OPM - Other People's Money

[Tradewinds 12]

Trading OPM. I just heard the term "OPM", Other People's Money. Never heard that term before. I don't know if it's a common term in the retail trading world or not. Maybe it's used more in the world of institutional traders.

[MightyMouse 12]

Trading OPM. I just heard the term "OPM", Other People's Money. Never heard that term before. I don't know if it's a common term in the retail trading world or not. Maybe it's used more in the world of institutional traders.

 

Have you ever heard of OPP?

[SIUYA 11]

opp - yeah you know me.

A sign of our ages!

 

goggle O.P.P. (song)

[MightyMouse 12]

opp - yeah you know me.

A sign of our ages!

 

goggle O.P.P. (song)

 

Ha ha!

 

Have you ever ever gone over your friends house to eat and the food just ain't no good? the macaroni's soggy, the peas all mushed and the chicken taste like wood. Sugar Hill Gang - "Rappers Delight" Old School. Very Old School

[TheNegotiator 13]

Trading OPM. I just heard the term "OPM", Other People's Money. Never heard that term before. I don't know if it's a common term in the retail trading world or not. Maybe it's used more in the world of institutional traders.

 

I heard it said by 'Buzzy' in Pitbull.

[SIUYA 11]

I think there are a few ways to make money in various businesses, and are roughly summarized here when in comes to trading.....

you can leverage your own money - great freedom, highly risky

you can leverage OPM - either as a broker or a trader - less freedom, less risky, generally more profitable - even if you are wrong.

you can leverage other people - by investing in them, employing them etc; - variations on the risk and freedom aspect

 

Many traders working at instos cannot trade (due to restrictions) and generally due to different skills sets, their own money and hence maxmise what goes in their pocket by trading OPM. There are lots of ways to do it but for my two cents if all you are interested in is the money, then trade OPM. It also could be seen as a safety net.

would you rather trade your 10,000 for a 100% return where you keep 100% or trade OPM and amounts of 1 mil, for a 10% return where you keep 25% of the return?

[Tradewinds 12]

. . . There are lots of ways to do it but for my two cents if all you are interested in is the money, then trade OPM. It also could be seen as a safety net.

would you rather trade your 10,000 for a 100% return where you keep 100% or trade OPM and amounts of 1 mil, for a 10% return where you keep 25% of the return?

 

100% percent gain on $10,000 = $10,000

10% percent gain on $1,000,000 = $100,000

$100,000 * 25% = $25,000

 

So that would be $25,000 earnings trading OPM or $10,000 earnings trading my own money. On the surface, that seems like a "no brainer". But I have more questions.

 

One initial question for me is; "Is it the same or easier to get a 10% return on 1 mil than a 100% return on 10 grand?" I would think it would be easier to get the 10% return on the 1mil. But it gets more complicated that that, because I want to earn more that either the $10,000 or $25,000 a year. If I only want to earn $10,000 a year, then I can go get a minimum wage job. I don't think people are attracted to trading to earn $10,000 a year.

 

The other question is, what kind of returns are reasonably achievable? Let's say I traded for two years, and built up my account to $20,000 dollars. Then after two years trading experience, was able to make $1,000 dollars a day trading. That's approximately $250,000 a year. With the OPM example, to make $250,000 a year, with a 10% return, I'd need to get a return of 1 mil a year, and that would take 10 million of OPM. I'd need to be managing and trading 10 million dollars of other people's money. They would need statements, and consultations, and have their distributions managed, etc, etc. And I would need to find people with that kind of money and convince them to invest with me.

 

Then the next question I have; "Is it as easy or easier to get a 10% return on 10 mil as it is on 1 mil?" That's the big question I have. If it gets more and more difficult to manage the larger and larger amounts of money, then the balance point would need to be calculated.

[MightyMouse 12]

100% percent gain on $10,000 = $10,000

10% percent gain on $1,000,000 = $100,000

$100,000 * 25% = $25,000

 

So that would be $25,000 earnings trading OPM or $10,000 earnings trading my own money. On the surface, that seems like a "no brainer". But I have more questions.

 

One initial question for me is; "Is it the same or easier to get a 10% return on 1 mil than a 100% return on 10 grand?" I would think it would be easier to get the 10% return on the 1mil. But it gets more complicated that that, because I want to earn more that either the $10,000 or $25,000 a year. If I only want to earn $10,000 a year, then I can go get a minimum wage job. I don't think people are attracted to trading to earn $10,000 a year.

 

The other question is, what kind of returns are reasonably achievable? Let's say I traded for two years, and built up my account to $20,000 dollars. Then after two years trading experience, was able to make $1,000 dollars a day trading. That's approximately $250,000 a year. With the OPM example, to make $250,000 a year, with a 10% return, I'd need to get a return of 1 mil a year, and that would take 10 million of OPM. I'd need to be managing and trading 10 million dollars of other people's money. They would need statements, and consultations, and have their distributions managed, etc, etc. And I would need to find people with that kind of money and convince them to invest with me.

 

Then the next question I have; "Is it as easy or easier to get a 10% return on 10 mil as it is on 1 mil?" That's the big question I have. If it gets more and more difficult to manage the larger and larger amounts of money, then the balance point would need to be calculated.

 

If you can turn 10k into 20k in 2 years by scalping ES, you can trade my money for me.

[Tradewinds 12]

If you can turn 10k into 20k in 2 years by scalping ES, you can trade my money for me.

 

I'll let you know. :rofl: Hopefully I'll be posting my trade stats to my trading log. Then I may post my live account cash balance screen shots, (with the account number erased). I'm not saying that I can make any money at all. All I'm saying is, if I actually do make a claim, I'll try to provide evidence of how good or bad I am.

[ahimsa 10]

Tradewinds you have the same my thought,i ever thought that if a trader work whit OPM like an istitutional traders he have surelly less fear.long life and no stress.And successively he can aquire a good security for personal trade.?,I think that for this traders is a vantage to begining to trade inside a istitutional world confront a trader who works alone or in a small group,but i think also that have more turn up.psychologically they can form or a big self-control and security to operate or sudden if for example they for some reason stop to work here and decide to trade alone can started after many time a fear path because they must trade with own money.in any way the fear before or later we'll meet .better don't have fear to the fear,because otherwise can become a internal fight with our problem,anxiety,weakness,and we don't needed of this..

[TheNegotiator 13]

Doesn't it depend which way round your success comes? If you are successful with your money then trade OPM the stress is definitely more. For many though it is the other way around.

[ahimsa 10]

Surelly.i only take for example who begining his career inside an istitutional world,sure for who started alone or in a little sim will be more able and would have less fear to trade with OPM.

 

 

cheers and good easter.

 

ahimsa

Edited April 21, 2011 by ahimsa
mistake

[SIUYA 11]

Doesn't it depend which way round your success comes? If you are successful with your money then trade OPM the stress is definitely more. For many though it is the other way around.

 

Very true - some trade better with a salary and OPM and cant handle the stress of running their own money. Others hate the idea of being responsible for OPM. Horses for courses.

The best guys - and there are plenty of these around, are those that use OPM to make plenty for themselves and none for the OP. :haha: