Before I start, I am the real deal and I am NOT looking for money right now. I am not posting this to get PMs with offers for money and the trading method is not for sale either. I am starting this thread so someone can tell me what my options are and how I would get started. I trade futures, I'm in my mid-20s, and I've been trading for about 5 years. I have my own way of trading which is very unique and is very profitable. I am in the process of building a detailed track record. I have no doubt I will become very rich within the next 5-10 years on my own. However, my way of trading is very scalable, especially at this point, since I have less than $100k. Right now I only trade with my own money. I have no trading licenses and I've never traded prop. Although I can grow my own money, since it is scalable, I figure why not trade other people's money and make even more. Here is what I'm thinking about: trading prop., starting a fund, or forming some type of corporation. I must say, though, under no circumstances am I willing to reveal how I trade. I don't even want people seeing the execution statements. I am willing to sign contracts, work with accountants, lawyers, etc. I would also like to say that I am totally willing to start small. I may say, give me $2,000 and if you like the return you have after 4 months, give me more. Maybe I'd just take a % of profits. I am looking to do this within maybe 6-18 months. I'm just looking for someone to offer advice/point me in the right direction. Thanks
You'll have to give some idea of what your methodology is. For example, broadly speaking, are you a trend-follower, counter-trend trader, quantitatively oriented manager? These are pretty basic questions that you should be expected to answer if you want anyone to give you any capital. I don't think that answers to these broad stroke questions put your strategy in jeapordy. Just my 2c.
Question--- If you have been trading for 5 years and your system is "Very unique and very profitable", why do you have less than 100k?
A good way for you to start managing OPM is to become an exempt CTA, which means that you can manage money for (I believe) up to 15 people and up to a total of $250,000 (it might be $200,000 so check with the NFA and the CFTC). You can do this with family and friends and aquantances, but you cannot hold yourself out as a CTA. If you start to do well for your clients, after a year or so you may want to get your Series 3 and register as a CTA. Then you can manage large sums of money and you are not limited to 15 investors. An industry standard arrangement is 2/20. In other words, your clients get charged 2% annually as a management fee on their deposited capital, and you as the manager also get a 20% incentive bonus on all net capital gains you generate for their accounts.
I am totally willing to co-operate as much as possible without revealing how I trade. I would be willing, for example, to say the number of trades generated per quarter and have them verified by an accountant/lawyer through my broker or something. I would also be totally willing to list the profits from each trading instrument per quarter or something. I am willing to work something out, as long as someone can't figure out how I trade. Basically, I'm just wondering about the pros and cons of the possible directions I could head. I have questions like: What does it take to start a fund? If I started with money from friends/family, would I still want to start a fund? If I started a fund, would I have to reveal the trade executions? Could I have them sign a contract understanding they will not see them? Could I start a corporation and sell shares of it or something? Anyone trade prop futures? If I did, they could maybe study my trades. I'm just trying to understand what my options are.
It took me years to learn how to trade great. I am talking frequently making 100%+ of the day's range. 5 years from now I will have many multiples of 100k..trading OPM or not.
Thank you very much. This is exactly the kind of info I'm looking for. I have heard that funds can't advertise or something. If this is true, why not? Besides word of mouth, how do you attract investors then? Thanks Sorry for these newb OPM questions, all.
Do a search on this board. You will find lot of things have been discussed before. Search for hedge fund, raising money, CTA etc. Go through the Career Trader section.
Also understand that there are other issues involved when trading OPM. Many of your client would want lot of hand holding or will require some customer service, which can be a distraction and can have significant impact on your trading methods. Don't underestimate that factor.