So let's assume that a trader has indeed

[virtusa]

Why did you open a fund to begin with and how did you get investors? I mean. Did you have a track record at that point? I imagine your motivation was to gain even bigger returns collecting management fees and returns on a larger capital base?

Opened a fund because the expenses for me alone were too high and my account too small.
Second reason was a legal one. I was not allowed to trade other people's money. So my brokerage sponsored my series 3 exam and told me to open a fund and register as CTA. At that time they introduced me already to several investors who later became client from my fund. For several months I traded accounts from people who were client at the same brokerage as me. All these people were unable to make money consistently while I was consistently profitable. I never did any prospection for clients, my brokerage did that as they had many clients that were not going to survive. So to protect their commissions the brokerage proposed some clinets to let me trade their accounts. All my clients were Europeans, so no Americans. I meet them all personally and we both agreed the rules to follow. Minimum account was$50K. They knew they could lose everything.

I had no real track record. My broker was already following me a few years, so they saw the evolution and on their recommendation investors signed up. One of the biggest problems I had before I was consistent profitable, was the fact that I was many times afraid and missed a lot of good trades. As my broker called me a few times per day, I gave him each time the signal and which direction to take. Each day my broker made a list of the day and the question that I heard hundreds of times in the beginning was: "You told at XX:XX that you had to go long. You did not take that trade. I calculated how much money you missed."

Thanks to these remarks, that were very painful for me, I started bit by bit to take more trades. It took me several years before I had enough confidence to take (almost) all the signals I had to take.
From that moment on my broker asked me to trade for clients. They saw the potential and got in realtime signals to buy or sell. They knew that I was the problem, not the system.

All my clients were very wealthy and were ready to lose their total investment. For many of them it was just a game.
I charged no management fee, only an incentive fee. So I made only money if I made money for my clients.

 

[virtusa]

Any of your kids shows interests to inherit your model and continue the path of trading?

Yes, work in progress.

 

[SelfMadeDude]

Opened a fund because the expenses for me alone were too high and my account too small.
Second reason was a legal one. I was not allowed to trade other people's money. So my brokerage sponsored my series 3 exam and told me to open a fund and register as CTA. At that time they introduced me already to several investors who later became client from my fund. For several months I traded accounts from people who were client at the same brokerage as me. All these people were unable to make money consistently while I was consistently profitable. I never did any prospection for clients, my brokerage did that as they had many clients that were not going to survive. So to protect their commissions the brokerage proposed some clinets to let me trade their accounts. All my clients were Europeans, so no Americans. I meet them all personally and we both agreed the rules to follow. Minimum account was$50K. They knew they could lose everything.

I had no real track record. My broker was already following me a few years, so they saw the evolution and on their recommendation investors signed up. One of the biggest problems I had before I was consistent profitable, was the fact that I was many times afraid and missed a lot of good trades. As my broker called me a few times per day, I gave him each time the signal and which direction to take. Each day my broker made a list of the day and the question that I heard hundreds of times in the beginning was: "You told at XX:XX that you had to go long. You did not take that trade. I calculated how much money you missed."

Thanks to these remarks, that were very painful for me, I started bit by bit to take more trades. It took me several years before I had enough confidence to take (almost) all the signals I had to take.
From that moment on my broker asked me to trade for clients. They saw the potential and got in realtime signals to buy or sell. They knew that I was the problem, not the system.

All my clients were very wealthy and were ready to lose their total investment. For many of them it was just a game.
I charged no management fee, only an incentive fee. So I made only money if I made money for my clients.

Very inspiring and useful posts. Thank you much. I know that many people have gotten a lot of beneficial information from your trading experiences and advice.

 

[Lucas_Paul]

So my brokerage sponsored my series 3 exam and told me to open a fund and register as CTA. At that time they introduced me already to several investors

can i ask you what brokerage was that?

 

[SunTrader]

I have a hard time understanding how someone with a too small account with no track record opened a trading fund with clients the broker recommended?

Was this in a third world country?

 

[ZZ Trader]

I have a hard time understanding how someone with a too small account with no track record opened a trading fund with clients the broker recommended?

Was this in a third world country?

Some low-quality brokers try to push clients towards having their account managed by some of their "traders" clients at the broker, usually through some "trade copy" tech mechanism.

By doing this they can collect more assets from clients: usually each sales person at the broker has a minimum yearly quota to reach in terms of accounts $ to bring at the broker, and so they would do anything to reach that goal (otherwise they'll lose their job).

 

[wmwmw]

I have a hard time understanding how someone with a too small account with no track record opened a trading fund with clients the broker recommended?

Was this in a third world country?

He did have track record in his broker account that the broker had been monitoring for several years.

 

[Millionaire]

You guys either don't understand or haven't seen the gap between what most people do on here and actual pure day traders.

Even with 200k 20% would only be 40,000.00 income

Don't have to believe me just saying it's a joke the way you guys talk about day trading.

I don't know about stock day trading. I day trade futures.

And I day trade mainly because of the higher leverage you can get day trading.

20% returns would be a disappointing year. But at least it wasn't a losing year.

When I can catch a 1% move in the underlying with 20:1 leverage, I make 20% in one day.

I will say that i don't make money every month, i am not that good, but when I get a good month the results are eye popping.

Leverage is awesome. The trick is to really tap leverage during hot streaks, but not when you are doing poorly.

 

[Laissez Faire]

I don't know about stock day trading. I day trade futures.

And I day trade mainly because of the higher leverage you can get day trading.

20% returns would be a disappointing year. But at least it wasn't a losing year.

When I can catch a 1% move in the underlying with 20:1 leverage, I make 20% in one day.

I will say that i don't make money every month, i am not that good, but when I get a good month the results are eye popping.

Leverage is awesome. The trick is to really tap leverage during hot streaks, but not when you are doing poorly.

Nice! How does a good year look for you then?

 

[Millionaire]

Nice! How does a good year look for you then?

I don't want to jinx my trading results.

Interactive Brokers really clamped down on day trading leverage, I only ever made 200% in a good year with IB. And they got even more tighter the last few years. So I closed my account.

I have moved to AMP. The returns with an AMP account are multiples higher than what i could get from IB. So that will give you an indication of what can be made in a good year.

These kind of big returns are all down to using high leverage + very good market conditions, not my trading skills (entries and exits etc) which are good but not outstanding.

In a year when the market action is not so good I can not make these kinds of returns.