Trading for friends and family?

[moorfield]

Hello all (long time reader, first time poster)

I have been approached by some close friends and family who are interested in the idea of me trading some funds for them (writing index options is my bag, has produced a consistent and conservative xirr for me over last few years).

Does anyone do this and can offer any insight on how best to manage this kind of relationship/enterprise - eg. as a ltd company, llp, share club? I operate my own accounts so don't really want the pfaff of going down that route, and family probably don't either.

Thanks
M

 

[Pat494]

I expect they think you are an ace trader and making bucketfulls of cash ?

But keep in mind what if you lost some or all of their money ?

I advise against. Family and friends are more important.

 

[tomorton]

I think you might need to talk to the Financial Conduct Authority and a lawyer.

 

[CityTrader]

Hello all (long time reader, first time poster)

I have been approached by some close friends and family who are interested in the idea of me trading some funds for them (writing index options is my bag, has produced a consistent and conservative xirr for me over last few years).

Does anyone do this and can offer any insight on how best to manage this kind of relationship/enterprise - eg. as a ltd company, llp, share club? I operate my own accounts so don't really want the pfaff of going down that route, and family probably don't either.

Thanks
M

Why don't you just set them up with accounts at the same broker/clearer as you, then mirror your trades for their accounts n the right proportion?

 

[AlexTagr]

What citytrader said is something that I would recommend aswell.
I have been approached, a close friend offered to invest 20K and he wanted to share the profit 30-70, 30 to me that is. But when we started discussing the possibility of him losing that money, he got scared. He had seen me make some decent money so he figured that it´s a 100% sure bet, little did he know that this doesn´t exist in the stock market . Anyways that didn´t work out.

Make sure that the friends have clear understanding of the risk and that they are OK to lose that money in worst case scenario.

 

[CityTrader]

What citytrader said is something that I would recommend aswell.
I have been approached, a close friend offered to invest 20K and he wanted to share the profit 30-70, 30 to me that is. But when we started discussing the possibility of him losing that money, he got scared. He had seen me make some decent money so he figured that it´s a 100% sure bet, little did he know that this doesn´t exist in the stock market . Anyways that didn´t work out.

Make sure that the friends have clear understanding of the risk and that they are OK to lose that money in worst case scenario.

TBH after having worked as a market-maker for 20 years and have traded independently for a number of years since I get a lot of people wanting to "invest" or let me manage funds for them - probably 1 or 2 a month- but I always turn them down as I don't want, nor need the responsibility. If I want to spend 4 hours at lunch ( like y'day!) that's because I can't still mamange my risk whilst i'm out - and don't want to have to justify anything to anyone. Be careful who you get into bed with :cheesy:

 

[Splitlink]

TBH after having worked as a market-maker for 20 years and have traded independently for a number of years since I get a lot of people wanting to "invest" or let me manage funds for them - probably 1 or 2 a month- but I always turn them down as I don't want, nor need the responsibility. If I want to spend 4 hours at lunch ( like y'day!) that's because I can't still mamange my risk whilst i'm out - and don't want to have to justify anything to anyone. Be careful who you get into bed with :cheesy:

You are very wise. Folk can be very unforgiving if you lose their money.

 

[Trading Spaces]

Use. https://www.interactivebrokers.com/en/index.php?f=2321ib friends and family account. No need to register with FCA as you do not accept client money. IB are good for options traders.

 

[Anon1]

The best line I have ever been given is this:

NO GOOD DEED GOES UNPUNISHED

If you lose their money they will hold it against you. If you want to help your friends and family financially, find another way to do it other than risking their hard earned cash, however good you (or they) think you are at trading.

 

[karmit]

Everyone wants "free" money.. be it friends, family or Greeks.

Simple advice. Don't do it!

 

[50Delta]

Hi!

I would invite your friends and family to open their own accounts. Show them how things work, by screenshare or just by going through the account and some trading together.

If they still want to go ahead after they see this, draft a one-page agreement listing benefits and risks, for you both.

BTW, I am not a lawyer. This is what I would do. I would also check the regulations of the relevant financial authority, if any.

Cheers

 

[tar]

You can run a closed system at collective2.com - friends and family will be the subscribers - and you can send trading signals from your own brokerage account .

 

[moorfield]

Thanks all - plenty of food for thought. My motivation for looking at this is altruistic - I would rather not watch my family blow themselves up if they are going to try writing options - and I certainly don't regard myself as a charlie-big-potatoes-trader-I-fancy-having-a-go-at-doing-it-for-someone-else-now.

Bon weekend (what's left of it).
M

 

[Parky]

As mentioned above in the thread, you have to be FCA registered to trade for other people and "Managing Assets" which is what you are doing, is very much a regulated activity. Many moons ago you could operate under a Power of Attorney but those days are gone. Simply setting up sub accounts will not wash and given that all Prop trading will be regulated shortly companies allowing this are going to find themselves in hot water, very soon.

 

[jesse3398]

Keeping it simple, find out what interest rate they are currently getting and offer them anywhere between 15-25% depending on the size of the deposit. The larger the deposit the lower the interest rate. They're has to be enough skin in the game for them to risk their money.

I personally daytrade and don't do options. But with a min of 10K at 20% annually you should be able to handle that fairly easy without risking any of their money. But then again it depends on who your trading with and the type of trade you do.

Once your good at managing your money managing a few small accounts and depositing profits into your personal account. Will secure your personal savings while making decent gains for investors. It will be a matter of time before your making millions.

Key to trading is developing a plan, I find most people I talk to have no real experience in trading. If you a profitable with your account there is no reason why you would blow theirs. Let your P/L statements speak for themselves, not your material possessions.

 

[jsc]

Apart from it being completely illegal to offer financial advice as unregulated and unqualified person, you will find most who are both qualified and regulated will never deal either with, or for, friends and family. Incidentally, that is why they still have both in many instances.

 

[NVP]

Hello all (long time reader, first time poster)

I have been approached by some close friends and family who are interested in the idea of me trading some funds for them (writing index options is my bag, has produced a consistent and conservative xirr for me over last few years).

Does anyone do this and can offer any insight on how best to manage this kind of relationship/enterprise - eg. as a ltd company, llp, share club? I operate my own accounts so don't really want the pfaff of going down that route, and family probably don't either.

Thanks
M

wouldn't recommend this route............screws up more traders than not..................

 

[NVP]

Thanks all - plenty of food for thought. My motivation for looking at this is altruistic - I would rather not watch my family blow themselves up if they are going to try writing options - and I certainly don't regard myself as a charlie-big-potatoes-trader-I-fancy-having-a-go-at-doing-it-for-someone-else-now.

Bon weekend (what's left of it).
M

let them ..............don't screw up your life to do this..........if they are going to do it they are going to do it ...........nothing you can do............despite family loyalty and love......

my bookmaker dad and Grandad both watched me gamble away a lot of money in the 70's despite my proven background and experience in bookmaking/pro gambling in the previous years ...........once I got the bad spell out of my system and got my teenage head straight again I was ok...........havnt done it since

N

 

[moorfield]

No I'm not going down this route after all, more trouble than its worth I agree.
Thanks.