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Managing futures account for friends
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Managing futures account for friends

  #1 (permalink)
Trading Apprentice
Toronto, Ontario
 
Futures Experience: Intermediate
Platform: NT
Favorite Futures: CL, GC, TF
 
Posts: 11 since Dec 2013
Thanks: 4 given, 3 received

Managing futures account for friends

Hi everyone,

First of all, my apologies if this question has been asked and answered already....i searched but couldnt find any.

I primarily trade TF, CL and sometimes GC and ES. My performance has been getting better over the months and lately some friends have asked if I could manage their futures trading account.

My question is:

1. Which broker is best recommended for use to have this type of an arrangement (since I assume myself and my friends would need to be with the same broker for block allocation to work!)

2. How does the profit sharing work? I understand that we (me and my friend whose account I will be trading will come to a mutually agreed % split and that I will be given a limited Power of Attorney), but does he withdraw the profits then give me a check for my % of the profit OR is there a way whereby the broker can send me a check directly.....hence both myself and the account holder are protected.

Thank you for your answers in advance.

F.

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  #2 (permalink)
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  #3 (permalink)
Elite Member
NC, USA
 
Futures Experience: None
Platform: None Yet
Favorite Futures: Guitar
 
MrYou's Avatar
 
Posts: 403 since Jun 2011
Thanks: 618 given, 193 received


This is recall from what I've read/glanced over...


ferdy View Post
1. Which broker is best recommended for use to have this type of an arrangement (since I assume myself and my friends would need to be with the same broker for block allocation to work!)

A broker that provides you the ability to trade for/manage multiple accounts for "friends and family". 15 people is the legal maximum in the U.S. Interactive Brokers is a good example. See their site for more info. You'll have to determine any legal restrictions in your home country.


ferdy View Post
2. How does the profit sharing work? I understand that we (me and my friend whose account I will be trading will come to a mutually agreed % split and that I will be given a limited Power of Attorney), but does he withdraw the profits then give me a check for my % of the profit OR is there a way whereby the broker can send me a check directly.....hence both myself and the account holder are protected.

I would reference Interactive Brokers information for more details. I can't imagine why you would need any sort of Power of Attorney (limited or otherwise). Basically they are just giving you legal permission to manage the trades performed on behalf of the account.

I would absolutely not do this until you have a proven 1-3 year track record using real money and can provide them an equity curve chart and maximum drawdown and any other information that they can easily understand to 1) keep your relationship positive and 2) to save face. I would also establish legally binding rules such as how often they can receive reports and when they can make withdrawals.

If you are a profitable trader, provide your track record, but still stress over and over that this could all end tomorrow and they could lose all the money they've invested with you. Don't paint a pretty picture just to get their money. They should absolutely not be investing money that they can't stand to lose.

You should absolutely consider all the potential negative affects this could have on your relationship with these people.

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  #4 (permalink)
Trading Apprentice
Toronto, Ontario
 
Futures Experience: Intermediate
Platform: NT
Favorite Futures: CL, GC, TF
 
Posts: 11 since Dec 2013
Thanks: 4 given, 3 received

Thanks MrYou, for your response.

I did take a look at IB already but was wondering if you or anyone knew how does the profit splitting part work?

My friends would only ever invest money that they can afford to lose so no fear of hurt feelings if there is a loss.
Suppose we have an understanding whereby there is a 50-50 profit split, would they withdraw the profit amount then write me a check for half of the profits OR does IB have a system of splitting the gains on a agreed upon profit split %?

Thanks again.

F.

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  #5 (permalink)
Market Wizard
Switzerland
 
Futures Experience: Intermediate
Platform: Investor/RT
Broker/Data: IB / DTN
Favorite Futures: Futures
 
Posts: 4,128 since Feb 2012
Thanks: 3,780 given, 7,650 received
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ferdy View Post
Thanks MrYou, for your response.

I did take a look at IB already but was wondering if you or anyone knew how does the profit splitting part work?

My friends would only ever invest money that they can afford to lose so no fear of hurt feelings if there is a loss.
Suppose we have an understanding whereby there is a 50-50 profit split, would they withdraw the profit amount then write me a check for half of the profits OR does IB have a system of splitting the gains on a agreed upon profit split %?
F.

With IB you can profit from an automated service for traded accounts that are not yours. You define the percentage
of profit - this will be transferred by IB every end of month to your IB account. So you are alimented all the way you
are profitable. Plus every attached account can be differently for the percentage of winners.

Not sure if it works with the friends and family account but certainly with the advisor account.

GFIs1

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  #6 (permalink)
Trading for Fun
West Java
 
Futures Experience: None
Platform: MotiveWave
Favorite Futures: AAPL, Bund, FX
 
Posts: 145 since Apr 2014
Thanks: 143 given, 122 received


GFIs1 View Post
With IB you can profit from an automated service for traded accounts that are not yours. You define the percentage
of profit - this will be transferred by IB every end of month to your IB account. So you are alimented all the way you
are profitable. Plus every attached account can be differently for the percentage of winners.

Not sure if it works with the friends and family account but certainly with the advisor account.

GFIs1


Plus ... with IB you can use this (rapacapintro.com), if you want to expand your career as a Fund Manager.


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  #7 (permalink)
Market Wizard
Switzerland
 
Futures Experience: Intermediate
Platform: Investor/RT
Broker/Data: IB / DTN
Favorite Futures: Futures
 
Posts: 4,128 since Feb 2012
Thanks: 3,780 given, 7,650 received
Forum Reputation: Legendary


Thxo View Post
Plus ... with IB you can use this (rapacapintro.com), if you want to expand your career as a Fund Manager.


Selamat Datang!

Thanks for the link - do you have experience with Rapa?
Have to check the conditions for it

GFIs1

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  #8 (permalink)
Trading for Fun
West Java
 
Futures Experience: None
Platform: MotiveWave
Favorite Futures: AAPL, Bund, FX
 
Posts: 145 since Apr 2014
Thanks: 143 given, 122 received


GFIs1 View Post
Selamat Datang!

Thanks for the link - do you have experience with Rapa?
Have to check the conditions for it

GFIs1

Hello Sir,

Thank you so much for the kind words,
Unfortunately I do not have any successful attempts with them just a failed one (My current acc DD just too big for RAPA standard) so i can't speak more than that. But, if my eyes (or maybe my taste ... ) not failed me, i think they are a genuine one, especially if you look at Major League Leader Board. But, of course its still not come close to other similar and long standing venue like Covestor.com, which is using RIA model and just for Stocks only.

Many Thanks

Thxo,


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