Dude, I'm screaming at you not to do this. You can't appreciate the difference between paper trading and real trading and if you can magnify that difference by 100-fold if it's family money. A quick story....I had 10 years experience trading before I started trading OPM (and none of it was family). My very first day I hit my max loss of 2%. By the end of the first month I was down 3.5%. It took me <b>two months</b> to make it back and when I did it was easily the 800 pound gorilla off my shoulder. Once I crossed that B/E line I took off north. Coincidence? Hell no! The game changes 100-fold when you trade OPM. You simply cannot appreciate how much it changes until you actually get in that chair. You need a minimum of 5-years of consecutive profitability before you even think of OPM. You'll regret this for the rest of your life if you do it now.
OK, I won't open a friends and family fund to trade it and make a living. Thank you so much, wise men, for talking me out of it. What was I thinking? J
Murpheys law states that if you borrow money to trade, you will lose it especially if its from family. There was this guy i met who had been trading 20 years or so and made 10s of millions from it. He had a kid that wanted to start trading. The borrowed money from pop, and blew it up. Then borrowed more money and blew it up again...the borrowed more and blew it up again. And this was the kid of a trader that really knew what they were doing. (of course the kid eventually did make money on the last account and has been pulling in over half a million per year now) But the point is...this is someone who had the best mentorship available and still lost family money the first time trading. you really dont want that type of guilt on your shoulders and unless your family has a ton of money (like in the millions) I would not ask to borrow money from them.
But what you state is one data point. And what evidence is there that the son of a successful trader would also succeed? He has no better chance of succeeding than any other aspiring trader. And sure, most people will fail. But I can counter your example by a personal experience. I've traded now 14 years full time. I'm no genius. I've NOT made millions. I've done well enough to make a decent living, live in a nice house and consider myself middle-upper class. I've had friends/family ask me for the past decade to trade their money. I said "no" repeatedly. I didn't want to mix friendships with $$$. They persisted. I finally gave in and took some $$$$. In the time I've traded their $$$ I'm outperforming the market by about 50%. My best friend, recognizing I had 'made a living' for over a decade finally said "Just make the same trades in my account that you make in your own account". What more need be said?
Regarding the profits, the other posters have put up good answers. Charge it however you are comfortable with. Though most charge quarterly. Charging fixed fees in my opinion is not right, especially with such small amounts. IB's friends and family account is great since it allows you to split up the accounts. HOWEVER, you have a daytrading problem. To daytrade as what you are proposing you will need to have each family member cough up 25K. Because if each family member has less than 25K day trading rules apply to them. Now regarding the risk, put your own skin into the game. While you might think it is risky, if you loose the money of your friends you will loose the family and friends, but fiscally you will be ok. If your own skin is in the game then you are going to watch out. I also would put more of your skin into the game than your friends and family. It will keep you very very honest.
Free meals and drinks when hanging out with friends has been good enough for me And family is family... profit fees/charges are the last thing on my mind.
Considering the fact that your claim to trading compentency was "Well, I've been paper day trading stocks for about 6 months now." you should: a) personally thank each every one of the posters who told you what an incredibly stupid idea it would hve been to take the money from people you care about (and who trust you) and blow it in the markets. b) send Baron a note thanking him for running a website where people can share their hardwon knowledge and prevent you from doing something that may have sent you into declaring personal bankruptcy c) get your head out of your ass and change your tone of voice when speaking to your betters.
Good post, but you're light years ahead of the OP. It's like comparing ... monopoly money to real dollar$.