I have enough cash to open about 25 daytrading accounts for starts with IB. So I was wondering if you think there are traders out there that would like to daytrade one of these accounts without worrying about the pdt rule. Each individual would put up 2k to top the account out at 27k. My profit out of this would be a rental fee of 250 bucks a month and the trader keeps all of the profits. Its as simple as that. I don't think that I would have to require a series 7 or anything like that because none of my clients would be allowed to loose more than 2k. If a client looses more than 2k they are out. If I decided to do this then I would like to advertise it over the net. Do you think there are many people who would go for something like this. If it is successful then I have partners who would help me expand. All replies will be greatly appreciated, particularly any legal ramifications that you can think of. Regards
sounds like a huge can of worms for you------my opinion only better off putting all that money in several managed funds with good track records, and then spend your time monitoring the performance-------------you do not want to become a baby sitter for people trading your money in the fashion you describe.
THIS is the most unusual idea ive ever heard. but just out of curiosity, if someone put up 2k, whose name would the account be in. if its your name, he's stuppid and if its his name, your insane. thats my first impression about this. but if im wrong, tell me why.
also---you say a 2k max loss and your out----how about this---- trader "a" has done great for two months and the account is at 31,200-------then he is in a 10 lot long up 5 ticks {oops he forgot a stop that day} and then paris gets some train bombings------- well if the darn s&p did not just drop 27 points and stays there all day because of continued attacks right up until our markets close----------then the 2k max loss rule is kind of out the window. i just see too much exposure for you.
Yes there are lots of ideas that I haven't ironed out. The accounts are in my name. I would send the winning to the client at the end of each month. I might have to do this in a trading office but for that case, I would have to charge more. That's for sure. I really appreciate the feed back.
I'd put up a grand to trade a $100k account and give you 25% to divvy-up however you want to between you and your clients - I'll keep the rest of the profit (when the trade/trading is closed at my sole discretion) - trading the forex spot/cash market. First $1,000 loss comes out of my pocket. If you close it, you give me my $1,000 back plus all the profit made by my trading.
hoodooman, Have you heard of LLC-sub account, this is where trader can avoid PDT rule, and they can get up to 10 times leverage, and can go high as 20 times also
Exactly. Hoodooman had might as well just become a quasi prop firm that requires a small trader deposit. Otherwise, he's NUTS to structure this with the terms he stated. You're talking about an effective 12% ROI with risk.
Hi Nana et al. Thanks for the very interesting and helpful replies. After considering all of the answers which I appreciate very much, I'm wondering if it is possible to put the 25k with a broker in order to satisfy the pdt rule and instead of 2k, the account would have to have 5k and that would be in the clients name. Then I am essentially loaning the money to the client which is held in escrow by the broker. 12% sounds pretty good to me right now. Is the plan getting any better. All replies appreciated.