Don, Actually the need to register with the SEC, which was at $25m, was overturned earlier this year and many funds that registered have now actually de-registered. The courts decided that the SEC was overstepping their bounds. Cheers
FWIW. I have recently stared a fund thorugh an offshore borker/dealer using a very basic platform. I am going to be switching to IB...and i dont see why you couldnt use any platform that you like. I use SIGtrade right now. works fine. Reporting for me is much easier...being offshore i dont have to report to the US (there are some exceptions i wont go into) and i have a back office i simply send daily reports to for NAV fund pricing. I am begining to understand what Don means in his earlier post. running a fund yields unforseen headaches and unforseen pleasures. The headaches in my case are having to report to people what i am doing and why i am doing it, and the pressure to perform has a negative net result. Becuse i have to send prices every day and people scower over that...there are untold deamonds. I do have a salary which is nice and access to broker client base..but i have to perform to be able to have the right to sell to them. i also like to be in an office and have a daily routine...i would not do well on my own from the house. sorry...more deatil than you wanted...bu PM me if oyu have dobts or quesitons. good luck.
Advent provides good software. In looking to start up a fund, you should consider a few things.... If you are starting an HF simply to trade money for a few individuals for a fee, then you are best served just opening a friends and family account with IB. If you have grand illusions of running a $400MM fund then you'll need to get good at marketing or hire others whom are good marketers. Then when you've got the money, you'll likely want to hire a 3rd party administrator that will handle the coordination that your initial post was about. In response to Don Bright's statements. I have no problem with him, but you should realize that he is selling something and his statements aren't totally correct. Whether or not prop is better for you is extremely dependent on your style of trading. For certain strats an organization like Bright Trading would help immensely. For others, all it does is focus risk inherent in a large account onto the shoulders of a small trader. IOW, for many strats they aren't giving you $millions to trade with as he implies. They are loaning you $millions on the basis that you don't lose any of it. You lose YOUR money first. So if you have $100K and they let you leverage 20:1 and you lose 5% on the position, you are out of the game. They will not risk their own money. In a $2MM hedge fund the same situation would still result in a $100K loss, but it would be spread out over many different clients. You personally would only lose $5K and you'd have the ability to recoup the losses for both yourself and clients. If you are a good trader that shouldn't take too long, and drawdowns are to be expected in this industry. 5% is by no means abnormal. But he is right that you would have investors, friends, and family breathing down your neck. That is what comes with trading OPM. $30MM isn't required to register a fund. he got the statement backwards. A fund that passed a certain threshold level had to register with the SEC. That is no longer the case, and even when it was, it didn't really make much difference to guys like you. You can start with as little as you want, but you really need to have a path outlined. If you are really small (<$1MM), you'll need to do all the administration yourself, and Advent is pretty good to do it with. If you're a bit bigger ($2-20MM) then there are several accounting firms that will handle your paperwork for you for a price. If you're above $20MM then I would consider a prime brokerage and 3rd party administrator to take some of the load off of you.
That is a very accurate summary of some key points that people need to know about prop, details like these are important but rarely discussed.
Haven't been here as long as our buddy pal 'Don' but observing the board troll go to work on these forums is a hoot. I guess a sponsor of ET gets every right to recruit. Suspect the poster who started this thread might be a whale? Me thinks he may be a doofus. Oh yeah that's your cue!
Sure, anyone can recruit, but I prefer to conduct business on the grounds of complete and honest disclosure. If someone claims to be a professional they shouldn't be declaring half truths under the guise of ignorance. There are a few prop managers here who are a little more candid about their firms, and don't oversell prop trading. Saying that prop is always superior to forming an HF because the trader gets to keep all the profits rather than just 20%. That is complete nonsense. There really isn't a comparison between prop and HF in terms of risk or reward potential. I think that both are suitable depending on the strat, but I would feel comfortable saying that there is less personal risk in an HF, and a trader can make greater risk adjusted returns via an HF.
Thank you, I appreceiate the update!! Regarding "prop always being better" - I was careful to allow caveats, nothing is "always" - people are different, many don't know the details of how various prop firms work, some decide to go with fund raising, some try trading on their own, this is a free market place. Don
Don is a good guy, and he would admit that he is biased towards prop because of a financial conflict of interest. He just gets confused about the facts when discussing Hedge Funds because that is not how he makes money.
I should apologize to Don. I read through my previous post, and I hadn't meant it to sound as bad as it came across. As long as people realize that he is trying to make money off them, then it is their prerogative. Unfortunately most people know as little about prop as Don seems to know of hedge funds. When he makes statements like those, it leads people to incorrect conclusions. The simple fact of the matter is that if you trade with a prop firm you are keeping THE SAME AMOUNT of personal gains as you would be by trading through an HF. The reason that it seems like more through a prop firm is that you are assuming more personal risk. In an HF you have the potential to make more $ per dollar risked. People really need to understand that when comparing the two. They should also realize that you don't trade "through" a prop firm, you trade "with" a prop firm. You become a partner, and are thus exposed to business risk if the firm management makes mistake and the firm goes bankrupt. What it comes down to is that if you are ok with the headaches that come with trading OPM, you can make more money with less personal risk that way than you can by going to a prop firm. OTOH, there are benefits in going through a JBO that might also help to reduce some of the personal exposure. So in many cases it is hands down better than trading retail.