How I had started trading Forex for funds and clients
In 2008 I was invited to trade for a private Hedge Fund that was based in Hong Kong. To cut a long story short, this led to me getting my own personal clients and subsequently creating a Forex record that saw me ranked as the number two Forex Trader in the world between 2008 and 2012.
During this time, my trading capital significantly increased and more and more managed account clients came on board in search for large returns. In the end, however, I decided it was time to stop trading for funds and clients…
Back in 2008, my expectations of professional trading were majorly at odds with the reality of it.
So what was the reality?
Firstly, let’s talk about the money. Money is the reason why most people want to start trading Forex in the first place.
When I started trading my first $1 million account, you would assume that I was making a small fortune. The reality was quite the opposite.
Because I was trading for a fund, there were all sorts of other entities taking a cut of the profits I had generated. The fund itself, for example, and initiators that brought the clients in, all took a chunk of the cash. Add to that the brokerage that we were trading through and the coins were soon starting to dwindle down. In the end, I was taking half of the performance fee and nothing else. This equated to around $3000 a month – nothing spectacular as you can probably imagine!
If you really want to make big money, you either need your own fund or you need to trade at an extremely large size. Both of these routes, however, can present their own problems and complications, such as regulation and cost.
The regulation is a tiresome and expensive process. It also still doesn’t solve the fact that half of the world is basically precluded from opening and having their trading accounts managed by another party.
The main problem I encountered when trading my own clients was that none of the brokers would allow US based clients to open accounts. This frustrating restriction was also expanded to Australian, Japanese and some European clients. It didn’t matter how well regulated I was, I couldn’t trade for clients if they didn’t have a brokerage account.
So, the regulations within the managed accounts industry meant that I was not allowed to share any of my trading performance or detail my trading strategies without breaching regulatory conditions. I had to make a decision.
What options did I have?
Option One: Ditch all of my ‘retail’ work with my blog, speaking and media, and go down the managed accounts route (which, by the way, was closing up more and more each year).
Option Two: Stop trading for clients and expand my other businesses (which had the potential to grow every week).
For me, the choice was obvious. I would trade my own accounts and continue my online businesses. That way, I could work from anywhere in the world. I could also keep my time detached from my income potential.
The purpose of this blog is not to dissuade you from trading for clients; it’s to alert you that it is becoming increasingly difficult to do so. It’s to make you aware that if you want to make big money by trading Forex, you either need a substantial account yourself or make it your goal to trade huge institutional level funds (rather than the smaller, more flexible managed accounts vehicle that I made my name working on).
Times are changing but the potential for profits are still there. You just need to know where to look!