Stock trading is quite tricky. It could easily cause you to win or lose big money, quickly. Of course, your propensity for losing is higher when you do or plan things alone. As the saying goes, two heads are better than one. When you look for a partner, you are actually venturing into a lower risk set up and gearing up to become “a market winner”.
Finding a stock trading partner is not really something technical or complicated. All you need to have is a simple agreement. Your agreement could be conveniently sealed either by a firm hand shake or a written document detailing the extent of your teaming up. When the partnership is stipulated, most probably, you would be required to shell out some cash, or perhaps, some assets. The additional investment is meant to enhance your accounts. Your partner would be compensated but the form and the value of his compensation is certainly negotiable. Aside from cash payout, he may simply be remunerated by the specialized knowledge you commit to impart while in the partnership.
Here are the procedures:
1. Partner with someone you know. Ask around for referrals. Consider the recommendations of your colleagues. Your partner’s reputation should exceed him. Never approach someone who is a complete stranger. You don’t want to risk your investment and your future. Trust someone you know or currently acquainted with.
2. Register your partnership. Fill out the necessary forms to formalize your partnership. Go to the brokerage house and submit your papers. Clearly indicate your complete names, business addresses, telephone numbers, and social security numbers.
Sometimes, your financial worth as partners needs to be assessed. But this policy isn’t universally enforced. To be safe, your partnership should reflect sufficient assets. You should also disclose your additional investment to perk up the newly formed partnership. Your additional investment may be in cash or in securities. It could even be a proven system for trading
3. Agree on a set up. Discuss how your partnership would work. Determine who would become responsible for trading decisions. It is a shared responsibility, clarify the routine or the process. When profits come in, what would be the distribution ratio. Cover everything. Make sure you to address all your important concerns. You may even talk about the legalities when one of you decides to back out from the partnership or one of you dies. Once the brokerage house approved your partnership, you may promptly commence your trading activities. Of course, it is ideal to stick to your agreed plan.
Stock trading requires insight, instinct, and ingenuity. In fact, some people readily admit that they are not cut out for it. They find stock trading to be either too technical or too complicated. If stock trading is, indeed, your passion, what you would eventually do with your partner is certainly going sharpen your stock trading skills. However, be warned. Never stake out money that you would not be able to afford to lose. Losing may become a wrecking experience for you.