How much is a client worth?
- Thread starter tradersboredom
- Start date
lol
I think Madoff is still accepting new clients. Don't go to his office, just put the money in an envelope and slip it under the door of his New York City penthouse...
Actually, it sounds like the client wants 100% of his initial capital back in one year and then the client will only have the accumulated profits (house money) at risk.
For such a tiny amount of money, they should take the $50,000 to Las Vegas. Their expectations are unrealistic...
this was a standard deal in the mid 80's to early 90's, a market maker would give a trader $50k and take half the profits for 1 year,they would also provide a 2-3k draw to live on which would come out of the total profit at the end of that 1 year,there would also be a stipulation where the hired trader would not be able to take out an agreed additional sum until a certain profit level was reached,50 k could net you 20k a month easily,this is a good deal if the investor can afford to lose it and the hired trader is good,you must have gotten 50 pm's by now..edit, the not so small difference is commisssions,back then you would rent a seat and pay $4k a month,your commisssions would be 8 or 9 cents per option,thats obviously gone way up , you trader would have to find a group to trade under to get the bettter rates or rent a small seat on the CME
if you invest in a trader you are expexting high risk for high reward,it's not unrealistic at allQuote from stinkyfelix:
Actually, it sounds like the client wants 100% of his initial capital back in one year and then the client will only have the accumulated profits (house money) at risk.
For such a tiny amount of money, they should take the $50,000 to Las Vegas. Their expectations are unrealistic...
So the trader needs to provide 200% return really, or the client could say, he doesn't care how much the trader makes above the 100% return, which would be fair, but hard to monitor.
Let's say the trader is capable of making 300% per year. But once the 100% is reached, the client can be vary of a large DD thus not allowing the trader to reach his full potential.
One way to avoid this letting the trader to keep monthly anything above 8.5%...That sounds fair and with futures not that impossible....
drawdown
Well, in my monthly payment scenario, there are 3 possibilities:
1. Everything is going fine, trader makes let's say 12%, keeps the profit above 8.5% thus 3.5%.
2. Trader makes less than 8.5%, let's say 6%. In this case he gets nothing for the month, and next month he keeps only anything above 10.5%. This way the client's annual 100% is "insured".
3. Worst case, trader loses money, let's say -5%. At this point client might lose his trust in trader. If there are more consequtive losing months, well, I guess that is the end of the contract...
Well, in my monthly payment scenario, there are 3 possibilities:
1. Everything is going fine, trader makes let's say 12%, keeps the profit above 8.5% thus 3.5%.
2. Trader makes less than 8.5%, let's say 6%. In this case he gets nothing for the month, and next month he keeps only anything above 10.5%. This way the client's annual 100% is "insured".
3. Worst case, trader loses money, let's say -5%. At this point client might lose his trust in trader. If there are more consequtive losing months, well, I guess that is the end of the contract...