Hi I am based in the UK - and have been trading for my own account consistently profitably for the last six years. I average about 40% net per annum, 60% gross (I trade fairly stable spread combinations so entry and exit commission costs are high - as are platform as I use a co-located autospreader). I make a basic living from my trading - but it's not "the dream" - and was thinking about starting to scale up. My platform costs would not go up much, and I could probably lower my commission fees with volume. This would also allow me to trade a bit more actively and aggressively, so I think that it is reasonable to expect to get my percent return up a bit more. Moreover, I have good academic qualifications (MBA and another quant masters) and experience of working with top name financial organisations at the start of my career. At that time, I was working in trading environments - analysis, regulatory, testing, documentation, etc - but not as a trader. However, I have not worked for somebody else for the last twelve years. To be frank, I am not a "company man" and I don't want to work full time trading. I have other business interests, as well as a couple of young kids whom I want to see. Also, I am no longer based in London which also makes things a bit more difficult. I don't want to go around trying to raise capital from the public myself. And in the UK there are a huge amount of regulatory hurdles to jump which would make it prohibitively difficult even if I did. I was wondering if I approached a hedge fund, or similar, would they let me actively trade a smallish tranche from my office base on my track record and give me a percentage of the profit as an incentive. If so, what is the norm? What other alternatives might there be? Have any forum members made a similar transition? I am open to any proposals if you wish to PM me.
Why not become a licensed CTA (commodity trading advisor) if you are a good trader? You can use your own track record for the documents. In the beginning you will find a handful of customers, but if you are good and have the ability to scale up with larger size, it may workout for you in the future. Also, you will trade on your own terms.
Hi Matt Thanks for your reply. I am not based in the US. I would have to follow UK regulations which are different and much more onerous and I don't want to go around trying to raise capital from the public.
You are welcome. You can become a CTA even if you are overseas and raise funds here in the USA. If you wish to get customers from the UK, I would assume you would need an FCA license. Whether you want to work with the public or not, it's a different story. Just keep in mind that the institutions who you wish to work with have low tolerance for drawdowns despite your performance and equity highs. I think you should investigate what is the risk/reward and drawdown from equity highs these institutions allow. Go with the ones that are reasonable for your method.
I don't know your situation, but shoudn't your prop firm keep upping your capital to nearly unlimited if you are making them money?
I know that I am cutting and pasting from your complete original posting, but in my mind this is likely a contradiction that would not be enthusiastically received by any potential investor. Having said that, my best advice would be to seek out and approach a home office investment group in lieu of the prop or HF or FCA route. Just my 2 cents, and good luck with things. If you are fortunate enough to find a suitable landing, it goes without saying that the results will reflect your effort. Trading OPM is a royal pain in the ass where what you have done quite recently is the only thing that seems to matter. You can have 13 winning months in a row, and they want their money out the first losing month. There's a lot of hit and run investors in the business.
I did exactly what you want to do. I took OPM (other people's money) and I didn't last one month. One guy called me up and said the market is up 6% and you are up 2%. The market turned south and lost 9% while I was up 3%. Did I get a call? No. They are never satisfied regardless of your performance and it is a pain to talk to them. You can try https://fundseeder.com/home. You can upload your trading history and supposedly big money will find you.
You need to speak to an experienced compliance consultancy in London. I would recommend this company: http://linearinvestment.com/ They handle all FCA registration issues, structures and capital introduction.