Coming to the world of trading and investments, beginners see reaching the desired profitability as their first goal. The only success that is considered truly decent is the situation when a person earns their living by just investments in financial markets.

I would like to remind you that trading is such an occupation that anyone can learn, yet it lacks a career ladder in its classical way. Success expresses itself in the quality of trades and the money you make. Even if you get the maximum from your trading talents, you might still earn less than you need for satisfying your basic needs. Hence, many face the question, what is next.

One way is to start working with investors and attracting money for trust managing. Being a manager, one can increase their working capital several times, and profit will also increase several times in absolute values with the same profitability in relative values. This article is devoted to the correctness of the idea and the underwater rocks on your way to the long-craved financial freedom.

Trading on your own: pros and cons

Let us get started with finding out what means trading on your own, what peculiarities this process has and what conditions it requires. Here we set the rules ourselves, choosing the trading strategy, instruments, and acceptable risks. You only have your own money on the account, so no one will suffer from losses if you fail. Theoretically, your income is limited by nothing but your deposit and psychological peculiarities. This is mostly the main reason to become a financial market player.

Now – to the advantages and drawbacks of retail trading. The pros are:

  • An easy start. To become a trader nowadays, you only need to register an account at a broker and deposit it upon verifying.
  • A low entrance threshold. To start trading, even 10 USD might be enough. In this case, sure, there is little chance for earning your living.
  • Making fast decisions. You do not need to consult or notify anybody of the decisions you make in the market.
  • Profit. As long as you change your instruments and risk levels yourself, you are the one to reap the benefits of your work. Moreover, you also decide when to withdraw or deposit funds.
  • Tax incentives. In certain countries with developing market economies retail investors have the right to pay lower taxes.

And here are the drawbacks of this job:

  • Shortage of funds. A trader can earn up to 5% of their deposit; if the latter is 1,000 USD, you will hardly feel that you make any profit at all. To save a decent sum, you will need at least several years. If you are not employed, you will find yourself in real financial trouble.
  • Time. You will spend several years to learn the theory of trading and drill your skills. Learning in this sphere is continuous.
  • Commission size. As a rule, brokers provide individual conditions to VIP clients only. An ordinary trader has to trade on general conditions that do not always comply with their trading strategy.
  • Psychological load. If your welfare depends solely on your trading, this will be a source of constant stress.

As you see, private trading has both pros and cons. Remember that for making a more stable profit and having a palpable income you need to operate sums starting 100,000 USD. Few traders have such a capital, hence, others decide to attract other people’s money for investments.

Asset manager – an important stage of a trader’s development

Overcoming the difficulties of individual trading, a fresh-from-the-oven manager will start looking for money. You can find partners both on the Internet and offline.

Investment account

The majority prefer opening a special account at a broker with public statistics that investors can deposit. In this case, you can avoid personal contact with investors and work just via answering their comments online. To attract partners this way, you need to demonstrate your success and enter the top-10 rating of investment accounts. Money attracted this way are seldom over 5,000 USD.

Offline conferences

Another way of finding clients is via offline investment conferences. There you can meet investors in person and establish a trusting business relationship. Practice shows that personal qualities of the manager do the main job here.

However, a potential investor will ask for the statistics of the public account of the potential manager. If you have other investors in your portfolio, this will give you further support.

Also, you must understand that the partner shifts responsibility for their funds on you, and if something goes wrong, be ready for an emotional reaction. When the investment period expires, the partner might ask for revising the conditions. You must treat these requests with understanding.

You can have no more than 10 investors that you know personally. Under your management, they can form a substantial capital because the average check will be much higher.

Selling trading signals

You can also avoid managing other people’s money; instead, you can sell trading recommendations via copy-trading services. In such a case, you make money in the form of subscription fees, a share of the profit, or a part of the broker’s commission. The advantage is that you do not handle other people’s money but trade your own, receiving additional revenue for your expertise. Meeting your subscribers in person is not obligatory but helps extend your investor network.

This is quite far from the classical trust management (as in the first two cases), yet is a decent option. In the end, however, your subscribers still shift the responsibility for their money on you.

Note that the very fact of starting to trade publicly is an important stage of a trader’s development. To grow professionally and get acknowledged by other traders, you simply need to demonstrate your statistics publicly.

Comparing the income of traders and managers

A question naturally emerges: can an independent trader earn more than a manager? The answer is simple: yes, they can but only if their capital is comparable to that of managers. If the profitability of your trading system satisfies your basic needs, you do not necessarily have to develop as a manager.

We need to be sincere and agree that hedge funds manage sums that exceed the capital of an average trader many times. In those funds, you can receive not only your share of the profit but also management fees. That is why managers make more money than retail traders.

Note that in the case of a failure, managers suffer not only financially, but also their reputation gets compromised, and this is the reason why many traders decide against developing in this direction. Anyway, the number of those eager to become managers grows daily.

Closing thoughts

The development of a retail trader into an investment manager is some sort of career growth in the world of trading. If you have an efficient trading system, you can increase your capital by your partners’ money several times. This builds up your responsibility and increases reputational risks.

You can attract investors online, offline, or by selling trading signals. The latter option can hardly be called trust investments, yet this is a way to monetize you own trading.


Material is prepared by

Has been in the market since 2012. Has a higher education in finance and economy. Started trading in the Forex currency market, then got interested in the stock market, and now specializes in analyzing IPOs and portfolio investments.