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Starting a fund

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  #11 (permalink)
 
jackbravo's Avatar
 jackbravo 
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Why not trade 500 contracts? Emini has enough depth for it. Also, what the above poster asked.

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  #12 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
Posts: 644 since Nov 2011

I know of one futures prop firm that I spoke with today-- not a traditional prop. If you have 25k to put up and at least a 2 year (most recent 2 year) track record produced with real money of decent size then they are willing to fund traders with considerable backing up to 1 million. You will still take a good amount of the risk though. 70% of the 25k is your risk. This is only for traders who have a real money track record with decent size, I'm guessing minimum 25k starting account. They'd like to see at least 50% to 70% returns, active day trading, and no overnight holds. I've no affiliation with them but PM if you want to know more or if BigMike doesn't care I'll share. Please do not contact if you don't meet these requirements because that's their minimum. You must have both the capital and the most recent 2 year real-money verifiable track record. Even if you have 200k and no track record, they aren't interested and if your account was funded less then 25k they aren't interested either.

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  #13 (permalink)
katalyn
Gyor,Hungary
 
Posts: 27 since Jul 2015
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tpredictor View Post
I know of one futures prop firm that I spoke with today-- not a traditional prop. If you have 25k to put up and at least a 2 year (most recent 2 year) track record produced with real money of decent size then they are willing to fund traders with considerable backing up to 1 million. You will still take a good amount of the risk though. 70% of the 25k is your risk. This is only for traders who have a real money track record with decent size, I'm guessing minimum 25k starting account. They'd like to see at least 50% to 70% returns, active day trading, and no overnight holds. I've no affiliation with them but PM if you want to know more or if BigMike doesn't care I'll share. Please do not contact if you don't meet these requirements because that's their minimum. You must have both the capital and the most recent 2 year real-money verifiable track record. Even if you have 200k and no track record, they aren't interested and if your account was funded less then 25k they aren't interested either.

Prop firms are not of my interest.The amount they are ready to fund is minimal compared to what serious compounding can do to your account.

I'm interested in large funds,that's where the big money is.If it's not for big money,I would be still interested in individual trading.

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  #14 (permalink)
katalyn
Gyor,Hungary
 
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jackbravo View Post
Why not trade 500 contracts? Emini has enough depth for it. Also, what the above poster asked.

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I'm building my account to do so.It would take about 8 years for me to reach such size in my calculation-where as if one can manage to his own fund,time factor for compounding improves vastly.

No way I'm going to wait for years to have that kind of posh lifestyle.

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  #15 (permalink)
katalyn
Gyor,Hungary
 
Posts: 27 since Jul 2015
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Coastline View Post
@katalyn

To clarify, do you net 6-8 points a day in total (by trading 14 contracts per trade) or do you net 6-8 points per contract (i.e. 6-8 points per day x 14 contracts = 84-112 total points per day)?

Why do you trade 14 contracts? Is this the number you have built up to so far? Do you implement some type of money management (i.e. position sizing) plan to arrive at a current quantity of 14?

Would you mind sharing your statistics regarding account size and the rate of return you are able to achieve on this account size? I am trying to learn more about account management, specifically for intraday trading.

If one is netting 6-8 points trading 14 contracts he shouldn't even think about a fund.

It's 6-8 points on average per contract traded.Some contracts that I swing-end up with higher profit,while some contracts that I scalp-end up with lower profit.

I currently trade 14 contracts because my MM rule currently dictates me so.My loss amount is fixed in every TIER,if it falls below a certain number-I downgrade;if net balance reach for next TIER-I upgrade.If all goes fair,I'll add many more contracts over coming years.

I do use Fisher's rule & compounding for money management.Do your due diligence before applying,it's aggressive way of MM-one has to have a proven edge before applying.

I'm currently investigating on CTA fund.I became careful to share any records publicly after knowing some laws & regulations.I would not to do anything that may damage my chance of starting a fund.

I may decide to open a trading room sometimes in future,my records will be available there unless some nut law get me in trouble. I'll join fundseeder soon as I finish polishing my losing days-my records will be available there for any interested party.

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  #16 (permalink)
 
Blash's Avatar
 Blash 
Chicago, IL
Legendary Market Chamois
 
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katalyn View Post
Hi,

On average,I net 6-8 points a day in ES.Once or twice a week in huge trend days I make much more.5 min chart seems too slow for me & 1 min charts have many false signals,so I added Crude Oil recently & experiencing similar outcomes.I look forward to add Silver after some time period.


katalyn View Post

No way I'm going to wait for years to have that kind of posh lifestyle.


katalyn View Post
If one is netting 6-8 points trading 14 contracts he shouldn't even think about a fund.

