Partnership Trading Account

Online Trading is a one-man show. Partnership accounts normally do not do well , although they have a chance to succeed if the responsibilities of each partner are delegated explicitly beforehand. Only one partner makes the analysis ; the other one makes the executions. Neither can be involved in both. Another form of partnership is that one of the partners do the analysis and execution ; the other is a ” sleeping partner “. I have seen partners trade in this manner too - one do the trade entries and the other do the trade exits. So there are many possible combinations …

One of the problems with partnership accounts is the fact that one person in the partnership is responsible for the complete assets of the account. This works well when the profits accumulate , but when the losses start to mount up , arguments and finger pointing often begins.

The markets are erratic , and even the most seasoned investment professional can hit a losing streak. When that happens , even the partner with the firmest conviction that his partner analyzing the markets can weather the losses will find doubts.

There is always an interaction of two or three different players in partnership accounts. When conflicts arise between partners in everyday life , they can be dealt with in an extended time frame. If partners in a trading account argue over whether a trade should be executed or not , or whether a trade should be closed out with current losses or not , they have to reach a decision quickly. Sometimes there are a lot of emotions seething below the surface.

Since one of the partners can be said to have greater input in trade executions , the other one will not want to share the losses equally.

To avoid problems , it is best to avoid partnership accounts. Either learn to trade yourself or find the services of a full time money manager.

Online trading is really a personal and private business. To have partnership trading account is something like having 2 pairs of couples sharing the same bedroom … are you comfortable with this ? Maybe , for some ….