Pretending the returns are sustainable and real and by chipmunks admission, unscalable. So he will be returning capital each year. He makes 70percent year. He takes 140k in fees. To manage 10 accounts in a partnership structure he will spend like 30-40k year in auditing and accounting fees. So he will take home 100k year. Nothing to sneeze at but there is no room for expansion and there is a lot of inherent risks that he has to deal with. And that is assuming he can do 70 percent. What if he does 20 percent. Then he gets nothing after his overhead. Remember the 70 percent is coming from 4 percent compounded which is inconsistent with his comment that the strategy doesn't scale past 1mm. In his last month he'll be managing 1.6mm. So his economics are suspect and there's not a lot of room to be wrong.
I didn't say I was doing it... I was saying can it be done. I am presuomng day trading can't go too high....where that high is i do not know I am pretty surprised day trading at 70% is considered High though..... I wasn't thinking 70% EVERY year or 4.5% EVERY month obviously but I was thinkig the odd 100% year (12%+ months) with some flat times sthrown in....but it seems everyone thinks even that is sky high Why is 70% day trading not achievable? Are you talking from experience or.....not? At this rate we all may as well simply put our money in the bank and forget about trading. Next you'll be telling me to make more than 10% per annum end of day is a pipe dream.... Comments like this. .So sad about forums. -------------------------------------------------------------------------------------- So his economics are suspect and there's not a lot of room to be wrong.
and what if I do 120%? ------------------------------------------------------------------- What if he does 20 percent
lost everything in the end if I recall. ------------------------------------------------------------------------- Niederhoffer
I haven't met any day traders....have you? So all hte guys doing it full time with mortgages and familes....what have they been doing? I'd prefer to listen to them than some troll who makes posts like this and really has no idea! So in your world ther eis no such thign as consistent trader? What's the fundemantl differenc ebetwen day and end of day? Day you get a lot more opportunity and can hit positions much bigger as you have no overnight gaps...... So have you ever emt a consistent end of day trader? ------------------------------------------------------------------------------------- Everyone here somehow take this on faith... but have you ever met a single day trader here who's done this kind of returns for more than a single year?
I honestly haven't met a successful day trader. I've been in this business for a long while now, and I honestly haven't met a single successful day trader. I get it, how would I? That success day trader works from home and doesn't exist as far as the finance industry is concerned. So how could I meet him? ET is my only contact with "day trading" - and so far there has no evidence that there exists a successful day trader. And of course there are consistently successful traders. But you were talking about "day traders" in the ET sense. Finally, your claim that in "Day[trading] you get a lot more opportunity and can hit positions much bigger as you have no overnight gaps......" sounds like another one of those things you take on faith, with absolutely no evidence to back up.
You didn't ask about the validity of day trading. You asked about the validity of running a business (a hedgefund) that runs a capacity constrained strategy. I am not questioning your ability to make 70%. When running said business you have to make sure you can pay your bills. I didn't say that you couldn't achieve 70%. I said that if you did, you wouldn't be making enough money to justify the risks. Further when applying some sensitivity analysis to your business model it shows it to be much more shaky. How does one trade successfully without being able to think these things through? They aren't complicated concepts.
I came across one of their managers once years ago and the guy didn't strike me as someone who was day trading. That firm sends out analysts to the meetings, holds positions for a while, and is data-mining every nutty source of information to get a predictive edge in advance of earnings reports. It was tailored for the little guy, but the fees were hefty if I recall.
By day trading fund, do you mean something like a proprietary firm? I think they would have fees higher than 10%