It's 6-8 points on average per contract traded.Some contracts that I swing-end up with higher profit,while some contracts that I scalp-end up with lower profit.

@Big Mike created FIO and it's different from other trading blog sites. A serious, hardworking and legitimate group, honest. I'm sorry but I find it increasingly interesting your lack of talk regarding risk. All the, on the level successful traders I have come to realize define their trades in terms of risk, managing risk.

Taking your mean points profit as you have described above, 7 on "average per contract" for 14 contracts you have made no mention of risk and define these trades from a purely profit point of view. This runs contrary to how legitimate traders talk. Trading, as you have said, for less than half the available trading days in a year, 100, puts you right in the $0.5 million/years range (USD)

Please, I want to believe you but see it from this side.... new to the FIO site with less than 500 posts and talk about a posh life style ...zero talk about your drawdowns.....your risk percentage per trade.....starting funds...etc.

Etiquette dictates you show, demonstrate, some level of competence and ability. I encourage you to make many posts helping others learn here. There is plenty of posts needing answers.

Ron

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The steed of this Valley is pain; and if there be no pain this journey will never end.
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  #17 (permalink)
katalyn
Gyor,Hungary
 
Posts: 27 since Jul 2015
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Blash View Post
@Big Mike created FIO and it's different from other trading blog sites. A serious, hardworking and legitimate group, honest. I'm sorry but I find it increasingly interesting your lack of talk regarding risk. All the, on the level successful traders I have come to realize define their trades in terms of risk, managing risk.

Taking your mean points profit as you have described above, 7 on "average per contract" for 14 contracts you have made no mention of risk and define these trades from a purely profit point of view. This runs contrary to how legitimate traders talk. Trading, as you have said, for less than half the available trading days in a year, 100, puts you right in the $0.5 million/years range (USD)

Please, I want to believe you but see it from this side.... new to the FIO site with less than 500 posts and talk about a posh life style ...zero talk about your drawdowns.....your risk percentage per trade.....starting funds...etc.

Etiquette dictates you show, demonstrate, some level of competence and ability. I encourage you to make many posts helping others learn here. There is plenty of posts needing answers.

Ron

You're right,Ron.

But do realize,a trader who knows her edge to make money doesn't seek other's approval.

That's one reason I don't post much,along with other reasons.

I can go on & on on ES market,but I don't think I should do this.Those who could have benefited from it-these may seem too advanced for them to grasp;those who can grasp-probably already know these.

Also it'll take huge time to lay out all my ideas of market(obviously keeping my edge) & those time will be better served trading or studying other markets to add on.

People see just end results & usually don't consider the efforts and time needed to reach the end result.Athletes at Olympics get judged for a few seconds of their performance, not on their whole life learning to perform like that.

I'm in trading for a total of seven and a half years now.For many years,I lost money.I was so frustrated, I felt like I dropped out of school for nothing & I'll never be able to achieve anything in life.

I stopped trading all-together.I devoted 18 months just to study markets & trading.It's a time period that I'll remember for a very long time.Now things are going smooth, but there's a lot of pain included in past.

Once someone has paid her due diligence, she certainly may want to make up for that.By reaching out for bigger things in life.

My family was never affluent, it's natural for me to value money a lot.I'm a lot more tenacious in achieving my goal than most traders for same reason.

I do want to post more here,but somehow I find my posts are few & all need-to-know basis.In past I often thought,if successful traders shared their tools-it would save a lot of pain for new traders.Why don't they?

I can post my trades here real time,though probably not more than 1-2 weeks.Individual traders make up less than 10% volume in ES market,so it may be unreasonable to fear my edge will get exposed & it'll stop working-the main reason I don't want to talk.But even then,no need to get my positions frontrunned & no need to for providing free money indefinitely.

For a long time,I only knew monetary insufficiency.From that feeling-now I don't usually work if there's no money involved.

I wish to post about trading ideas more.But thing is time is better served trading/ watching market or enjoying life.

I do wish to help traders in future.I lost enough money for trading education & trading rooms,that I feel repulsed of most vendors.

