How to create business entity that will trade on behalf of group of individuals.
There is no easy way to do this, you need to either setup a PMS business or an alternate investment fund (Hedge fund). Both the routes are quite complex, requires SEBI approvals and all.
PMS minimum ticket size is Rs 25lks for a client (derivatives can be used only as hedging instruments). AIF ticket size is Rs 1 crore per client (min corpus of atleast Rs 20 crores to start off). With AIF, naked derivatives trading can be undertaken.
All other ways of pooling money collectively to trade/invest or trading on behalf of another person is not legal.