Your growth will be a progression. You aren't going to attract CalPERS right from the start. First you start with your family...get a few thousand dollars from a few people...then with a good track record you might attract a few of your neighbors, friends, and former coworkers...then 6 months or a year later one or more of them might recommend you to a friend of theirs...as their confidence in you builds, the people who invested with you will add to their accounts...maybe you'll be a couple small funds of funds who'll open a minimal account with you...do good by them and they'll add to their account...keep networking and doing well and a couple family offices might take an interest in you...then, 5 years down the road when you've got $10 million under management, the larger pension plans and funds of funds will take notice of you.
Thank you everyone for enlightening me on this subject. Today I talked with a guy from a prop firm, he said if they see you have established a track record, they can bring in investors for a seed capital in hedge fund(?), he said since each trader's capacity is only so large so they are looking for new people to give them money to trade. So I asked him the same question - how good does it have to be to fall into their radar screen. He said that really depends on the style, duration ... anyway no definative answer. Then I asked him whether it is good enough if a trader does 5% monthly, no down month for 6 months and it is done by a number of trades. He said that would be definately a record they look for. Hmm ... Really ? What do you all think ?
6 months...they'll look at and keep you on the radar. You do another 12-18 months of that and they'll consider giving you $$. Honestly, trading $30k vs 10x or 100x your amount is a whole different world. To be honest, people who have been long these past 5-6 months have done well. What happens when the market zig zags and zags some more?
Agree. I have been selling Put(mainly QQQ options) since October 2002, and having been doing very well. I have ten consecutive months of winning streak with a total return about 50%. Reason: I started when the stock market was near its five-year low, and now NASDAQ is near 16-month high. Nothing to be proud of. Pure luck. I'll be VERY happy, if the market goes down to the October low in ten months, and I can still make the same return. Just my two cents.
You're right, they will want to see how you do in a variety of market conditions, and they will also want to see how you LOSE. It's great not to have had any losing months, but eventually you will, and how you handle that is really important to institutional money managers. There are lots of people with great initial track records who, for a variety of reasons, blow up when they have losses and get behind. Another consideration is how much leverage you are using to achieve your returns. Most managers don't want to see you using much more than 15-20% of available margin, and are happy to have somewhat lower returns in exchange for lower volatility. Your money management and risk management are more important than your returns to most pros who have capital to place with you, and you need to be prepared to explain in detail all of your parameters for those things. One thing you can do that will help you get noticed is to get registered, do a D-Doc, and start posting your AUDITED results on services like autumngold and barclays. It's really not a huge deal to do, and if you maintain a good track record, it will get you on the radar of lots of people. Good Luck! Jessie P.S. If you want to lose the long-side-only problem, you can trade futures in an IRA without that restriction.
Good questions. I think I am trying to define the very meaning of "expanding out" and "other people" right at this moment. Speaking of ideal situation, I understand it never exist and never will, so I havn't thought about it. I am just thinking what's the next move to make it a better situation. Thanks to ET site and everybody here, I have learned a lot about the landscape in past couple of days. It looks like a prop/prof firm (I still need to read more to figure out the difference) would be the next thing. Leverage goes both way, IRA money is one thing, taking out savings to do it X20 is totally different, as TraderD007 rightly puts it. This is not the first time I am up meaningfully multiple months while the broad market goes nowhere, but it is the first time I am not in a emotional state of mind. I can completely stop trading for a day or a few days if I have to take care heavy workload from my job, while previously I can not do that and end up losing it all back and wanting to smash my head on the computer screen. From my reading, there are some firms letting one trade only the firm's capital in exchange for a bigger cut of performance. What does it take ? There is even someone fresh out of school getting the offer, sounds too good.
Basically requires for you to be coming straight out of school. If I'm to believe what I've been told, competition for palces in these kind of firms is pretty damn fierce, and the firms get a pick out of the best grads. The other kind of 'prop firm'? I wouldn't waste my time.