Team Trading Contracts Part 1: Three Forms Your Trading Team Can Take
Many binary options traders fly solo, but another possibility is to trade with a partner. There are many different reasons that traders may choose to work together directly. It can be helpful to pool resources and knowledge. Two or three traders may have an easier time spotting setups if they monitor the charts together. They may have an easier time coming up with the capital to trade in the first place. They also find moral support and accountability by working closely with one another.
Trading with others can come with drawbacks too, though, which is why it is important to do some serious thinking about the form your partnership is going to take. There are many different ways you can approach trading with a team. Your team may work loosely together or may share an account. The approach that is best for you will depend on your needs and the strengths of your team members and the working relationships you share.
Three Different Approaches
Here are three different ways you could structure your trading team:
1. Shared Account
A shared binary options account is as closely invested as you can possibly be with the other members of your team, since you are literally sharing a single trading account. If you trade this way, you will be sharing all profits and losses and making all your trading decisions together. You are giving access to your money to the other members of your team, which means if they screw up—you lose. If one person trades well, the entire team benefits. If one person trades poorly, the entire team suffers.
The main benefit of this structure is simplicity. If you are sharing an account because you each have contributed capital, it ensures that all capital is being pooled together and treated the same way. This may also be a helpful structure if you are on a team where everybody works a day job or where members may be filling in for each other for different times of day. This enables you all to keep trading even when one of you cannot be at the computer.
The main drawback of course is the fact that if there is one bad egg in the carton, the entire batch will spoil. It isn’t just one person who loses. Everybody loses. A single person’s solitary bad decision could blow the entire account. Moreover, if a team member turns out to be untrustworthy, they could land the entire team in a very sticky situation with serious legal ramifications.
2. Separate accounts, shared decisions.
One way you can avoid the drawbacks above is to make sure that all team members have their own trading accounts—funded by their own capital. Everybody can continue trading together to whatever extent is possible, but this gives each team member the chance to veto a potential trade, or take one that other trade members are not interested in. This way everybody is responsible for their own capital as well.
So what you have is a team which is very close-knit and works together, but every person on that team is responsible for his or her own success or failure. This is a great way to avoid major conflict—though of course it means that nobody else can log onto your account to place trades for you when you are asleep or in the office, which is a drawback. It also means you must rely on your own capital to build from.
Learn how to keep your balance while you trade.
3. A loosely organized trading team.
Another option is to organize a trading team only at the most basic level—a group of people with whom you can regularly talk about trading and trading decisions, share strategies and discoveries, and so on. You may even have accountability to your team, but in this situation, capital is kept separate, and even trading decisions may be entirely separate most of the time. Traders on the team may or may not follow along closely with other team members’ decisions, and may touch base frequently or rarely. In this situation, the team is more of a small, private community pooling knowledge than a partnership.
Reading some of these ideas, you probably have some ideas of your own as to how you could organize a binary options trading team. You may have already thought of some variations on each of these three types of trading teams or ways you could improve each model to suit your needs. Trading with a team is not necessarily better or worse than trading alone, and there is not a “right” or “wrong” decision. Every trader has his or her own trading style, and style also includes aspects such as this.
No matter how you choose to trade with a team, it is very important that everybody knows the ground rules going in, and that everybody knows exactly what level of responsibility they assume by becoming a team member. If capital is going to be shared, then you will need to draft up a business contract. If not, a simple set of rules is probably sufficient to proceed. Over time, priorities may change shape and teams may change shape with them, so regularly revisit the rules of the team and see if there are any changes which need to be made based on everybody’s needs. And if trading with a team is not for you, do not be afraid to fly solo.