Hi: I have developed models and have been trading 30K of my own money for about 3 months now. Eventually I'd like to raise money (assuming I have a good track record - which I think I will). I cannot go the "friends and family" route as they could not contribute anything of significance. Is it pretty much impossible to raise money under my circumstance? A friend of mine who's a CTA said it's a tough game out there - and getting tougher by the day for the small guy to raise money, or even get meetings or having phone calls returned. Any thoughts?
70% of all money invested with CTA's comes from institutions. To qualify you generally need 3 years and 10 mill. under management. Failing that, you need to attract individual investors. Try convincing your broker to send some accounts your way. It's a way for him to keep underperforming accounts and a way for you to grow. Failing that you could go the hot money route by delivering >100% returns for your account for two years. Then put together your disclosure and post to all the usual CTA performance sites. Keep the 100%+ returns coming and you'll be turning away business in no time.
You have 30k already - if you are good enough to trade OPM, just use your's and save yourself the headaches. If you think you are good enough to trade OPM you should be getting triple-digit returns.
You need triple digit returns in order to qualify for trading OPM? Is that's so, it's time to shut down every mutual fund, hedge fund, private managers, etc out there. Some may hit a home run now and again, but no trader is regularly making triple digit returns on a sizable amount of money. I'm not talking about the 10 grand piker account.
I started with 30K. Just get set up and do it. Get your CTA and start with one account...your own. List in all the usual places and see who comes knocking. You do need very good performance, but not triple digits. Institutions are scared by that kind of performance since you need to take so much risk to get there. It is very hard, but if your performance is sufficient, everything else will fall into place.
Worry about DD's more than returns. If you have a big one early on, you are going to have to explain it away for the rest of your existence. I would echo KTM's advice and just go for it and list your returns on all the usual databases. If you are willing to put your money in a first loss position, much like a prop deal, you can get additional capital and have at least enough AUM to where people will begin to look at you. It's going to be tough with only $30k to catch anyones eye unless you are putting up stellar returns. Good Luck!
My point was that if you trade OPM you are in a whole different league with regards to rules and regs you have to follow. Most of those regs take traders who are used to getting 100% YOY returns to the single digits. If you are only used to double-digit returns without the rules and regs of using OPM, you think you will do better under them???!!
what are "all of the usual databases"? Are you referring to the collective2-type websites or is there something else that I'm missing? Thanks
Barclays, Autumn Gold, IASG (actually an IB, but a pretty good list of CTA's), etc.. Collective2 is for tracking new trading systems. It seems a little flimsy to me, and I don't know of any bigger/successful CTA's that use it.