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Starting a fund

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  #31 (permalink)
 
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 SMCJB 
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Big Mike View Post
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Mike

While his performance in this thread has definitely been a little rude, I've generally found Pedro40's post to be insightful. I say this because he's not some newbee shooting his mouth off, he has contributed quite a lot in other places.

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  #32 (permalink)
katalyn
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bpr0 View Post
@katalyn

I don't understand. if you are making half a million or more a year then what is the rush.Just slowly compound.
Why work for others money and loose your freedom it does not make any sense.

Also market has liquidity limitation you cannot expect to keep same return when you increase your position size to crazy levels.Market will detect and punish excessive greed.

Thing is after losing money for many years for some months I'm actually seeing good return.You can call it a vengeance for all the old times for all those losing days.

I'm taking plans over a period of 5 years.

I come from a impoverished background.For living so long never having enough-money is a very important thing in my view,a source of security-I never want to go back to insufficiency.It's a very strong emotion/motivation in part of me.

To pursue trading-I sacrificed my study & many other little things of life.I don't mind sacrificing my independance too.I'm solely fixed on going as far as this career can go-gradually over time.

I know about that liquidity limitation.I can't take the quick scalps on a narrow trading ranges or a failed buy signal in a bear trend as frequently as I do now.Mostly swing & using 15 minute or higher timeframe chart.

I believe in a 5 years time period,I'll be able to figure things out.

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  #33 (permalink)
 bpr0 
Union City + CA
 
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katalyn View Post
Thing is after losing money for many years for some months I'm actually seeing good return.You can call it a vengeance for all the old times for all those losing days.

I'm taking plans over a period of 5 years.

I come from a impoverished background.For living so long never having enough-money is a very important thing in my view,a source of security-I never want to go back to insufficiency.It's a very strong emotion/motivation in part of me.

To pursue trading-I sacrificed my study & many other little things of life.I don't mind sacrificing my independance too.I'm solely fixed on going as far as this career can go-gradually over time.

I know about that liquidity limitation.I can't take the quick scalps on a narrow trading ranges or a failed buy signal in a bear trend as frequently as I do now.Mostly swing & using 15 minute or higher timeframe chart.

I believe in a 5 years time period,I'll be able to figure things out.

You are being childish. In trading impatience and revenge trading has no place.

Everybody looses money for extended period before tasting success.you are not alone.

If you are only successfull for several months then that is very less time even to prove an edge.

Again remember your edge might be working at the current position size as you increase position size and play higher timeframe you don't know what all challenges that you are going to face. I am not saying it will not work but it is not verified unless you do it for real.

Last thing that you want is to do some foolish stuff which will give big setback to your trading career.


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  #34 (permalink)
 grausch 
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Bladesmith View Post
Starting a fund is an interesting and worthwhile topic...

@Blash has already mentioned FundSeeder. Quite frankly, if I wanted to raise external AUM that would be my first port of call. For a fee, you will have professionals assisting you with all the regulatory headaches, and trust me, with the current regulatory environment these are quite a few. Haven't used them, but their model seems to be the best for small funds right now.

Another way to get into the business would be to join an existing investment manager and launch a new compartment or sub-fund within their existing fund. It keeps costs low and allows you to piggy-back of their existing infrastructure, including their distribution network. However, you may find this is tricky as there is reputational risk involved for the IM and they may take a large chunk of your fees to cover their risk / expenses. However, this is the easiest and probably quickest way to get regulatory approval, since only a new sub-fund needs to be approved. Edit: Should add that the IM may not add any AUM to the sub-fund, so unless you bring in a reasonable amount of AUM to begin with, there is really no incentive for any IM to take you on-board, unless of course they deem that your track record will add value to their brand.

You could also launch your own fund, but costs become prohibitive quite quickly. You could outsource all functions to third-party service providers, i.e. administration, custody, legal, risk management and even investment management. You would then be appointed as investment adviser to the investment manager and this reduces your infrastructure investment significantly. Downside to this is that every outsourced activity carries a cost and unless you have sufficient AUM, you will be subject to minimum fees. If the fund is too small, then the minimum fees can effectively be more than you would earn in management fees and it just kills the fund in terms of overall performance.

@Bladesmith - you mentioned $50 million to start a fund and I tend to agree. Even at $20 million, a fund will still be subject to a minimum fee and this pushes up your Total Expense Ratio ("TER"). Whenever you market a fund with a higher than industry-average TER, you will definitely get a ton of question about why your expenses are that high.

Institutional investors ("II) also have certain limits with regards to how much they can invest in certain funds and they have minimum investments they must make. To get into the door you will need $50 million, and for some it can be in excess of $100 million.

There are also service providers that specialise in launching smaller funds and they may have competitive fees, but you will still need a decent chunk of capital to cover the legal and other fixed costs and you still sit with the problem of attracting capital from IIs.

@katalyn - My suggestion would be to contact FundSeeder and have them look at your track record. If you deliver the returns they want, then it is probably the easiest way to get into the business of managing OPM.

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  #35 (permalink)
 lone 
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How much money is enough? Are u willing to sacrifice the freedom of trading ur own money to manage others?

If u can make 6-8points with 14c as claimed which is 4kish a day u can easily make 800% more a day within a year with simple compounding. Is 32K a day or 6million in a year not enough? How about 48m next year? And 360m after that. Why even bother with a fund.

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  #36 (permalink)
 Coastline 
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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.


katalyn View Post
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.

1. If you are really netting 6-8 ES points per day per contract, you should reach 500 contracts much sooner by using any reasonable money management plan (based on Fixed Fraction or Fixed Ratio, for example). This assumes your maximum drawdown is "reasonable".
How do you estimate 8 years? Why so long?

2. What is your maximum drawdown in dollar terms based on one contract? Did you set your estimate (8 years) so far into the future because your drawdowns are extreme?

3. I am not familiar with "Fisher's Rule". Can you clarify basics of "Fisher's Rule" and how to apply it? Is the approach fundamentally different than Fixed Fraction or Fixed Ratio?

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  #37 (permalink)
 bpr0 
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Coastline View Post
1. If you are really netting 6-8 ES points per day per contract, you should reach 500 contracts much sooner by using any reasonable money management plan (based on Fixed Fraction or Fixed Ratio, for example). This assumes your maximum drawdown is "reasonable".
How do you estimate 8 years? Why so long?

2. What is your maximum drawdown in dollar terms based on one contract? Did you set your estimate (8 years) so far into the future because your drawdowns are extreme?

3. I am not familiar with "Fisher's Rule". Can you clarify basics of "Fisher's Rule" and how to apply it? Is the approach fundamentally different than Fixed Fraction or Fixed Ratio?

money management is part of the strategy/edge/psychology not an external module that somebody can change it willy nilly.

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  #38 (permalink)
 Coastline 
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bpr0 View Post
money management is part of the strategy/edge/psychology not an external module that somebody can change it willy nilly.

What? Of course it can be changed.

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  #39 (permalink)
 asyx 
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  #40 (permalink)
 asyx 
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