Dealing with inflows and outflows

Discussion in 'Professional Trading' started by ElectricSavant, Dec 9, 2005.

  1. There is an entire world of Money Management involved with HF's that the Private Retail Trader has no idea about.

    Not only does your system need to be consistantly profitable with a DD less than 15%, but you need yields with 3-5% per month.

    But here is the real difficulty...lets say you start with 10 million under management and 30 days later you get 10 million more and your system is not an intraday system but is a carry system. You have a defined universe of instruments and your money managment is based on balance, whether it increases or decreases from profits, deposits, withdrawals or fees. Therefore artifically money mangement triggers an increase in exposure and has nothing to do with what the market is illustrating, and renders your money management dollar cost averaging and not its desired effect.

    Michael B.