Take a look at ETG's web site (ETGtrade.com). Go to the bottom left hand corner and you will find a link to K&K securities. They will help you start your own hedge fund......... good luck
I was in a similar boat about half a year ago. I found an investor who put up some good money and, if God permits and all goes well, will invest several mil more soon. I didn't have any "real" trades to prove the strategy would work. But I did have a very convincing study that took into account almost the absolute worst that could happen (e.g. you only by at the maximum ask posted within some time period etc) and still showed good results. My question is, why hedge fund? An LLC seems like a much more attractive option. That's what we have done.
Vladiator: This will betray my ignorance on the subject, but what are subtle differences b/t hedge & LLC? Is there a structure that will allow you greater access to capital (IE - non qualified investors, etc?) , what are the benefits of one over the other? Thanks,
1) Is your system scaleable without slippage? There percentages you are throwing out. Is there a drawdown with the more capital that you use? If so, how much? 2) Does your system returns account for commision and spread? 3) Is there a brokerage or trading platform that can handle your system? 4) The percentages that you are throwing out. Are those real time trades, or did you simply backtest your system?
Honestly, I'm pretty ignorant on that legal issue myself. What I do know is that a hedge fund is much more costly and unwieldy to organize, operate, discontinue, if need be. Especially if you are just starting on a relatively small scale to test smth and then scale up if things go well. There are also taxation benefits with an LLC. I checked into the matter back when we were doing it and what the investor's lawyers were saying about the pros and cons was correct. I don't remember the particular details beyond the general stuff I already mentioned. But it should be available at plenty of places on the web. Sorry I couldn't be more specific. I'm sure you'd get a much more informative answer if you asked in the "Self Employment" section of ET.
"Hedge fund" isn't a legal term and isn't a well defined term. Generally, hedge funds are companies whose primary business is investing in and trading securities. Most, but not all, people include managed futures funds under the "hedge fund" moniker. Some people would call venture capital, private equity funds "hedge funds". Hedge funds are usually structured as either LLCs or limited partnerships. By keeping the number of investors under 100 they are exempt from public registration and therefore aren't mutual funds. The business enitity structure for most hedge funds is the LLC or LP structure. The Schindler Fund I manage is a limited partnership. Schindler Trading is my commodity trading advisor company -- a sole proprietorship. Schindler Trading is the general partnerof the Schindler Fund, L.P. and makes all the trading decisions. The other investors are limited partners. Vlaidiator, if you've set up an LLC and have outside investors and are trading their money... Congrats, you are now running a hedge fund. And you didn't even realize it!
Vladiator and Aaron: Thank you both for your replies, you have both shed a little light on the subject for me. Since my immediate interest is in pursuing prop trading, I have not kept up this aspect of our profession. Thanks again, and good trading.
Thanks for the clarification I wasn't aware of that, the legal parlance sometimes seems nebulous to me and gets me confused It seems to make sense now. By the way, just wanted to thank you ET guys for helping me out when I was just starting, getting set up etc.
"How to Create and Manage a Hedge Fund: A Professional's Guide" http://www.amazon.com/exec/obidos/A...52931/sr=11-1/ref=sr_11_1/103-5103681-9981416