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I have developed a great trading system. Now what!!


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I have developed a great trading system. Now what!!

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  #1 (permalink)
 Minds 
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I need feedback.

During the last 5 years I have been working in a trading model. Now is ready. It went live about 12 month ago.

The system is composed of strategies that I learned working in the prop desk of banks in the US and EU. Some I purchased and improved and others I learned from coworkers and specialist in the market. However I have tweaked everything to match my personality and trading flows from the order book.

Now, I am managing friends and families accounts in Europe and South America. However, now is the time to go pro (making a living). The trackrecord, a year already, is as good as hedge funds. The account is up 18% with a Vol of 9. All the last 12 months are positive after trading fees.

I am using the managed account system from Interactive Brokers. I manually trade US Stocks, Options, ETFs and Commodities, hedges are done with futures. About 50% of the alerts are automatically generated - but I filter all of them.

There are about 7 strategies on the portfolio, 2 of them have 90% chances of winning trades over the last 3 years. Of course, there are options strategies.

Do you know how to continue from here?

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  #3 (permalink)
 shodson 
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What do you mean when you say it's time to go pro? I mean, if your system is working then just trade it. If you mean "go pro" to be run a hedge fund or manage other people's money, then the next step is to set up a business to do such that and shop your track record around. Lots of asset managers are looking for good money managers to trade funds for them. You should really talk to some "pro" that does what you want to be doing and look for advice from them on how to get into the biz.

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  #4 (permalink)
 Minds 
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shodson View Post
What do you mean when you say it's time to go pro? I mean, if your system is working then just trade it. If you mean "go pro" to be run a hedge fund or manage other people's money, then the next step is to set up a business to do such that and shop your track record around. Lots of asset managers are looking for good money managers to trade funds for them. You should really talk to some "pro" that does what you want to be doing and look for advice from them on how to get into the biz.


Yes, I agree with you. I need to get to this business. Do you know any fund / advisor / asset manager that could be interested?

Thanks

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 supermht 
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 Devil Man 
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Minds View Post
Yes, I agree with you. I need to get to this business. Do you know any fund / advisor / asset manager that could be interested?

Thanks

If your turning 18% you'll be fightin' em off!

wish you all the best in your endeavor!

JD

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  #7 (permalink)
 jonc 
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Minds View Post

Now, I am managing friends and families accounts in Europe and South America. However, now is the time to go pro (making a living). The trackrecord, a year already, is as good as hedge funds. The account is up 18% with a Vol of 9. All the last 12 months are positive after trading fees.

how much are you managing in the account which is up 18%?

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  #8 (permalink)
 sharmas 
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There is something fishy here.
Why would someone announce has got a winner with 90% winning rate then not sure how to operate a business when has spent a number of years with large institute.

You never know...like another person here who promised to make you a winner and guaranteed 1200.00 a day return for a fee.

none of his strategy stuck and strategies kept changing...ended up with nothing in hand but he got rich as he must have sucked few more people in...

good luck to him ...

Sharmas

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 sam028 
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sharmas View Post
There is something fishy here.
Why would someone announce has got a winner with 90% winning rate then not sure how to operate a business when has spent a number of years with large institute.

You never know...like another person here who promised to make you a winner and guaranteed 1200.00 a day return for a fee.

none of his strategy stuck and strategies kept changing...ended up with nothing in hand but he got rich as he must have sucked few more people in...

good luck to him ...

Sharmas

It's "90% chances of winning trades over the last 3 years", and with small targets and huge stops, it's possible. It's also very doable selling deep OTM options.
I won't say it's very safe, but mathematically possible.

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 Minds 
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sharmas View Post
There is something fishy here.
Why would someone announce has got a winner with 90% winning rate then not sure how to operate a business when has spent a number of years with large institute.

You never know...like another person here who promised to make you a winner and guaranteed 1200.00 a day return for a fee.

none of his strategy stuck and strategies kept changing...ended up with nothing in hand but he got rich as he must have sucked few more people in...

good luck to him ...

Sharmas

Hello Sharmas,

I see your point; this is why i asking for feedback. The strategy about doing combos strategies 85 days to expiry and closing before reaching 45 days of expiry ... it is a strategy that gives an insurance to the big players how are willing to pay 200k plus to protect a 20 million trade for 20 or 30 days...

The strategy holds about 4% of the monthly risk with a max of 6.9% - (stop loss)- is good because of the high% of profitable trades but it is risky. There are different ways to manage the risk.

My issue is that nowdays is not so easy to get funded as it was in 2004 to 2007. I could compete with performance but now with infrastructure.

