you dont learn to trade from books. you have to have enough money to last until you learn the game. most estimate a year minimum. a good mentor can shorten that learning curve. 10k track record. lol
let the kid pursue his dream, who cares if he loses his friend's money? Now does anyone on ET know the REAL answer to his question??? What licenses / registrations / tests / etc do you need to manage other peoples' money??? <-- that is what he is asking
Thanks. I am in particular asking for the needs to manage by trading future/future options/currencies/currency options. I am sincerely looking for answers/experiences and advices. I do consider I am capable of to be profitable and I am trying my best not to fail, I am treating it as real business.
That's because 100% per year is not credible. Buffett's average return is less than a 1/3 of that. Investors want to see the Ferrari and the mansion to see if the trader walks his talk. Otherwise you might as well invest with Jack Hershey who once claimed to average 3x the daily range in profits, is deeply in debt from unpaid taxes and doesn't own a house.
What I posted previously is about all you need. You can either open a friends and family account with IB or you can go the CPO route, which requires a Private Placement Memorandum, an Operating Agreement, and a Subscription Agreement. These have to be submitted to each investor, your broker, and the NFA if you decide to go the CPO route.
Thanks a lot for the valuable information. I have already been managing a IB F&F accounts (you can see it if jusy searching for my posts) but unfortunately some instruments I am doing is not available at IB. So I am trying to go the CPO route. The docs you mentioned, was there any templates that I can find it use, or something that I MUST pay for a lawyer to do? I try to avoid using a lawyer right away since it is just a small account we are talking about here which is more of a proof of concept thing...
when you lose their money they will be looking for someone to blame. if you are skirting the law you open yourself up to liability.
Going this way, to me, the problem is the tax. If I lose money, then they can not deduct the lost; if I win, I pay all capital gains... It is not fair to all the parties and I don't know IRS will be looking for me if my personal bank account grown up 250K overnight.
The truth is most Market punters who "trade" for a living are really just managing money for a living.... making 1-4% on the management fee, then some 20-40% of the trading profits (a lot of times these profits don't exist and if they do people are seduced by low volatility, forgetting that the cashflows and return streams are manufactured). A lot of times these assets they hold are actually very illiquid, and their investors are paying them full price for returns that are illiquid. this kind of risk premium is not always reliable, and investors can get hurt - ala 2008 when these funds all lost 40-50% of their capital in illiquid trades. This happens a lot more than you think, and this is why lots of funds mop up other funds and repackage their mediocre returns as a successful, low volatility fund. It's inaccurate to assume that the big guys who "trade for a living" are actually trading. It's the management fee, stupid. As for being uneducated, its probably 10 times harder right now to make consistent UNCORRELATED money than it was 3, 5 or 10 years ago... The Market is a very expensive place to learn. Only do it if you are very young, and have a tiny amount of capital to deploy. By the 2nd or 3rd time you blow up, you might have an edge. But even then thats no guarantee. Thats the likely path even if you do have an edge... given the undercapitalization or inexperience with different Markets.
Your statement suggests you are no where near ready to be advancing on your 'fund journey'... Take in the advise provided by some knowledgable people and take the next 12 months continuing to trade and simply 'learn' from your trading experiences... Good luck to your friends...:eek: NiN