Associates have offered me 10% of profit to trade their account. Is that enough?
Not enough information.
Associates have offered me 10% of profit to trade their account. Is that enough?
Not enough information.
what is required? I'd like to keep this as simple as possible. Earn 10 bucks, i get a buck...
Instead of 2/20, the 1/10 structure for incentive accounts makes much more sense.
If they are giving 0/10, then make sure to ask for some fixed couple hundred bucks monthly from each account, as getting extra technology/help to have an "operationally" very efficient trading desk will definitely help both parties in the longer term.
Although after a hurdle of say 15-20% returns you can ask for incentive to be raised to 20%.
You're just not providing enough information to help. I don't know what the asset classes is,I don't know what you're trading strategies is, I don't know how much a AUM you're being offered or what your projected earnings are ...::
Min 100k account, the underlying is irrelevant, my strategy
Maybe someone else can help you then, but any number we come up with is random.
See how things work out for you, and your associates.
If you are truly good...then I don't see why you can't ask for a bigger share of the profit pie,
The bargaining chips have slightly moved in your favor now,
But chances are, you are basically Average (if not piss poor) -- no offense, just reality.
...nothing to get excited about,
Trading is a finicky and fickle business;
The magical words of 'Past performance is no guarantee of the future'...are ever so golden...and I hope your associates are well aware of this.
I'm just starting out trading other peoples money. For 3 months i did it for free and they see the value compared to professionally managed account, we agreed on 10% of profit.
What if they sue you for losses?
For $100K, 10% is very low unless the strategy has very little risk and very low return. If you are going to do this, get in writing that you can keep copies of your monthly statements and daily returns from their account to market yourself.
And, the asset class and strategy does matter. Your past returns matter too. I know someone that runs a fixed income levered strategy that charges 65 BPS on assets, no incentive fee. Last week I spoke to someone that is up 60% for the investor this year AFTER 1/40. 3 years ago someone asked me to help them raise money for an options/futures MM. They needed $10mm and wanted 60% to them and 40% to the investors AFTER all expenses.
So let's say you are really great trader that can consistently deliver out sized returns on a risk adjusted basis. Your friends give you 1 Million dollars and you return 30%. Their accounts earn $270,000 and you earn $30,000.
If you can genuinely deliver risk adjusted returns that outperform and you can document the performance their isn't a hedge fund, family office endowment or pension fund in the country that wouldn't hire you. Typically a $200,000 to $300,000 base against (typically) 10% of your book's profits. A little less at public pension plans
You are - IMHO - wasting your time with that kind of deal.
Scale will be everything and unless your friends can pony up 8 figures your time would be better spent where you can get scale and infrastructure.
I trade my own account and all i do is trade their account with exactly the same trades. The extra fees i'm earning from their accounts is just token of appreciation.
there's a disclosure in place
Still wasting your time.
Let's say I'm spending about 1 hr per day trading their account. What would not be wasting my time? I waste more time on ET...
Looks like you answered your own question. You asked for opinion (or rather a confirmation) on whether it is enough, most gave no as an answer, from a professional manager point of view. You're happy with a "token of appreciation", so it is obviously enough for you. Almost everyone here will ask for more - as it is below the industry average, but if you're happy then go for it.
if you are who you pretend to be, I don't understand why you would still trade other people's money.
your profile says:"Trader by day and secret crime fighter by night. Previous life International Systems Acrhitect IT consultant. Developed Income Trading Methodology and the QuintFecta Critical Path to create 5 income streams from 1 stock. All forward tested for many years."
you behave as you are one of the numerous "experts" on ET, so you should be very successful and just trade your own money (millions or billions). if you in reality are not that expert, it would make sense to make a 10% commission.
You're stating the obvious, I do trade my own account and if she is hot enough i'd trade her account also (10% is her idea) wouldn't you? That's what I do, develop system. Developed a trading system for personal use and mentored many for free, some compensate me for my time but i never ask. Does that make me a professional or expert so be it, I've been called worst.
I've been trading her account for a few months now, she can see the return is much more than any investment she has ever experienced. Why not take it to the next level when opportunity presents it's self and your doubting me for what reason? Does it make you feel better or something, so many peanuts...
For long term investing with little involvement, it's plenty. For active daytrading where you have to fight for liquidity, make it 40-50%. I'm sure others disagree.
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.
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.
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.
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?
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.
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.
Yes, for free.
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'!
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.
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%?
Sure, It is 10% of profit, no downside protection. That is your responsibility, no guarantees like everyone else. Send 100k to start.
Sounds like a pretty good deal...for YOU !
The pro's charge them 20%, that's their current deal with financial advisor, annual return about 6%. I've been mentoring them on my trading system for years, on and off, they see my returns are more than triple what the advisor pays them. They came up 10% of profit, I just trade their account for them, duplicating my personal trades. They understand my system and trades, but afraid to trade on their own. We see it as win win. I'm not altering my life from the extra proceeds lol.
I was responding to Millionaire's quote of 60/40 split.
Yeah, that split doesn't make any sense... seems like the Millionaire's family doesn't know the law of the land in this...
I thought he said he took care of down side for his investors? No losses over 10%.
I have done it once. I was taking nothing for the first 20% of profit, and 50% after that, +2% flat annual fee.
i got 1% of 5% once and made alot of money, was pretty happy. but we were throwing 1500 large sp's back in the $500 a point days.
lylec , if I were you I'd take 10%, if your successful more will come of it , easy to ask 20% when you've made them a ton, and probably more people funds come your way , better to start today and small than hang put for a load that may never materialise,plus you can front run these trades a little too.
And he deleted his comment once more, it appears. My reply was to him saying that "successful people share their success" and that's why I will never be successful.
I think 777 summed it up , we know they're crooks, parasites who crop up in sites like these , can't be gotten rid off , just avoided , this particular one shows bad judgement , is insulting people the best way to fleece them , I think not .
He didn't delete his comment, it is still there. He replied right after you saying he blocked you. The curious thing is, I didn't think that when you block someone so you cannot see their posts, it also blocks THEM from seeing YOURS. An odd feature.
If you still want to see them, just log-out of the forum and view anonymously.
Oh I get it, he started it ? Oh no he didn't , etc, I think we have your measure.
Yikes, those finance guys have ZERO good taste in men's fashion. NEVER place a pastel/striped tie over a white shirt with a dark suit. They look like clowns. Cookie-cutter business chaps, no sensibility. Makes me mad.
And the guys second and third from the left on bottom row? Geez, get a better fitting! Looks like they are going to pop buttons.
All them bitches should not be allowed to have money with that farcical display of clothier acumen. Hate them!
(Sorry, that pic offended me. Carry on.)
Stripped tie on white button down shirt in a properly tailored suit is a classical new england prep look. It will never go out of style in my opinion.
now if you are going to wear one of those new high armpit skinny suits and go for the otherwise preppy look you run the risk of looking like a clown if you are not model thin... but that is because any suit tailored like that makes you look like a clown if you are not thin. the white shirt just calls attention to how stupid you look in a suit tailored for someone else.
It is neat finding a kindred spirit on the forum who has such a robust post history for the first time. Jem, never seen any of your posts before, and your nick reminded me of...
Sorry. Anyhoo, hail and well met. I disagree with you on that men fashion bit. The "New England prep look" is offensive to my eye. No way, no how, it needs to just go away. (I hail from New York. Perhaps that is why?)