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Trading for relatives is almost a no-win proposition.
If you say no, they will be mad and jealous if they ever see you with something new, or if they witness you shopping in a nice store, taking a trip, etc. They will think you are being selfish, and keeping them from their fair share.
If you say yes, they'll be nagging you whenever the slightest drawdown occurs. After all, they thought you were a genius trader - being a genius doesn't include drawdowns, right? Or, you'll make money for them, and they'll either gripe about your cut (should you even manage to negotiate a percentage), or they'll think you should do it for free since you do it for a living anyhow (and in their mind, their little account won't be any extra work).
It is kind of like loaning money to a family member; another bad idea - unless you write off the money from the start (and treat it in your mind as a gift).
I've always managed to keep relatives at bay by saying "yes you could double your money, but you could also lose it all - quickly." No one wants to hear the loss part, and that usually scares them off.
I would never do it. Unfortunately I am speaking from experience from about 15 years ago, it was a nightmare. I didn't borrow money, I instead was trading for a relative, and it messed me up because I started trading differently with their money.
I only made the mistake once and like I said, about 15 years ago. But I see others making this mistake often, so I decided to create the thread for discussion.
I will not trade relative or friends money for my own account or on their behalf. You only have to go down that road once to never go down it again. No matter how much you explain to people the risk and how much you think they have their big boy britches on and can handle losses. They cannot handle losing and will resent you if you lose their money. Some may be quieter about it than others and may act like they are okay with the loss but you will forever feel beholden to them.
I will not even tell family and friends how to trade or give stock recommendations etc because even if they pull the trigger themselves if it loses they will blame you.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
If you want your family to benefit from your trading, why not just give them cash? Or pay off their house. Or buy them medical insurance. Send 'em on a cruise. That's my plan once I've scaled up and taken care of my own.
But to expose their older, more brittle sensibilities to the risks that have taken me years to weather and put into perspective? That would be pretty inconsiderate and irresponsible.
thanks for the poll Mike. actually this is the current situation which make a great dilemma to me.
I accepted to manage some of my family money ( 3 members exactly). encouraged by my early success as trader they want their money to be managed by me with 50% profit sharing each month. the payoff is nothing really spectacular - my monthly performance is around 8-15% but it's still higher than the deposit rate, right? i'm still developing my skill as a trader but that is the result i can give to them consistently each month.
because of their kindness to me when i'm having troubled times i feel i have no power to reject them at that times. 2 of them didn't make a fuss about my trade and they didn't ask me each month how their money has growth unless i give monthly report to them and 1 of them keep pestering on me each day which annoyed me and make me feel pressured when i have a draw down period.
i've been thinking to cut them all but i don't know what to say especially to those 2 who have been supporting me all this time even before i make it as a trader.
have i known this would happened i would reject them all and just give them nice gifts each year just like you did now. damn!
@Harlequin, I would simply tell them that there were unforeseen psychological consequences to taking their money, and that you need to return it and stop trading for them. Better to do it now while you are net positive than be in a position of being net loss and worse.
