i agree. CTA is the correct way to start for who you mention, not hedge fund. two different animals for different purposes. surf
I started with 150k. I recently crossed 5M. I'm a CPO and running into liquidity issues so I'm planning on getting the Series 7 and venture out into stocks.
Been trading for 10 years. The first 2 were great, the second 3 were a complete disaster and finally found my groove in the fut's markets. I have a BA in Finance and an MBA with a concentration in Analytical Finance and Investments. If I had to choose any class that has helped me more in my trading career it would be statistics. I approach the market from a statistical viewpoint and it works pretty well. I fade moves that go to statistically extreme levels.
I often get the question about my education but they don't ask about the type of school I went to. If you have good numbers it doesn't matter. Only Wall Street wants to see an Ivy League stamp on your diploma. Investors really don't care. They just want to make money. I have run into some very sophisticated investors in this field, not surprisingly. And they are all very interested in your view of risk. I keep very detailed stats on my trading that illustrates exactly how much risk I am taking and what I'm producing with that risk. My ultimate goal is to maximize profits and minimize costs, while minimizing risk. Those three things are very hard to balance. Sometimes minimizing costs has to go out the window when I run into a difficult day. I've had days where my commish rate was 70% of profits because I ran into an extremely hard day. Other days it's 5%.
My wife supported us. I never actually imagined I'd be successful in trading but I was willing to give it my best shot. There are a lot of things that happened in my life that just fell into place by chance. I went back to night school when we had our first child so I was Mr. Mom by day, wanna be trader, and night time college student. I was very lucky to have the opportunity to study the market for a few years.
This is very true Surf. Small investors will give you a "jaw-dropping" look when you say something like 500%. I was able to do numbers like that when I traded my own small account. Now that it's gotten large I can't touch that. Sophisticated investors just want to be compensated for additional risk and don't expect triple digit returns.
This is all very true. Being rich just means you have money. I've met some very rich people who don't have any understanding of the risk/reward relationship. The first thing I do is explain the risk factor of trading futures and you will get a lot of "Oh" responses, even from very wealthy people. Many wealthy people don't know the first thing about the markets because they make their money making widgets or drilling out teeth. But, they can afford to lose all of their investment without it affecting their life. You can take up to 35 non-accredited investors but you'd better be careful to make sure they realize the risks of a hedge fund. Get them to sign all sorts of additional risk disclosures, especially one where they realize losing 100% of their investment will not change their lives.
Is there any advise you would give other traders? (Mine would be to 'cut your losers quickly' as cliché as it sounds, I think it's important)
It's not about being right or wrong. You shouldn't really care what the market does. Put yourself in a position to profit from the market, regardless of the direction. An example....there are a number of stocks that have been beaten down during this fall. I will buy one of those stocks and then buy puts on it. If it goes down further I'll take the profit on the put and roll that into the stock to bring my average price down then I will repeat that if I think there is more downside. My strategy is based more on money management than timing. Timing is important but what if you're wrong? I don't use stops like a traditional trading book tells you. If I were to buy a company with a strong brand name that has been beaten down and it gets beaten more I'm buying more. For stocks (in my own account) I use a flavor of the "Warren Buffett Way." The two books that have made the biggest difference in my career are The Warren Buffett Way and Trading in the Zone. I don't follow trends. If a stock, or the market is being sold, I'm buying. If a trend is established after I'm in then I will ride it of course but I'm not initiating a position because others are buying. I initiate when others are selling. So, the biggest piece of advice I would give to a trader is this....don't follow trends and be aware of how difficult it is to time the market. You can offset that difficulty with risk management and money management tools. All my professors in college went on and on about the Random Walk Theory and I rejected it. My trading career took off once I accepted it. Statistics explain randomness.