starting a fund...best structure?

Discussion in 'Professional Trading' started by dac8555, Apr 10, 2006.

  1. bolter

    bolter

    Load_the_boat,
    Prop desks generally will not profit from the amount of volume you're doing. They are however interested in showing regular trading profits - they have bosess to please and targets to hit like every other business. They are less likely to be less interested in a trader/style that experiences prolonged drawdowns. Go and talk to a few, see what they say. It will be a great experience.

    Good luck.
     
    #11     Apr 11, 2006
  2. If that is the case maybe I should focus on futures possibly. I can always trade currency futures with the s&p's, oil, etc, etc as I would like a portfolio of markets that are uncorrelated.
     
    #12     Apr 11, 2006
  3. bolter

    bolter

    nana,
    Exactly right! Prop=proprietary capital.
     
    #13     Apr 11, 2006
  4. segv

    segv

    The definition of the term "proprietary" when referring to trading firms depends on the context. For example, the CME has a very terse definition of "proprietary trading" that requires an employee-employer relationship between trader and firm, along with no risk capital on the part of the individual trader. However, the term is widely used to refer to "arcades" and other such entities trading "in their proprietary interest" or "for their own account". Many firms calling themselves "proprietary" do not fit the CME definition. The point is that one needs to understand in detail the organizational structure of a particular firm before signing a membership agreement. Caveat Emptor.

    In any case - The "proprietary" firms that I am acquainted with, those who do not require risk capital from the trader, also do not allow purely discretionary trading. They have lengthy training programs and expect you to more or less trade their methodology. Other "proprietary" firms , those that do require risk capital contributions, will allow one to trade as one pleases provided that the trading does not violate certain risk parameters. My previous comments were in reference to the latter definition of "proprietary" firms. There is overlap in either definition, the only hard and fast rules are with the regulators. The other poster who suggested interviewing at various firms would be a very "educational experience" was right-on. If you can get hired into a "zero-trader-risk" firm that will allow you to trade your discretionary methodology - by all means go for it!

    -segv
     
    #14     Apr 11, 2006
  5. bolter

    bolter

    Segv,
    I did specifically use the term "prop desk". Anybody who has been professionally involved in this industry for a while will know exactly what I'm talking about. Hope this is clear.
     
    #15     Apr 11, 2006
  6. segv

    segv

    I understand, bolter. I was just trying to be succinct and descriptive for everyone else who is not a professional involved in the industry.

    -segv
     
    #16     Apr 11, 2006
  7. Congratulations :) The USA is where the money is...



     
    #17     Apr 11, 2006
  8. You must be joking. One would have to be very stupid to consider risking any money on someone that has barely a half year of profitability.
     
    #18     Apr 11, 2006
  9. Would a US-based online broker open an account for your newly established Cayman offshore fund?

    Any suggestions or comments?
     
    #19     Apr 12, 2006
  10. hmm.. hedge fund. it actually does sound realy sexy. but as someone mentioned, it is more of a business management than investment. the last you want is the business activity getting in the way of ur trading.

    I actually like to own my hedge fund sometime in the future.

    typical hedge funds have a top dady sitting at the top in 'command control' callin all the shots, with trader teams carrying out the battles..

    I recently met a top hedge fund manager in London with $4billion under management.. you'd be amazed at how some of these people are.. he told me a little about hes investment strategies.. and hes pulled off 12% in the past 6 months. but let me tell you this guy does not even know who hes clients are. for marketing hes nicked a top noch ex-Lehman brothers sales manager.

    to have true established hedge fund you need a pretty extensive team. although i know someone else who runs a 2-man hedge fund! but these are extraordinary traders.

    there are traders who make money. who kill and eat the bones. then there are those who want to own something. own a fund - manage a fund. i suggest if you're really good simply employ a sales team and get them out to raise the capital for you. hedge funds are hardly regulated you hardly need much else..

    ever heard of SAC capital? ran by Steven Cohen, - he took home $500million personal profit home last year. but again, the guy is not a salesman. he knows how to trade and he has the scariest trading team in US.

    to open a account is pretty easy and many companies offer you all the required services, from middle office, clearing, etc..

    anyways, ultimately, if you want to raise capital, drop a post at efinancialcareers.com for a some great sales candidate who can help you out. some of these dogs can sell anything.. dont worry if u aint heard of.. most hedge funds are capped and thus 'closed' for investment.. any new fund starting up can attract capital very easily.

    so in short:

    1. chose a location. in doesnt really matter where u settle really who cares.

    2. employ a sales team in client-rich areas - e.g. london, NY, etc.

    3. PERFORM. if u can manage 20%+ in the first year, you can raise 100 millions in months.


    with any business start up u gotta put ur whole life into it. tke cre for now.
     
    #20     Apr 20, 2006