However if I was in your positiion -- i would say the same – smells fishy -- but i can share some info - if you want

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 Minds 
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sam028 View Post
It's "90% chances of winning trades over the last 3 years", and with small targets and huge stops, it's possible. It's also very doable selling deep OTM options.
I won't say it's very safe, but mathematically possible.

Hello Sam028,

Thanks for the reply

I gave a brief explanation of the strategy to shamas above.

would you have any idea of what to do from here?

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 Minds 
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jonc View Post
how much are you managing in the account which is up 18%?


The accounts are large accounts. I call them income portfolios, targeting 1.5 to 2% per month.

With those strategies, some years ago, i could manage a porfofolio account over 300M EUR - there is not an issue there.

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 MrYou 
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First things first... the hedge fund company you establish is going to have to be familiar with and abide by the laws in your country.
  1. You're going to have to determine how scalable your strategies are. In other words, does the percentage return begin to decrease after $x million dollars?
  2. Find books on running/starting a hedge fund.
  3. Find a business partner, consultant, or mentor to help you run the "business side" of the business (knowing the laws, seperation of funds, etc.). I wouldn't advise you giving this person a percentage share ownership in your company, maybe some non-voting shares, but not percentage.
  4. You'll have to run this like a business, with marketing (if allowed by law), doing due diligence of investors finances (if required by law).
  5. All of the above is going to require some employees and some seed capital to get things going.

FYI, and someone correct me if I'm wrong, until recently (or in the very near future) hedge funds in the U.S. traditionally haven't been allowed to do ANY marketing/advertising (some didn't even have websites), but they are required by law to analyze any potential investors current finances to qualify them as a customer.

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ReaM
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I've read about this. Long story short: hedge funds = only offshore, otherwise fees and taxes will eat you alive.

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 Minds 
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MrYou View Post
First things first... the hedge fund company you establish is going to have to be familiar with and abide by the laws in your country.
[LIST=1][*]You're going to have to determine how scalable your strategies are. In other words, does the percentage return

Yes it is scalable. about 400M EUR were manage with similar strategies during 2004 - 2008 -- now there is more liquidity in efts and option market.

Thanks for the feedback

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angpao
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Minds View Post
The accounts are large accounts. I call them income portfolios, targeting 1.5 to 2% per month.

With those strategies, some years ago, i could manage a porfofolio account over 300M EUR - there is not an issue there.

gaining 2% in a month is easy for me,,
If its balace high, we will more easily to get those target..

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 tst1 
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Minds View Post
Yes it is scalable. about 400M EUR were manage with similar strategies during 2004 - 2008 -- now there is more liquidity in efts and option market.

Thanks for the feedback

What`s 'efts'?

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 tst1 
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Minds View Post
Hello Sam028,

Thanks for the reply

I gave a brief explanation of the strategy to shamas above.

would you have any idea of what to do from here?

How does your system account for the compounding?

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  #19 (permalink)
 Minds 
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The risk is in options about 60 to 75% risk of the portfolio, depends of the week. The rest in US Stocks, Indices, Futures and ETFs.

Here is short page that explain a little bit. Tell send me feedback if it is not clear


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 Minds 
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tst1 View Post
How does your system account for the compounding?

SORRY ETF

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  #21 (permalink)
 Minds 
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jonc View Post
how much are you managing in the account which is up 18%?

Currently, the AUM is above 5 and under 100M USD. Can not give more details.

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 artemiso 
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@Minds Cool to know that you persevered and are still in the game. Congrats and best of luck ahead.

@ReaM No, there's no need to set up an offshore fund if your investors are subject to U.S. taxation. In fact your costs probably go down about 3-4x if you manage to stick to U.S. investors. This often applies to small CPOs or hedge funds that are starting up. That said, if you want to go after large institutional investors, chances are that they are set up in an offshore jurisdiction in some way.

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 danchada 
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I agree with shoson, with your track record you shouldn't have a problem setting your business up. I suggest you stick to improving your track record and hire some asset manager to handle the business side of things.


shodson View Post
What do you mean when you say it's time to go pro? I mean, if your system is working then just trade it. If you mean "go pro" to be run a hedge fund or manage other people's money, then the next step is to set up a business to do such that and shop your track record around. Lots of asset managers are looking for good money managers to trade funds for them. You should really talk to some "pro" that does what you want to be doing and look for advice from them on how to get into the biz.


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 Minds 
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supermht View Post
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I have tried that for the last 6 years. It is not working as expected.

On the other hand personal friends and real face to face interactions produced much better results.

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 Minds 
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Devil Man View Post
If your turning 18% you'll be fightin' em off!

wish you all the best in your endeavor!

JD

Thanks CAPITAN!

The endeavor is moving forward.

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