How to Start and Manage Your Own Small Fund - Introduction

As a trader, your goal is to do two things. First, you want to have a big account. Second, you want to realize huge capital gains. In other words, you want to outperform the market. As you start your trading career, chances are that you don’t have enough money. In this article, I will highlight a few reasons on what you need to do to start and manage your own small fund.

  • Perfect your skills

The first thing you need to do is to perfect your trading skills. Without doing this, you don’t have chances whatsoever of being a successful money manager. To get here, there are a few things you need to do. First, you need to find quality learning materials that will guide you through the trading process. Good for you, these materials are in plenty. There are hundreds of websites, books, and audio materials that will help you move from an amateur trader to a professional within less than one year. After learning, you should take time to practice using a demo account. Then, you should start trading by using your own funds. This will give you the ability to manage your money.

  • Fundraise

After succeeding in the learning process, you should now start to fundraise. In this stage, you should focus on your family members and friends. The goal here is to raise money that you will use to trade. You should do your best to ensure that you have a written agreement with your investors. You should be open to them as possible. Tell them that you are a trader, what you specialize in, your trading strategy, and the expected return. This agreement should be prepared and signed to protect yourself from the potential downside.

  • Start trading

After raising money, you should now start trading. In doing this, you should do several things. First, ensure that you have your own money invested in the trading account. Having your money invested enables you to be invested in your trading process. Second, you should ensure that you risk as little money as possible in every trade that you open. Third, you should ensure that all your trades are protected using a stop loss. A stop loss ensures that you don’t lose money until a certain limit. You should never trade without having a stop loss.

  • Be transparent

You need to build trust with your investors. Doing this will help you in several ways. First, when your investors trust you, chances are high that they will refer you to their friends if your performance is good. Second, they will also add to their investments. To become as transparent as possible, you need to provide them with regular update. This could be monthly or quarterly. Depending on the number, you can take them through your performance during this time so that they can feel invested. You should also be transparent with them about your fees.

  • Grow and be humble

Your goal is not to double your investors’ money. Instead, you want to grow slowly and compound their returns. You should ensure that you grow in a slow but sure process. As you succeed, you will be tempted to tell other people about your investment success. This might be your own undoing. Instead, try as much as possible to remain humble.

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