My realization is,those who can't trade good enough-end up in education side.I don't like the idea of traders charging new traders for trading education.If he's good in what he does (trading),he doesn't need to.As for now,I'm not satisfied with my trading accomplishment-so I don't think I should bother sharing my trading ideas & I can't do it for free now-I'm not rich enough to do that.

If any trader is doing it out there,I have genuine appreciation for him/her.

I've a lot of rules regarding MM & risk exposure. It took me a lot of time to collect from here & there to put together what I have now-it's not something I want to talk about readily.

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  #18 (permalink)
 
Blash's Avatar
 Blash 
Chicago, IL
Legendary Market Chamois
 
Experience: None
Platform: NT8,NT7,TWS
Broker: InteractiveBrokers, S5T, IQFeed
Trading: The one I'm creating in the present....Index Futures mini/micro, ZF
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katalyn View Post
You're right,Ron.



But do realize,a trader who knows her edge to make money doesn't seek other's approval.



That's one reason I don't post much,along with other reasons.



I can go on & on on ES market,but I don't think I should do this.Those who could have benefited from it-these may seem too advanced for them to grasp;those who can grasp-probably already know these.



Also it'll take huge time to lay out all my ideas of market(obviously keeping my edge) & those time will be better served trading or studying other markets to add on.



People see just end results & usually don't consider the efforts and time needed to reach the end result.Athletes at Olympics get judged for a few seconds of their performance, not on their whole life learning to perform like that.



I'm in trading for a total of seven and a half years now.For many years,I lost money.I was so frustrated, I felt like I dropped out of school for nothing & I'll never be able to achieve anything in life.



I stopped trading all-together.I devoted 18 months just to study markets & trading.It's a time period that I'll remember for a very long time.Now things are going smooth, but there's a lot of pain included in past.



Once someone has paid her due diligence, she certainly may want to make up for that.By reaching out for bigger things in life.



My family was never affluent, it's natural for me to value money a lot.I'm a lot more tenacious in achieving my goal than most traders for same reason.



I do want to post more here,but somehow I find my posts are few & all need-to-know basis.In past I often thought,if successful traders shared their tools-it would save a lot of pain for new traders.Why don't they?



I can post my trades here real time,though probably not more than 1-2 weeks.Individual traders make up less than 10% volume in ES market,so it may be unreasonable to fear my edge will get exposed & it'll stop working-the main reason I don't want to talk.But even then,no need to get my positions frontrunned & no need to for providing free money indefinitely.



For a long time,I only knew monetary insufficiency.From that feeling-now I don't usually work if there's no money involved.



I wish to post about trading ideas more.But thing is time is better served trading/ watching market or enjoying life.



I do wish to help traders in future.I lost enough money for trading education & trading rooms,that I feel repulsed of most vendors.



My realization is,those who can't trade good enough-end up in education side.I don't like the idea of traders charging new traders for trading education.If he's good in what he does (trading),he doesn't need to.As for now,I'm not satisfied with my trading accomplishment-so I don't think I should bother sharing my trading ideas & I can't do it for free now-I'm not rich enough to do that.



If any trader is doing it out there,I have genuine appreciation for him/her.



I've a lot of rules regarding MM & risk exposure. It took me a lot of time to collect from here & there to put together what I have now-it's not something I want to talk about readily.



So great to get to know you thanks for sharing...adds a ton of credibility in my book when people can open up in an honest way.

Yeah I hear ya... I lost $53k learning this business but have zero regrets now. I started a new journal in 2017 here and am rewriting my business/trade plan for this year which I'll have completed in about a week and posting about it there with my trades.

2am here in Chicago so I'm sure I'll catch you later.

Take care

Ron


Sent from my iPhone using futures.io

...My calamity is My providence, outwardly it is fire and vengeance, but inwardly it is light and mercy...
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
Follow me on Twitter Visit my NexusFi Trade Journal Reply With Quote
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  #19 (permalink)
Pedro40
Pittsburgh, Pennsylvania
 
Posts: 564 since Jan 2013
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I have to call BS on this poster, I am sorry...



katalyn View Post
I'm building my account to do so.It would take about 8 years for me to reach such size in my calculation-where as if one can manage to his own fund,time factor for compounding improves vastly.

No way I'm going to wait for years to have that kind of posh lifestyle.

First, you are saying you make 4K or so per day, and you mention compound interest, yet you don't realize that you could be at millions in less then a year if you were actually compounding profits.

Second, you post from a country where you can live like a king on 4K per month, and you make that in a day. What do you need so much money for???

