Twice as Strong: Tips for Working with a Forex Trading Partner
Most forex traders never think about partnering with an experienced trader to increase profits because the activity is usually thought of as a solo endeavour. However, a forex partner can actually add a lot to your trading strategy, and even help pull you out of a losing position. Here’s how to find a partner you can trust, and how to keep the relationship mutually beneficial.
Always Have A Signed Contract
Like any business deal, it’s best to have a working business contract that spells out the business relationship. So, for example, if you’re starting a limited partnership, you would want a lawyer to draft up the partnership agreement, and this will serve as both a show of good faith in terms of starting a business relationship and it will also provide special legal protections for the both of you. This is true, even if you’re using basic trading platforms like the Metatrader forex trading platform.
Form a Limited Partnership
Limited partnerships are a good form of legal organisation that you can choose. Why? Because there are only two of you. If there are three or more people involved in the business, then perhaps a corporation is more appropriate. But, if you’re working with just one partner, then a limited partnership is probably the most appropriate.
Define your responsibilities. It’s common for partners to just assume that each will gravitate to their own strengths, but this is not how business works. In every partnership, there is work that needs to be done that neither person really wants to do (or knows how to do well).
Spelling out who will do what saves both of you from having an argument later. It also makes the business run much more smoothly, as you’ll never be stepping on one another’s toes.
Share All Expenses
A partnership means that you split all expenses evenly. Even if your partner is doing most of the heavy lifting, you should offer to pick up half of all overhead and other expenses. Presumably, you’re contributing something valuable to the organisation yourself. And, you’re picking up the slack in areas that your partner does not have competence.
He will, in turn, pay you for half of all expenses.
In some cases, it’s appropriate to split the finances according to the share of ownership. So, if you own 40 percent of the company you may only cover 40 percent of the expenses. If your partner owns 60 percent, his share of the expenses is 60 percent of everything.
In this way, splitting the expenses isn’t “even,” but it’s fair, and should match the income or profits being taken out of the business in the end.
Have Defined Exit Strategies
It sounds so unfriendly, but having an exit strategy will not only spare feelings later on, it will also potentially preserve a friendship. It will also help make the breakup smoother. No one likes to think of a business relationship ending, but it happens.
There are many reasons why you might want to go your separate ways. An exit strategy, complete with a buy-sell agreement, will prevent any confusions from cropping up when the time comes.