An LLC is a limited liability corporation. You can use it to pool money for trading, just be sure you set it up correctly (hire an accountant and/or an attorney). I used Green & Company to set mine up, they did a good job and the total cost was around $900 ($400 of which was state fees). You can find them at www.greencompany.com. SSB
Hi SSB, Did you end up going with the "Incubator" hedge fund, or something else with Green Co.? If not, are you charging your clients a admin/performance fee, and how are you calculating NAV? I've been looking into the F&F account structure at IB, but I just think it would be much easier to have funds pooled in a single account. Also, does trading as an LLC mean that you are required to pay for real time data from IB as a "professional" thanks, -rob
Hi SideShowBob: Thanks for mentioning the use of "allocation profiles by ratio." Can such allocation by ratio be set up under IB's F & F account without limitation? For instance, can one manually create a profile for every conceivable futures position under the account so that allocation is done in (almost) real-time? For example: 1 contract: 1 to C 2 contracts: 1 to B, 1 to C 3 contracts: 1 to A, 1 to B, 1 to C 4 contracts: 1 to A, 1 to B, 2 to C ... 10 contracts: 2 to A, 2 to B, 8 to C etc Further, can allocation profiles be created for different contracts (ES, 6E, etc) without limitation? Presumably, normal margin and liquidation rules apply to each individual sub-account (ie, no cross-margining). Thanks in advance for your feedback.
You can make up as many profiles as you want....but I've been told the limit is 10K of data (I assume as XML since that's how it's stored). If you go over you may get your profiles wiped out (this happened to me). Note you can't "assign" a default profile by symbol, but you can name them by symbol and then choose them when placing orders. Try playing with the demo to see what you can do. The username for the FA demo is fdemo, the password is demouser. SSB
Very helpful reply, SSB. Thanks. Can you give a very rough idea of how many profiles you had when some (Not all, presumably; just the oldest ones?) of them were wiped out in your IB F & F account after exceeding the profile data limit? On the whole, are you happy with trading futures via an F & F account in terms of allocation ease/reliability?
I had probably 15 profiles when they were wiped out. Basically I logged into TWS and turned on my trading system, but I didn't check if the profiles existed (and I didn't have any signals at the start of the day). I luckily noticed that my first trade at 11 AM was set to inactive (since the profile in my API order didn't exist anymore) and I had to manually recreate all the profiles. It's not the actual number of profiles, but the space they take up. So two profiles with 15 accounts each could be too much.... I lost ALL my profiles, not just the oldest. I discovered that using the VB sample API application I can get the XML text for them and then save it to a text file for a quick restore if needed. I wish IB would document the limit or warn you -- I only heard about it when I opened a ticket and the guy researched it and told me that (I'm not even sure that was the reason -- it could just have been a glitch on their end). Despite some issues, I've been very happy with my FA account. I now trade an LLC account for myself, plus 3 IRAs for me and my wife, plus IRAs for my parents, and also an account for my sister. The biggest issue is figuring out how many contracts to trade with each account, and it can be a problem that you can't leg into/out of positions with futures, but that's not a problem with IB, that's just an allocation problem you'd have with separate accounts too. Note you can also create a second user account which you can use to log into TWS and monitor trades without booting out the main account (I use it at work to monitor my automated trading system). Two other benefits -- the $30 threshold for paying for data is now across all accounts, not per account. Also LLC sub-accounts to not pay professional fees since the data are viewed by the non-pro FA master account. SSB
A truly helpful post, SSB. Thanks again. Agreed. I hope an IB rep on ET will make a note of this and arrange to update the documentation accordingly. Good point!
Is IB the only broker that has software for managed accounts? What is another company that offers this software for friends and family accounts?
TWS does not save allocation profiles. They have to be valued manually each time you want to place a trade in the F&F accounts. You must open configuration and reset the values each time unless you use the last one set. For example, you want to decrease you and your clients position by 50%, you pick -50% from your default that you set up and set the value in the configuration before you place the trade. If you use the same allocation for the following trade every thing is fine. HOWEVER, when you pick a different allocation say -100%; closeout position; you MUST go into the configuration and set the value for -100% then save it then place the trade. TOTAL BULLSHIT in my opinion. Also, TWS CANNOT allocate spreads trades across multiple client accounts; each spread even if identical must be placed individually. On top of this lunacy TWS almost never displays the correct PnL values or account balances and values--they are in constant disarray. But wait, there's more...positions suddenly disappear and reappear minutes later. Bottomline: IB lies about the capabilities, functionality, and reliability of TWS. It's a facking gimmick this software. I use thinkorswim now and love everything about it. Don't be scared off by the difference in commissions they will cater to your needs. I pay the same commissions at TOS as i do at IB with software that is by far superior in every aspect along with co-founder assistance and support. I feel lucky to have met these guys. Good Luck to all...