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I’ve just started looking into seeking capital for trading vs, using my own. What are some of the things you wished you knew before you started down that path?
Also, reading this site has been an eye opener for me. I traded off and on since 2000, making decent money in stocks, but, I always used a bundled package. First I remember TD waterhouse , then E-trade, then fidelity, finally TD Ameritrade. But, now I’m looking into other systems, as I closed out my TOS account last week. And I have to admit, I’m behind the times on where to start.
For reference, I built my computer with trading in mind, so I want a smooth system to utilize. Also, I have 100mb up/ down fiber, that I can upgrade to 1gb if needed.
I want reliable, fast, executions.
Any suggestions would be great.
As to why I want to use other people’s money to start. Simple, I’m retired at 43, have a family of 5 and my parents that I support. Thus, I don’t mind making someone else money to limit my risk.
You could be correct, however, that’s for me and the fund provider to decide. I’m looking for information, making statements about my abilities is not up for debate, yet.
My observation is that the majority worked in the financial industry first.
I listened to this one last night, and I think it is worth a listen:
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I understand the funding question and I have come across a term "arcade". This is used to distinguish a funding prop shop to one where you supply the money e.g. $25,000. So in arcades they don't give a hoot about you and push you through charging you higher commissions and don't care if you lose.
In one of the talks was a funding prop shop but they gave no salary.
As you may know there are also companies that charge you to pass through hurdles and eventually if you get through then you get some contracts to trade. Most people trying these entry competitions (about $350 a try) and after a number of tries they give up. Topstep, Onestep, guantlet..
At the start of 2018 there were 8,335 hedge funds for an accredited investor to pick from. This is 8000 legit structured and capitalized businesses. That doesn't even touch on thousands of the high net worth advisers to pick from.
Outside of friends and family no one is going to give you money that has money.
" I don’t mind making someone else money to limit my risk. "
A few ideas(some in which you have already covered)
-platform/software fees
-commission splits
-trading fees
-tick by tick live data feed fees
-ease of funding/withdrawals/deposits & fees
-understand how you will be taxed and/or how this may affect your current taxes
-customer & technical support
-hardware
-internet connection
-mobile access
-time commitments
-spouse/family expectations and agreements
-if you're using someone else's money you know personally, make sure you set expectations and agreements up front
Be thorough and prepared before taking this step. I am sure you know it is basically a self-employed business. Set your structure and goals, reduce your costs as much as possible, don't cut corners, and be profitable. As we all know, if it were easy everyone would be doing it.
This was helpful, thank you. In India this trend is not prevalent yet, but I can see this happening. Its better to be aware of these kind of things before it takes root here and me or someone I know goes down that road.
