Surely you have to trade OPM?

Discussion in 'Trading' started by chipmunk, Sep 14, 2009.

  1. Unless you have a substantial account your-self (I am talknig millions) surely if you are a successful trader then you have to trade O.P.M.?

    Why not? You are simply leveraging your trading to make more profits.

    Why are so many against trading O.P.M.?Seems like asound business plan to me?

    do not get me wrong..if my acount was $2M+ i would simply trade it...but it's not. (yet)
  2. if you cant make a living on a 500k at 4x margin account you're not a trader.

    you're a leech
  3. No, you don't. And don't call me Shirley :D
  4. lindq


    This is something that you can't relate to until you do it yourself.

    Then you'll find that any frustrations in your own trading - temporary drawdowns, poor market conditions, technical problems, whatever - are greatly magnified when you're responsible to others.
  5. Not to mention your trading must be scalable enough to move large portions of money.

  6. There's a big difference when trading your own money and trading OPM as a business. It's not as simple as buying or selling more shares/contracts.

    W/ that said, it's a great way to leverage your time if you can do it successfully.
  7. If you manage OPM and take 20% then after income tax you are left with around 10% of every dollar you take out of the market.

    Manage your own money and you get to keep 80% (depending on the CGT tax rates were you live).

    If you are a good trader you can use leverage to make 100, 200 or even 400% returns a year.

    Starting with a 50K account and making 200% year it wont be long before you are making 1 million a year and keeping most of it for yourself.

    50K -> 150k -> 450K -> 1million+
  8. That's correct.

    A survey taken of the average ET member showed that most made 200-500% return on their account size.

    The same survey reported the average member was 9".

    No reason to think the results were not accurate.
  9. Most rich people use other people's money. Option payoff profile, you can walk away and start again. Not so easy when the bank takes your house. Even the ig Pit traders had an option payoff profile in the accounts they solicited. Ever wonder why traders who trade 100's/1000's of contracts bothered with handling accounts? It is because if he has a big loss the other funds in his account are used to cover that loss before they go after his assets. So, he solicits ccounts up o the value of his worst expected drawdown on that portion of his funds that he keeps in the account. Probably this explains ho all these pit tradrs who all sem to have had devastating losses were able to come back from them.

    Seems clients drive money managers mad. Read Buffets early letters. To me the idea of someone watching CNBC and then phoning me up to ask if we were "in on that" e.g. Takeover and if not why not, is not acceptable.

    Also the economics. Because I am not looking I have been offered money to manage over the years. I did my costs when someone offfered me 500,000 thinking it would be a good base to start from but it was not worth bothering once I factored in costs.

    You basically have to be sure you can get to $100,000,000 within months. Startup costs for a hedge fund seem to be around $250,000 now.
  10. so all those money managers making billions are idiots?

    Seems very small thinking....

    if you cant make a living on a 500k at 4x margin account you're not a trader.

    Why is that? Explian...This is exactly what iam talknig about.

    So ET are making 100%,200%,300%+ p.a. LOL Amazing and all these Holy Grails.
    #10     Sep 15, 2009