|I considered starting a hedge fund, but there would be disadvantages for my business, as well as for my clients. First, it's prohibitively expensive for a very small operation like mine to establish, requiring the expenditure of upwards of $30,000 for the services of a law firm and an accounting/auditing house, not to mention the establishment of more than one legal corporate entity to support it. Second, because of the first reason, it would only be available to relatively wealthy individuals i.e. the minimum account size required to participate would be on the order of $100,000 minimum.|
I'd much rather use that $30,000 to generate immediate trading profits than hand it over to attorneys and accountants. So, my solution is to establish an 'allocation account' at my broker's firm. Under this strictly-regulated structure, two or more client accounts can be linked so that every trade that is done from one of them is proportionately and simultaneously entered and exited in all of the other client accounts in the allocation. The benefits:
1. Daily accurate accounting and reporting to clients is automatically done by the brokerage firm.
2. Each account is wholly-owned and controlled by its respective client (the person trading it - that would be me - has no authority to withdraw funds from it for any reason, legitimate or nefarious), providing the necessary security and trust. You would be authorizing me to trade it for you.
3. As my client, you will receive the same very competitive commission structure that I currently enjoy with the brokerage I use. There are no additional fees for my brokerage's allocation service!
4. And probably most important - a much lower margin hurdle to overcome in joining, dictated not so much by wealth as by the minimum account size recommended for trading a given number of futures contracts (in this case the Dow emini).
Revisit this web site in September for details, i.e. our fees, minimum required account margin, and the procedure for joining our allocation account. Then get ready to evolve!
-----W. Mario Cavanaugh,
Owner/Trader, The Nightraider Project
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The Nightraider Project. Take it back.