I am a crypto trader (the proverbial retail trader to be exact) I have been trading for a while and trying to learn as much as I can. I would like to get funding at some point in future (not this year or next year) because I don't have enough money on my own (typical 2 and 20 type of arrangement). I have a few questions: 1) How long of a track record should I have before soliciting funds from serious investors? 2) How should I document the track record before approaching any serious investor? Can they simply verify from the exchange? 3) What typical minimum annual return (reward) and respective drawdown (risk) would generate interest from potential investors? I have developed a system and I have traded with it for a few months. I have been profitable so far. Maximum DD about 8% and currently up about 44%. I need information from people who have worked with investors before at a prop firm probably. Alternatively, can I build a track-record and apply for a job at a prop trading firm (which might be a more direct route than seeking investors)? What are the requirements? TLDR; How do I grow as an undercapitalized retail trader if I have a potentially profitable trading system and a verifiable track record to back it up?
I would try leverage trading first before experimenting with other investors money. Plus the crypto markets have been extremely bullish these last 6 months, how are you going to be profitable in bearish markets? You are also going to have a ton of pressure once you start trading with other investors funds, assuming you are a legit and honest person
Leverage is a new whole ballgame for me - I don't think I have the skills to use it profitably. I do not like the higher trading costs of leverage as a proportion of the margin. I also don't like using hard stops so I currently never worry about being shaken out of positions by wicks. Add other holding costs and leverage becomes unbearable. Crypto is already too volatile as it is. Even if I succeed in using leverage, I would have to accept a larger drawdown and I am not willing to take the additional risk. However, if you have a contrary opinion, please feel free to share. I would like to know whether leverage can increase returns without increasing risk in a trade.
No leverage trading is the most riskiest, and on top of that you are trying to trade crypto. I don't recommend it. The only way I could see leverage working is during a rally, but that would probably be the riskiest trade set up you can make. But how would trading with other investors money be any different? Just curious
It is different because I wouldn't have to take on additional risk in percentage terms. As a result, I would simply continue to implement the strategy exactly as I was doing prior. The absolute figures would be larger, but the percentage risk would remain the same. My profit would come from the performance bonus of 20% paid by investors.
What exchanges and coins do you use? Is there enough liquidity for you to put on serious positions? Apart from a few major coins most of the other coins are not really liquid at all.
True. But I'm not rich yet. I understand that if I hit 7 figures AUM I might encounter liquidity challenges and at 8 figures the strategy would lose its edge.
If you have a good profitable system put all your trust into it to make you rich. That must surely work best for you before anything else.
Enter the US investing championship. You have to have a $20k account. Your own money and it costs you $350 to enter but if you win or place well you have a verified record to show prospective clients and a lot of free advertising.
I'm already doing that but I need to accelerate the process without taking more risk. That's why I'm planning to build a track record with the aim of getting investors at some point in future.