Join organizations like in your first post. Move to somewhere were you can have an office and walk around promoting yourself. Traders talk. This is a gossipy industry. Get creative. YOU HAVE TO DIFFERENTIATE YOURSELF. There are no hard and fast rules and this business is no different than any other.
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Becoming a CTA, CPO, or manage futures
- Thread starter qtip
- Start date
Join organizations like in your first post. Move to somewhere were you can have an office and walk around promoting yourself. Traders talk. This is a gossipy industry. Get creative. YOU HAVE TO DIFFERENTIATE YOURSELF. There are no hard and fast rules and this business is no different than any other.
Quote from TGM:
Join organizations like in your first post. Move to somewhere were you can have an office and walk around promoting yourself. Traders talk. This is a gossipy industry. Get creative. YOU HAVE TO DIFFERENTIATE YOURSELF. There are no hard and fast rules and this business is no different than any other.
Yes, you have to treat it like any business to get name out...
As long as it follows the rules.
qtip,
these comments do not follow your original post outline, just random points:
1. I would suggest contacting the NFA, they are friendly and can answer many questions you may have regarding CTA/CPO status.
To answer one of your questions, you will have to be registered as a CTA if you are manging more than 250K or more than 15 clients.
2. If you plan to become a CTA and have been trading your strategies that you are incorporating for managed accts, you can include the results in the disclosure documents as 'proprietary accts'. This allows you to include your results prior to forming LLC.
I would suggest using autumngold.com to find some CTA names and perusing their dis docs for a better idea of what is involved for disclosure to potential clients.
3. If you are going to study for Series 3, use STC for study materials. Pay attention to hedging and regulation, esp regulation! They split the test scores into Market knowledge and Regulations.
4. Be careful developing promo material---the CFTC and NFA have strict guidlelines in establishing marketing material to prospective clients.
5. Registration fees with NFA range anywhere from $800-1500/yr depending on how you structure your business. This assumes it is just you running the show.
6. Once you have various managed accounts, you should be able to bunch orders and transmit one order to each broker for all accounts with that broker. I would recommend finding one broker and sending business his way unless you plan on managing some serious coin, then you should form a CPO.
That is all I have for this Friday afternoon. I know I'll think of more on Monday.
One Q for you Qtip: Who have you used to audit your performance?? I'm having trouble finding a local CPA who has a history of auditing retail commodity accounts. Anyone on the web worth checking out?
ps--studying for the Series 3 will answer some Qs you probably haven't thought of yet.
these comments do not follow your original post outline, just random points:
1. I would suggest contacting the NFA, they are friendly and can answer many questions you may have regarding CTA/CPO status.
To answer one of your questions, you will have to be registered as a CTA if you are manging more than 250K or more than 15 clients.
2. If you plan to become a CTA and have been trading your strategies that you are incorporating for managed accts, you can include the results in the disclosure documents as 'proprietary accts'. This allows you to include your results prior to forming LLC.
I would suggest using autumngold.com to find some CTA names and perusing their dis docs for a better idea of what is involved for disclosure to potential clients.
3. If you are going to study for Series 3, use STC for study materials. Pay attention to hedging and regulation, esp regulation! They split the test scores into Market knowledge and Regulations.
4. Be careful developing promo material---the CFTC and NFA have strict guidlelines in establishing marketing material to prospective clients.
5. Registration fees with NFA range anywhere from $800-1500/yr depending on how you structure your business. This assumes it is just you running the show.
6. Once you have various managed accounts, you should be able to bunch orders and transmit one order to each broker for all accounts with that broker. I would recommend finding one broker and sending business his way unless you plan on managing some serious coin, then you should form a CPO.
That is all I have for this Friday afternoon. I know I'll think of more on Monday.
One Q for you Qtip: Who have you used to audit your performance?? I'm having trouble finding a local CPA who has a history of auditing retail commodity accounts. Anyone on the web worth checking out?
ps--studying for the Series 3 will answer some Qs you probably haven't thought of yet.
Qtip- You are going throught he same same motions that I have for a year or two now. The advice given so far is excellent and you can find more in former posts I had started.
My biggest issue has been the reality that I'm in a position making decent money and a have a family to support. I realize we are in a risk taking business, but I don't want to compromise my family/lifestyle. Have you heard of ways to finance a startup CTA? Is it possible to raise startup money that will pay for the business startup and also for a salary to you for the first couple of years? or is it simply that you must raise enough MUM to live off of at the beginning or have a large savings that you are willing to part with?
Just curious if you or others had any insight into this.
My biggest issue has been the reality that I'm in a position making decent money and a have a family to support. I realize we are in a risk taking business, but I don't want to compromise my family/lifestyle. Have you heard of ways to finance a startup CTA? Is it possible to raise startup money that will pay for the business startup and also for a salary to you for the first couple of years? or is it simply that you must raise enough MUM to live off of at the beginning or have a large savings that you are willing to part with?
Just curious if you or others had any insight into this.
I would say you need savings. It would seem difficult to sell your ability to succeed to someone to the extent that you could get enough funds to be worthwhile - or you could wind up giving away a percentage of your business that may come back to haunt you later.
Some other points. It is important to keep costs to an absolute minimum until you have enough AUM to become self sufficient. Barter where you can. Consider waiving or reducing 2/20 fees in return for accounting or backoffice help. I have found that most soft dollar services are not worth it. Many are credits for overpriced services in return for things that CTAs don't really need in the first place. Early on, most of your calls are from people who are trying to sell you something. Others offer you the "chance" to land some funds if you open brokerage accounts and pay inflated commissions in return for them marketing your fund. It's usually best to tell them that once they have landed that managed account, that you will be glad to use them as the B/D. They don't call back.
