I would think the preseration of capital is critical, if not the most important, principle in trading. Without any actual risks to the trader, the money whatsoever is really not real enough!
There is something seriously wrong with this promotion. If I am a large institutional investor, I do NOT want my money thrown at some guy who blew out the quarter by gambling the farm every day and winning. Not only will he blow up, since he's been on such a winning streak, he will blow up much sooner. If these guys were looking for true talent, the contest would be no shorter than a year and more like three or more.
The guys at tradepipe.com are professional institutional allocators and have designed the contest in a way substantially different from your typical trading contest. I am surprised no one here has visited their website., for if they have some of the comments on this thread would not have been made. Firstly, you CAN NOT win the contest by betting the farm in a high risk manner everyday. Why? They have strict risk control rules for all contestants. For example, you can not use more than 30% of your account size to meet margin requirements. Secondly, there is also a maximum daily volatility limit that you must not exceed. Thirdly, options trading is not allowed. Furthermore, they have loss limits that automatically get you kicked out if you exceed them. In my opinion this is a well designed contest and should serve their aim of identifying new trading talent. Sadly, on ET cynicism rules, so the thread has degenerated into an exercise in cynicism and yet no one has answered my initial questions!
If they REALLY want to identify "trading talent" why don't they simply ask people to submit their past years trading statements for review? Wouldn't that be a much better indicator of trading talent? Of course it would.
OK, now we're getting somewhere. There are numerous "firms" out there who "specialize in working with emerging CTAs and CPOs to get them funding." Essentially, these guys are looking for you to sell your soul (and all your potential future earnings) to them for a song. The more stars they can find before the rest of the investing public does, the better they do - by keeping the star in a box, working for them and grinding out superior returns while they keep the fees for doing nearly nothing. They will be their returns, not yours!!!! If you are planning to be a mediocre CTA and want to give up most of your fees, this would be a good deal. They are taking 2/20 in fees, according to the site. Where do you think these fees will be coming from? Let's say you are taking 2/20 and cut an outstanding deal and get to keep 1/10. Now your investors (thru RSQI/Tradepipe) are getting 3/30 off the top. You need to be a big star to be capped at 30% margin and overcoming that kinda cut. If you have gone to all the trouble to get the CTA (assuming you have?) and gotten set up, why bother with these guys now? They weren't there for you when you were setting up legal and accounting and spending all that money and taking the series 3. Why not take whatever egg you have, do your thing for a year, get listed on a few databases and let the money flow in? They are taking CTAs only - guys who have spent all the money to get set up, not joe trader off the street. When it comes time to actually fund you, they will take most of the fees. The agreement is not something I would want to enter into if I am capable of turning a consistently nice profit on my own.
ktm, you have a few good insights but... the situation you describe does not apply to tradepipe.com./ They have two main pools of traders. A. The Star Search pool - these are basically startup ctas or non-CTAs who are trying to build a track record. They allocate you a 'small' $100K account and let you trade with predefined risk constraints. You get NO incentive fee for this. If you are in the top 3 each quarter you get a cash prize, introduction to other investors and potentially an allocation from pool B below. B> The ECI Pool - These allocations are for existing CTAS with some assets under mgmt and good track records (no minimum length of track records) though. These allocations are typically in the seven figure range. I know they are aggressive with fees but I do not precisely know how aggressive aggressive is - 1/10; 0/10, 0/5 - I do not know. But I do know many traders have used this ECI allocation as a platform to secure more assets quicker than they otherwise would have. I do not believe that in any of these two pools they force you to 'sell your soul' by demanding a cut of your future incentive fees. In fact I am fairly sure they do not. I know the fabled Commodities Corp used to do that though. Once they seeded you and you later went independent for a few years they owned a apart of your busines. Many hedge funds also do this - even today. Again, I do not think this is what Tradepipe/RQSI/Access is trying to achieve. There may be more to their story than what I know, but form what I know it seems to be a fair deal. Any insights from you or others on this or any other opportunities for Emerging CTAs would be appreciated. Thanks.
With options unavailable, I couldn't participate anyway. I believe Aaron Schindler got some funding from them, or a similar outfit. Part of the deal he got was a restriction from discussion of the terms etc... I am wary of all these "middlemen"...too many hucksters in this industry and too many looking to make a buck on someone else's back. If I bust my ass to make a fortune by discovering a competitive edge, I'm helping those out who were with me when I had nothing, not someone who arrived at the 11th hour. Funding was a bigger deal 10 years ago for those who did not have the contacts in the industry. These days, with ubiquitous internet access, money will flow to those who have solid returns and are out there reporting audited results. Good Luck!!!
dude ..get a clue...of the 20K "alias's" here <maybe> 6,000 are unique and out of that maybe 500 are active traders.....so it's not that surprising noone here heard of your trading contest.