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leasing my ea vs running a managed account

Jun 05 2013 at 18:26
32 posts
For some time i've entertained the idea of setting up a managed account with a US broker, but the exorbitant NFA fees have kept me from doing it, even though I've already passed the various series exams. it may not be much of a fee for a hedge fund, but it's prohibitive for a one-man operation just starting out. i'm now considering just drafting individual contracts directly with clients for development and operation of a forex EA that places trades on their accounts from my server. i could charge them whatever we agree on in the contract for the EA lease, and it could be tied to any random quantity like the ocean tides, daily weather, or the monthly profit in their account.

My clients would be essentially hiring me or my LLC as a contractor to be their programmer and IT guy that runs the servers, and I wouldn't be manually placing trades in their account or offering financial advise. They will just happen to be paying me a variable fee that could correlate with their account's performance. Is there any way the various regulators can stick their noses in these contracts to 'protect' us from ourselves? Is there a better way to do this without sending clients to some shady foreign bank? i'm not looking to scam anyone. i'm trying to do right by my clients within the law and using the most affordable legal arrangement available.
Mike Yap
Jun 05 2013 at 19:04
65 posts
Why don't you try becoming a signal provider? There's no licensing involved.
Jun 05 2013 at 19:39
32 posts
while i'm not ruling that out entirely, i shy away for a couple of reasons.
1. my clients and i would prefer to have a performance-based fee structure rather than a fixed monthly or per-trade fee
2. the signal service charges an additional fee for trade propagation and scaling (a feature my EAs already have). this is additional profit that can go to me and my clients.
3. most services i've looked into have some crazy restrictions like the allowable fractional lot size or pending orders that can throw a wrench in how my eas operate
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