Even more will call asking you to allocate some of your millions (that you are trying to get) to their fund, which has a pathetic record. Mention your fund's far superior record and try to sell them, which almost worked once.
There are some costs that are unavoidable and some areas where you don't want to skimp, but once you get past the initial setup, you can start figuring out what areas need funds and what can wait.
Some other points. It is important to keep costs to an absolute minimum until you have enough AUM to become self sufficient. Barter where you can. Consider waiving or reducing 2/20 fees in return for accounting or backoffice help. I have found that most soft dollar services are not worth it. Many are credits for overpriced services in return for things that CTAs don't really need in the first place. Early on, most of your calls are from people who are trying to sell you something. Others offer you the "chance" to land some funds if you open brokerage accounts and pay inflated commissions in return for them marketing your fund. It's usually best to tell them that once they have landed that managed account, that you will be glad to use them as the B/D. They don't call back.
Even more will call asking you to allocate some of your millions (that you are trying to get) to their fund, which has a pathetic record. Mention your fund's far superior record and try to sell them, which almost worked once.
There are some costs that are unavoidable and some areas where you don't want to skimp, but once you get past the initial setup, you can start figuring out what areas need funds and what can wait.
Quote from jgfutures:
One Q for you Qtip: Who have you used to audit your performance?? I'm having trouble finding a local CPA who has a history of auditing retail commodity accounts. Anyone on the web worth checking out?
I used to use these guys www.Futuresaccounting.com
They are cheap but not very reliable.
When I started doing my offshore fund I looked at Arthur Bell, very well known/reliable and very expensive.
Currently for my Managed accounts I use NAV Consulting...reasonably priced and so far no issues....
peace & profit
While I am here..here is my 2 cents...
I have been registered as a CTA in the US since Dec last year. Before then I used the loophole of less than 15 clients and not actively marketing yourself (holding yourself out as a CTA) to trade client funds as an exempt CTA. It doesn't make any difference that I was not US based, although my 15 years registered with the FSA in the UK helped appease some initial clients.
Most of my current managed Account clients are US based and I have never met one of them face to face. I had a couple of video conferences with one but thats it.
I am listed on Autumngold/IASG/Barclays/MAR and thats not done me a lot of good, in terms of new biz. To date its all been
recommendation and an FCM.
Brokers offer good 'deals' but the clients they want to introduce usually pay higher comms and it can seriously affect your performance.
I came out of last year looking pretty good (top5 on all ranking lists) and as a result got alot of calls from TPM's (Third Party Marketers) They all offer to introduce you to Auda or Citadel but want an ongoing piece of the action (anywhere from 10-30% of your gross fees). Naturally I signed a couple of these and am still waiting, this is possibly due to the fact that my performance hasn't been as good this year (+4.74% ytd/ + 31% 12mths to date) but also because I believe there are a load of guys that 'fish' for new talent, put them in front of a couple of people they met once in a bar and if anything comes of it then hey its a free 20%....but maybe I'm too skeptical!!
Loadz of good advice on here so far & I totally agree that location and getting in front of people helps..I'm stuck on the beach in SW France so not that accessible to all, but lifes a payoff and I don't mind that much with the Managed accounts biz. The fund biz I had to get off my ass and trawl the major centres. But thats another story!!
Self belief and self marketing get you thru...get your name out there in any form you can and see what comes up..i had chat with the editor of Futures Magazine a few months ago and now I'm one of this years 'Hot New CTA's' in the October issue!!!
Be pushy, no one gives money away anymore. If you can last the first 18mths the odds of success get better, so dip into the family coffers and have faith in yourself and your system.
Peace & profit
I have been registered as a CTA in the US since Dec last year. Before then I used the loophole of less than 15 clients and not actively marketing yourself (holding yourself out as a CTA) to trade client funds as an exempt CTA. It doesn't make any difference that I was not US based, although my 15 years registered with the FSA in the UK helped appease some initial clients.
Most of my current managed Account clients are US based and I have never met one of them face to face. I had a couple of video conferences with one but thats it.
I am listed on Autumngold/IASG/Barclays/MAR and thats not done me a lot of good, in terms of new biz. To date its all been
recommendation and an FCM.
Brokers offer good 'deals' but the clients they want to introduce usually pay higher comms and it can seriously affect your performance.
I came out of last year looking pretty good (top5 on all ranking lists) and as a result got alot of calls from TPM's (Third Party Marketers) They all offer to introduce you to Auda or Citadel but want an ongoing piece of the action (anywhere from 10-30% of your gross fees). Naturally I signed a couple of these and am still waiting, this is possibly due to the fact that my performance hasn't been as good this year (+4.74% ytd/ + 31% 12mths to date) but also because I believe there are a load of guys that 'fish' for new talent, put them in front of a couple of people they met once in a bar and if anything comes of it then hey its a free 20%....but maybe I'm too skeptical!!
Loadz of good advice on here so far & I totally agree that location and getting in front of people helps..I'm stuck on the beach in SW France so not that accessible to all, but lifes a payoff and I don't mind that much with the Managed accounts biz. The fund biz I had to get off my ass and trawl the major centres. But thats another story!!
Self belief and self marketing get you thru...get your name out there in any form you can and see what comes up..i had chat with the editor of Futures Magazine a few months ago and now I'm one of this years 'Hot New CTA's' in the October issue!!!
Be pushy, no one gives money away anymore. If you can last the first 18mths the odds of success get better, so dip into the family coffers and have faith in yourself and your system.
Peace & profit