Profit share between investor/trader

options-george

Well-known member
483 92
I have someone who is going to be trading a specific strategy with some of my trading capital.

Could someone share some light as to general rules of thumbs how profit/loss is split?

We are thinking of sharing 70% investor/30% trader - the traders shares in the profits, but not in the losses.
The calculation of profit/loss would be done on a quarterly basis. Is that in the right ballpark?

Are there some specific factors that drive the appropriate split? E.g. the amount of time invested by the trader, the level of skill/experience of the trader, the amount of trading capital, the number of trades?

Would greatly appreciate advice on that one!
 

Folke

Newbie
5 0
The standard in the prop shops are around 50% split for novice traders, but experienced prop traders can earn an even higher percentage of their profits. so 30% i far to low :)
 

rapidtrader

Newbie
1 0
Well it also depends of how much capital is allocated. 30% is just fine if its + 1MM that the trader can leverage.

Otherwise its too low and you don't want the trader swinging for the fences trying to pay his rent.
 

Club

Active member
163 11
For asset management the "norm" is 2 and 20.

2% management fee and 20% performance fee.
 

intradaybill

Well-known member
358 14
Depends also on track record. If 10+ years, 70-30 sounds OK. If less than 3 years, 90-10 is more appropriate with a 10% drawdown cutoff to protect you. If no track record, less than 5% with 5% drawdown cutoff.

Do not make the mistake of wiring any money to some account. Just provide power of attorney for trading only and monitor your account daily. Watch for churning. Be allowed to revoke power of attorney instantly and provide only second level passwords so you can change them at any time. Other things should be done also I have no time to list. In general, having someone else to trade your money is dangerous because they may arrange for commission cut and overtrade your account so that the share of profits do not matter to them.
 

Lord Flasheart

Legendary member
9,796 975
I have someone who is going to be trading a specific strategy with some of my trading capital.

Could someone share some light as to general rules of thumbs how profit/loss is split?

We are thinking of sharing 70% investor/30% trader - the traders shares in the profits, but not in the losses.
The calculation of profit/loss would be done on a quarterly basis. Is that in the right ballpark?

Are there some specific factors that drive the appropriate split? E.g. the amount of time invested by the trader, the level of skill/experience of the trader, the amount of trading capital, the number of trades?

Would greatly appreciate advice on that one!

now that everybody has added the variables,Ill just what what the deal is is fine if hes any good. How much are we talking about and what does % does he expect to make
 
 
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