Trading Other Peoples Money explained by professional Forex trading experts the “ForexSQ” FX trading team.
Is Trading Other Peoples Money
Jeff Watson is a veteran of the pits and has forgotten more about trading than most of us retail guys will ever know. However, when you probe the archives of his mind, you find trading wisdom that is as relevant today as it ever was. Jeff is an active trader and focuses most of his time towards futures and commodities. But trading is trading and his experiences with trading other people’s money transcend asset classes and are something to pay attention to if you are thinking of running money for a living, or worse yet, a friend.
In Part 1 of this series Jeff agreed to trade a friend’s money and was up quite a bit, until his friend decided to get involved…
His account lost well over $20,000 and he was really angry at me for “losing his money.” Nevermind the fact that he started with $1000 three and half years before and nevermind the fact that that last fateful day I would have been selling hard into that strong open and probably would have made a few dollars for myself if I hadn’t been trying to get his trade down for him.
I told him that I preferred not to trade for him anymore and had my clearing firm cut him a check for the balance. To the best of my memory, the check was for $22,000 and change. We didn’t speak after that.
Several weeks later, the exchange started an investigation of me for acting as a broker (I was never a broker or dealer, just a local trader). Since most locals ”helped” our friends from time to time, I didn’t think that it would be a big deal, but the exchange was being prodded by the CFTC, with whom he lodged a complaint.
I was friends with the CFTC rep for the exchange and that complaint ultimately ended up disappearing. To make a long story short, I ended up getting suspended by the exchange for 30 days, and fined $5,000. I was OK with that, and took my lumps like a man. I had been suspended for many little things like foul language, fighting, etc, so I was cool with this.
And when my ex-friend dragged me into Civil court, my lawyer advised me to settle, which I did.
This expensive lesson made me realize that I should never, ever do anybody a favor when it comes to trading and markets. I made a guy an enormous return on his money, and he sued the heck out of me when he lost half. He was still $23,000 richer than when we started. I did him a big favor, made him a whole lot of money, and still got the raw end of the deal. I ended up having to pay him $24,000 plus various lawyer fees and court costs, plus I lost a month of work.
This is why I don’t trade other people’s money.
Moral of the story. Don’t do a favor in the market for anyone and trade their money unless you are a licensed money manager. It just isn’t worth it.
Trading Other Peoples Money Conclusion
For more information about currency trading brokers visit TopForexBrokers.com Forex brokers comparison website, Tip ForexSQ.com foreign exchange trading experts please by share this article about Trading Other Peoples Money.