Is 10% of profit enough

Discussion in 'Professional Trading' started by lylec305, Sep 15, 2017.

  1. bln


    It's a bit low, lower than 2-and-20. It's ok if it's without a high water mark limit. That do mean you can lose -5% one year and do gain +20% the next following year with no HWM limit on the gains.
    #21     Sep 16, 2017
  2. Pekelo


    I disagree about disagreeing. I agree with the post's conclusion. Bigger the account smaller the expected return.

    Madoff was king with 10% and everyone wanted to join him.
    #22     Sep 16, 2017
  3. Robert Morse

    Robert Morse Sponsor

    With a managed account like this where the owner of the account is paying for all their expenses, there is no need for a management fee. Based on what little information you have given us, I would ask for 20% and take that out quarterly. If you want to do it for 10%, it's your business. Just not sure why you asked if you were happy with your deal.
    #23     Sep 16, 2017
    JackRab, QuasWexExort and ironchef like this.
  4. lylec305


    There's first for everything. This is my first accepting a fee to trade another persons account. The way I look at it, 10% is better than 0. Considering I was doing it for free. However small, it is a bit of a motivator. Maybe my siblings would get the hint and do the same. Wishful thinking. Anyone else trading family accounts?
    #24     Sep 16, 2017
  5. Perhaps this question does not make sense, but I would ask:

    What are you trading and what time span?
    (is it just S&P Futures with no overnight holding or any equity for any amount of time?)

    Do you have any liability (are you on the hook if you loose all the money, or is it not an issue?)

    Do you have any additional fees?

    If the scenario is:
    You get 100k, no responsibility for loosing it, can do any investment you wish (including buy SPY ETF and hold for 5 years) and get 10% of the profit --- this would be a good deal.
    #25     Sep 16, 2017
  6. lylec305


    It's the later. I'll be trading options sell side on mega caps including index etf and es. I think it's a good deal for both, that's the conclusion i came up. I guess pros who depend on this type of business, 10% compensation is not enough for them. Obviously they charge more. However, they could provide more, certainly from their perspective. From my experience, they would definitely provide more hotair. And explanations why they're negative return is good for long term investors. Mean while they're taking their management fees.
    #26     Sep 16, 2017
  7. ironchef


    Yes, for free.:D
    #27     Sep 16, 2017
    lylec305 likes this.
  8. JackRab


    It think 10% is fine... if you start to ask 20 than you should maybe have a more official setup? Like you stated, there hardly any effort involved from your side... so no reason for a management fee.

    I would have them pay for the paperwork though... make sure it's tight.

    I don't know much about the hedgefund contract side though, so don't come knockin'! ;)
    #28     Sep 22, 2017
  9. About 10 year ago i managed about 100k for non family.

    It was 60/40 profit split. (40% to me).

    Down side risk to them was limited as i started off betting very small like 0.5% risk and increased risk only when account was in profit. Max loss on starting capital was set at 10%.

    So they had limited downside and unlimited upside.

    I made about 100% total for them over 3 years (ie 30% a year), that was net to them after i took out my 40% share.

    Everyone should have been happy but you can bet they weren't.

    They always bitched i was taking too much and when i ended it after 3 years they bitched that i had used them to build my own trading pot and i didnt need them anymore, which wasn't the case at all.
    Last edited: Sep 22, 2017
    #29     Sep 22, 2017
  10. ironchef


    Would you manage my money for me with the same arrangement: 60/40 upside, with limited down side of no more than 10%?

    Question: What adjustment do you offer if and when down side is > 10%?
    #30     Sep 24, 2017