If you are for real, you don't need a fund at all....

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  #20 (permalink)
 
Schnook's Avatar
 Schnook 
Munich, Germany
 
Experience: Advanced
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Starting a fund is an interesting and worthwhile topic. I believe that this can be a very constructive discussion; a great opportunity for many of us to learn more about the laws, logistics, advantages and limitations of institutional vs. individual money management.

Let's not squander that opportunity by making this all about @katalyn, and whether or not we wish to believe her claims. Let's instead treat it as a hypothetical, and simply build from there. I believe we can all benefit.

I've actually done a bit of research on the HF model so can share a few experiences and observations of my own. And in starting a fund, there are numerous important things to consider.

The first, and perhaps most important comment I will make is this: trading your own account and managing a hedge fund are two completely different things. Most people who are good at one will not be good at the other. This is borne out by thousands of individual examples over many decades of industry experience.

One critical consideration is the scalability of a given trading or investment strategy. A successful scalper or day-trader might be able to profit consistently with 5, 10, or even 50-lot trades, but can he expect the same success rate with 500 or 1000 lot size? At which point does execution begin to suffer, and to what detriment to performance?

Earning 15% annually before fees on $50mm in assets means you need to earn $30,000 per trading day. If you can squeeze out 5 points on ES on average after commissions per trading day (roughly a third of its recent average daily range - something extremely few traders might actually be able to do consistently), that means you'll need to trade 120 lots. If you can earn 5 points only every other day, double your size. If you can earn only 2.5 points every other day, double it again.

The minute you start slinging 100, 200, or 500 lot size, you become a target for HFTs and other scalpers, and it will cost you. Understand that. There's a very good reason the vast majority of funds operate on much longer time frames than the typical day-trader does.

Another important consideration is expenses and the viability of the actual business model. The moment you agree to manage other people's money, you need to devote significant legal and accounting resources to ensure compliance with securities laws, tax legislation, etc. This can become very expensive, very quickly. It is in many instances the biggest barrier to entry. Simply drafting your fund docs can easily cost $50 - $100k and that doesn't cover one bit of the ongoing expense. Any potential investor - especially in the post-Madoff world - will need to know that their money is safe from fraud and mismanagement. In most cases this requires an independent third party auditor and other risk management, accounting, and compliance officers keeping tabs on every position and every trade placed by the fiduciary. Again, this can be quite expensive.

On top of that you'll need tech support, operations support, analytical support, travel and marketing expenses, office space, records storage, equipment, data fees and subscriptions, etc. This, too, will add up quickly.

It's therefore quite likely that you'll need to raise at least $50 million or more just to cover the startup costs and ongoing expenses of managing a hedge fund. A 2-and-20 fee model will bring in base revenues of just $1 million on $50mm AUM, but will your seed investors even be willing to pay that? More and more funds these days are moving to a reduced fee model, so why would any investor pay a no-name startup the full 2 and 20?

Prospective investors willing to pay the full expense load will need to see an established track record on critical asset mass before even considering it. One or two years would be a bare minimum. This isn't field of dreams where "if you build it they will come." That only works for well established industry pros - guys like Alan Howard, Michael Platt, Louis Bacon, Boaz Weinstein et al who already built an impressive track record on the street before striking out on their own.

Indeed, for an individual trader to successfully launch a hedge fund is exceedingly rare. No matter how good you are, you'll never get a chance to manage assets if you can't first attract the assets. Again, probably $50mm or more to start.

So unless you're good friends with a billionaire, you'll probably need to find a professional fund seeder, and the moment you step onto that playing field you'll once again be competing against a lot of guys with wall street pedigrees, whom most investors would consider a far safer bet than the guy day-trading piker-lots out of his parent's basement. Quite frankly, it will be nearly impossible to pull it off going this route. You'd be much better off getting a job at a prop-shop style fund like Millennium, and then maybe after a couple of years breaking off to start your own fund, where you could successfully leverage your institutional experience and investor contacts to tangible benefit.

Still, if you're serious about this, I'd suggest you reach out to the Prime Brokerage departments at U.S. based securities firms. Ask them to send you some materials and start doing some real in-depth planning and research. Spend a year or more drafting a business plan and putting together some initial presentations and marketing materials. Do all of this while continuing to trade your own book and building your individual track record. Then, and only then, will you be ready to make your first follow-up call.

That's when the real work begins.

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