They prefer equity and futures traders, but they accomodate. Basically they just want to see profits, within drawdown limits. The $200k is part of your drawdown limit. The first stage is really a test to see if they can add more money in your account. Seriously contact them : they really mean business.
My preference would be my own money because i could trade tension free without any added burden. Anyways its either the fund raised or our own money we should be very responsible trader.
Yea, running OPM is like learning to trade from scratch again. Feel pretty much so, ha. Much more pressure emotionally, despite there is no monetary risk. But it's an interesting challenge and indeed makes one much more disciplined. Overall profit in points dropped for me so far, because I became much more risk averse, but it's a good drill to practice discipline and aggression will come back over time I believe.
Poor performance? It is not the headline return that matters, but the return relative to max drawdown, and to the scalability of the method. For example, someone making 20% per annum with 10% max DD and trading liquid markets with no research or execution edge, is excellent performance. It can easily be altered to 40% with 20% DDs, which is enough to compound capital 30 fold per decade (absent taxes), and if it is scalable then the sky is the limit. And this is not counting the extra edge that will come from access to institutional-level products, research, and execution. 20% with 20% DDs, if scalable, is still excellent performance and is begging to be used with a sizeable fund.
Simple - if you can show consistent 20% returns with <20% drawdown, on a scalable method, then you have an attractive and rare edge. A scalable edge is a gold mine for any fund. Just add zeros to account size (via raising funds) and now you are making millions for investors and yourself. Now if you are making 20% by picking off one lot orders in an illiquid retail market, then sure, that is not interesting for bigger size. But that's not what we are referring to.
Absolutely agree about scalability. 20% with max PTTDD of 10% in a really scalable way (up to billions) is without any doubts a gold mine. 20% with max PTTDD of 10% day trading NQ like I do or EURUSD like I did is very poor trading, which is not worth the time spent.
It is the same for the off shore asset allocators and as with academic studies neither the names of the trader or possible allocator are passed until both sides indicate serious interest. As I said before I have never heard of a trader turning down initially a meeting and then if they pass due diligence never heard of a trader turning down a multi million dollar allocation. For most the possibility to leverage talent with an allocation and become seriously rich relatively quickly is just too big a âticket to paradiseâ to pass on. I donât know what points I made you are addressing with the above quote? This is what I said about the GPFN: I can just add that the GPFN just about as discreet about their allocation policies and due diligence procedures as my client. The GPFN are not recruiting traders to allocate to using the websites you mentioned or any similar of their own design. This does not happen. I have told you several times that no one passes or sells traderâs details. This is a mathematical process and no personal details would be passed until both sides indicate serious interest. There is nothing sinister about this process; it is just business and has nothing to do with your references to human trafficking or drug dealing etc in earlier posts. Would you be happier with generally correct? His customer list was mostly professional athletes, actors, retired high net worth individuals, family endowments, some stupid and greedy money management advisors etc. The reason you know for sure that none of the professional asset allocators allocated money to Madoff is you know that Madoff could never pass even a rudimentary due diligence. Even if some GPFN (or other pro asset allocator) employee was bribed by Madoff for an allocation when the GPFN send in its team to do due diligence Madoff would fail and that would instantly end any chance of a GPFN allocation. I can tell you a little bit about this one and in fact a kind of funny story. I sat in the initial meeting where LTCM pitched for an asset allocation from my client. Even though I am was a proprietary trader and not asset allocator I really wanted to be at the meeting since being Canadian I really wanted to meet Myron Scholes who was a finance hero of mine. LTCM had the right pedigree and great track record with +42.8%, 40.8% and +17.1% from 1995 to 1997 before the start of the blow up in August of 1998. The due diligence team saw them during LTCM's initial start up and every year afterward until the blow up. Every one thought they were great on paper but LTCM wouldnât allow the team to do due diligence for âit is all proprietaryâ reasons. Thus the team had to turn down LTCM with the âno glove, no loveâ deal breaker i.e. âno due diligence, no allocationâ. Now a funny story turns hilarious. From 1995 onwards there was tremendous heat from TPTB to allocate to LTCM since their Wall Street Investment banking contacts were on the phone every day screaming at them to invest and those morons on the due diligence team be dammed etc. The three main due diligence guys held their ground for three years and in fact threatened to quit if TPTB tried to force an allocation with no due diligence. And then everything went BOOM with the Russian default and amazingly enough TPTB never mentioned their desire to allocate to LTCM ever again. It was like it never happened and everyoneâs hard drive in their head was reformatted and all those files were lost. However TPTB never again tried to interfere in an asset allocation and so far have left everything up to the due diligence team. Actually Buffett is kind of guilty of this him self; remember when Buffett said hedge fund fees were outrageous. His fees under the Buffett Partnership were +6% hurdle per annum and a cool 25% of profits per annum (and I believe no high water market) during a period when stock market beta return was around +8 to 9% per year. Give a guy with Buffettâs talent and a huge freaking bull market and fees like that and that is where the Buffett billions and billions came from. Honestly I have to wonder what Buffett would be worth if he just could have kept his mouth shut and kept everything proprietary instead of cloning himself hundreds and hundreds of times over. Pro money usually comes in against the flow of the retail performance chasers. Pro money has a real premium on from the point of view of the fund manager since it is stable and in drawdowns when retail runs the pros keep you in business and usually use drawdowns to add to the allocation. Thus the pros pay way under the typical 2/20 retail fees which one of the ways the guys out here crush the indexes year after year. I donât really understand what you are saying here about âGraham Riskâ being used to justify going all in and writing OTM puts and gambling etc? Graham Risk to me means respect your stops and risk is the permanent loss of capital i.e. drawdown from which recovery is impossible rather than the Markowitz standard deviation as risk of Modern Portfolio Theory. Graham Risk means keep some dry power to fight another day thus get out i.e. stop out to keep a drawdown from becoming impossible to come back from etc. BTW a lot of Ben Grahamâs methodology was not fully formed like the âmargin of safetyâ stuff before the 1929 crash and subsequent bear market disaster. I believe (donât know for sure) that the lecture notes of 1927 are not the same as the lecture notes of the 1930s. I am sure the 1929 crash put the value into value investing course notes especially regarding the âmargin of safetyâ part of Graham value investing. Just my opinion of course. Cheers Smoker
Interesting....my goal is 20% per annum less than 10% drawdowns. Only trading high priced, liquid stocks. Not sure what the scale is. probably guessing $50m to $80m. Is it worth it? the reason i ask is because i was going through the numbers and even at 20% r.o.i. it's tight margins $50 m under management 1.5% and 15% (?) 20% r.o.i. $10M profits 1.5% of $50m = $750,000 15% of $10m = $1.5M total = $2.2m Now you have huge overheads and taxes here to pay. So say you clear $1m from all that in a great year........ Therefore. it looks like unless you go to $100M+ it's not really worth it? Even on a $100M fund i'll bet you are clearing about $2m in a great year. Still it's the journey, right?