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darthtrader

building a track record?

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well since i'm a newb but at this point given up on the idea of a career outside of trading i would love to have a discussion on building a track record.

 

Is anyone else interested in this path? While i have zero interest in ever being "king trader of the street" looking at the CTAs on autumn gold it seems i may as well at least leave that door open.

 

anyone a CTA here? Anyone doing managed accounts in general?

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Darth,

Excellent thread starter.

 

Here's some ideas that I have done, thought about doing, currently doing and/or might do in the future ;):

 

  • Something as simple as Collective2 is a good starter option for building an independent record.
  • Start a newsletter and/or chat room service.
  • Managing money for friends/family, staying below the requirements to register (requirements dictated by instrument(s) being traded).
  • Get your CTA (for futures traders) to be able to mange more accounts, receive % of profits, and/or put an add-on to the commission charges.
  • Start an incubator fund.
  • Start a hedge fund.

Those are the options as I see it, assuming you want to work for yourself or at least be able to call the shots. You could also try to go to work for a fund or bank.

 

There's money to be made in doing any of the above. One argument is that all the extra headaches and paperwork is not worth it. Another argument is that those extras are easily offset by the additional income and fees you can generate. I'm a firm believer in using OPM (other people's money) from my times as a stockbroker. If you can trade with a profit consistently, using OPM can get you to your goal much quicker. And if you decide to do something more formal, it's a matter of how far you want to take it. I think some people rule these extras out b/c they have preconceived notions as to what it takes, how much money you need, etc.

 

I look at it in terms of futures - you can drop up to 2000 contracts on the ES at one time with little to no slippage (from what I have been told by 3 different brokers). Over time you might get to the point of trading 2000 on your own, but odds are, you can do that much quicker using OPM. With OPM and say your average client trades 20 contracts, it doesn't take that many to put you in a position to make some good money from the commission add-on and/or the incentive fee.

 

It's a big decision and one that you have to either do all the way or not at all.

 

And as for your question about the CTA route, it's not difficult to get that designation at all. And once you have it, you just need to follow the guidelines set forth and then submit performance numbers to different tracking services (of course your info must be accurate and able to be audited).

 

And who knows... maybe one day a fund or bank calls you to offer a buy out... Now that could definitely make your time and effort worth it.

 

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Make sure to vote for me in the trading quote contest!! Hurry before time runs out!! http://www.traderslaboratory.com/forums/f97/trading-quotes-june-2007-votes-1879.html

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I'm kinda surprised no one else chimed in here. Hasn't anyone else thought about the power available with OPM? I know there's more headaches and such, but if it can take you to your monetary goal in life much, much quicker, why not? At least that's my thought process.

 

Of course the integral part here is being 100% confident in you, your system and the ability to work under pressure. That's essential when you bring OPM into the mix. But for futures traders, getting the CTA together is not a ton of work in my opinion and will require some monetary investment into your business but as the OP said, looking at some of the CTA numbers being reported to Barclays and such, I think it warrants strong consideration - either now or when you get to the point of being able to crank out some good trades consistently.

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i had never heard of Collective2 before, that site looks incredible. I can't see how its possible to build a track record cheaper than free :) That seems like it would be an interesting site even if you were not interested in OPM, just a way to keep track of yourself.

 

i have only read a bit about incubator funds, do you know much about them? from what i have read i don't really see the downside if your going to form a legal entity and don't plan on trading OPM right now. Seems it could be costly to throw away a good track record.

 

i can't see i would ever want to take on a huge amount of OPM but i can see how my friends and family have been a bit infected by the idea of extra risk from my interest in the markets. At some point it seems like it will be better all around for me to trade their money than for them to blow themselves out gambling. Good deal all around.

 

good stuff

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Just the thought of operating and reporting to others tie my freedom down. I think most of us came to trading to do one thing: no more bosses. At least that was my main motive for getting into this business.

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Guest cooter

What about your significant other at home?

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Oh yeah, that one. Uhhhh, ok, I'm trying to get it down to 1 boss in my life unfortunately, we created 2 more bosses about 5 yrs ago so I'm going the wrong way. Ok, let's just say I'm trying to keep non-family bosses out of my life :D

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Tor - I guess I view managing OPM on your conditions that you are still the boss. You are the boss of your biz. You can hire and fire clients at will. Of course if you are good at what you do, they will do just about anything to stay on board. ;)

 

Darth does bring up a valid point in managing just friends and family money as well. I know many would say just do it, get a letter of intent or something and be done, but if you want it done right, these additional ways to set up your biz should be a consideration. When it comes to money, esp friends and family, I am by the book no questions asked. I would argue that managing friends and family is worse than taking on strangers. Just be careful going this route. That's why a formal CTA, Hedge Fund, etc. is essential. Everything is laid out in black and white. This serves to cover YOUR butt.

 

I guess it's all about where you want to take your biz. Many just trade their own money and that's fine. Some want to take it a step further and leverage their work hours with OPM. And some of us just have a scratch to WANT to run a business.... :o

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