Just from something I read ages ago, I think $10-$50m aum is around the minimum. If you want to trade a 20k-100k account get backed by a prop shop or just trade your own account. Small accounts are optimal for daytrading, you pretty much wont get any slippage unless you trade pennystocks or something like that.
If it me or someone else, the economics of a hedge fund don't work with that little AUM. You should start with Separately managed accounts (SMA) where you cost are much lower.And yes, the minimums at each of our relationships are higher than that. Our clients are mostly domestic and trade US listed futures/options or listed US equities/options.
In order to do this domestically do you need a licencse? I am just wondering even though it's out of my league for now.
Does being registered as a CTA/CPO or RIA or a Member of the Exchange require you to be registered as a Pro in every trading activity regardless of the type of product being traded? Thinking about data costs... Likely, it is "Universal" with IBKR.
Any account of any entity requires paying for pro data. We all hate fees,but to be honest, while running a business, these fees a quite small. Btw, if you have an individual account at an FCM and you lease a membership, you might not lose your non-pro exception. I'm just not sure.
My hedge fund client with the least AUM has $4mm with a track record going back to 2011. Not sure how much of that is their money. They are a new client and their returns are quite good. I have no idea what they net from their 2%/20% after expenses. I can tell you that if a good deal of those funds are their money, it makes a big difference. If it were not, they would have rely only on fees. I would think that to consider forming a hedge fund from all outside capital, that $5M would be a good start but you must have an expectation of growing to $25mm with in a few years, or I would stick with SMA if the strategy fits that. For those that can start with their own money, they will be trading anyway, will have income from trading, but will be incurring extra costs vs just trading their own account. I always like to view these decisions in business terms. If it costs you $15k per year to start a new business in trading, that is a VERY small cost vs other businesses. Hell a food cart can cost $50K! However you need to have a business plan with the expectation of profits, just like any other business, or you don't do it.
If you are going to accept money from others in the US, you will be subject to some type of oversight and pre-qualification - as Bob mentioned. The requirements depend on what you will be trading. If you are doing ANY securities trading, RIA applies and you are subject to SEC oversight. If you are only dealing in futures and commodity products, the NFA is the SRO and you will need to register with them and pass the Series 3. The NFA is the SRO for the Commodity Futures Trading Commmission. There are circumstances where you may need to register with both. The minimums are really up to the individual, but you do need a material amount to make the effort worthwhile once you figure in your legal, accounting and annual infrastructure costs. Smaller firms also get audited on a regular basis by the SEC/NFA...every few years.