biggest dd = -0.71 yr 4 (jul 08 -> jun 09) dvar = 12% month avg = -0.06 month var = 7.66 tot returns = -0.68 biggest dd = -5.89 (almost went broke this year, but then again it was jul 08 -> jun 09) yr 5 (jul 09 -> jun 10) dvar = 12% month avg = 2.13 month var = 11.43 tot returns = 25.61 biggest dd = -4.33 yr 6 (jul 10 -> jun 11) dvar = 5% (started trading entirely my own money, risk dramatically lowered) month avg = 1.62 month var = 12.41 tot returns = 19.40 biggest dd = -6.23 (glad i wasn't still at 15% dvar, but sadly this was in june so my 7th yr starts with a hamstrung dvar) yr 7 in the works i can see myself moving to a smaller dvar, but not until my total capital is larger. i'm still young- i can make it all back if i lose it all, but even if you put my dvar at 5% for my entire career, i'm still averaging in excess of 100% returns / yr. edit: also to explain- dvar for the first 5 years i simply stared death eye to eye, if i lost 4 dvar at 15% and was down 60%- i did not lower my dvar at all. yr 6+ my plan is for every -6 dvar dd i reset my dvar based on my new capital at risk to give my strategy a longer life. even at 1% dvar i average in excess of 22% returns / yr.
I believe that you are a real trader. I think it depends on how many are interested in your type of trading. For myself, I could trade someone to trade futures for intraday or a swing forex trading that must be held over night. I would probably charge more for futures since its more involved and took me longer to learn. For Forex, its an easier system to grasp and does not need to be watched all the time so I would charge less.
Paul Tudor Jones, Warren Buffett and George Soros would gladly sign up for your school. Hope you reel in a lot of suckers and I am sure you will have a 1001 excuses why you will never be able to validate your claims of 100% per annum returns like everyone else in Vendorville.