Hi. I trade full time and battle with a condition (fear) which causes me to skip trades on a regular basis. So much so that I reckon I'd make 2-3 times what I do if I could get it under control. Anyhow a while time ago I was approached by someone wanting me trade on their behalf. At first I refused on the grounds that I needed a few more years to really get a handle on what I am doing. After some thought, I reconsidered because I think that this may actually help me overcome this problem I'm having. The way it is to work is that this person will come in as a 50% equity partner, paying for half my set up costs and as a bonus I get 10% of his profits. I will trade the account and he will act as a manager by making sure I follow my rules and having me justify each and every trade. I feel that having to answer to someone about my decisions would go a long way to keeping my business on track. I'd appreciate any feedback, thoughts or ideas about this concept. Thanks S
. good to trade OPM alongside yr own cash, your correct that it gives you an incentive to be more disciplined... plus it allows you to potentially increase your overall earnings curve, at the same level of personal risk... . as far as set-up costs, its your business, if you want to retain ctrl and not feel like your working for s.o., they are yours to wear... as far as split, you shldn't settle for less than 20-25% of realized P%L, high watermark-basis, for you... 10%'s a tip... don't take tips... good luck ;-)
This sounds more like a new partner who is putting in his share of the efforts. The capital is equal equity, the 10% sounds like it is to compensate for a perceived difference in time & efforts expended (and not a "tip"). Depending on the amount of capital involved, perhaps the partnership should be operated through a LLC for asset protection. How much capital? While that's personal, I often suggest $50,000 to $100,000 capital each might be a place to start thinking about an LLC for its asset protection abilities. See an attorney for advice about any asset protection plans.
Thanks for your feedback. Because this partner would be checking my trades at the end of the day and taking care of any bookkeeping and tax issues, he would be quite involved. I feel, therefore, that any more than 10% would be a little unfair. We're still looking into the structure at present and the whole thing won't be in place for a couple of months. I was just curious as to what others think of the concept and what sort of feed back I would get. S
think longer term... when your going to accept additional clients' funds... industry 'standards' are 20-25% profit share high watermark for the fund manager / management team... 4-5% max going to the referrers... middle/back-office etc is pretty much free... as long as you are happy with how your deal is going to work with your partner, thats all that matters!