Using broker statements to get a trading job?

Discussion in 'Professional Trading' started by logic_man, Mar 31, 2012.

  1. Has anyone tried this and succeeded? I've developed an algorithm for the ES and have had 8 months of profitability with a gain of 196% and a max drawdown of 26%. I've been optimizing it and it could have been even better. Clearly, if I can continue at that rate, I won't necessarily need a job, but I'm wondering if I could land one using that as my "resume". It'd be nice to trade OPM, so I could put even more emotional distance between myself and the outcomes. Also, having the technical resources of an established firm behind me would enable branching out into other markets, which I am dipping my toe into now. The algorithm "should" work in any market which fluctuates, which is pretty much all of them, although, of course, that needs to be verified.
     
  2. You try to get a job as a trader at a firm, they will without a doubt, ask you for the code to your strategy to "make sure it fits their business model" and then they will STEAL it and they don't need you anymore. You're better off trying to raise cash(couple hundred thous) via a rich friend( attorney, doctor, etc) and starting a small hedge fund.

    You take your profitable ES strategy to a firm,......U can kiss it goodbye!
     
  3. Yeah, I would definitely say "no" to divulging the strategy to anyone. I'd trade it on their behalf and if they could reverse engineer it, well, I guess that I couldn't complain because I take that risk by even letting anyone know the entries and exits. Even so, the ES is big enough for two traders trading the same method.

    As far as "fitting their business model", I could describe it in general terms like the typical holding period, trade frequency, etc., and that should, for anyone negotiating in good faith, be sufficient information for them to decide if they want to work with me or not.

    The main reason I'm interested in working for someone else is that I can access scale that I simply can't get on my own. My estimate is that this strategy could trade hundreds, if not thousands, of ES contracts (whatever the amount is that one can trade without impacting the market's future price action) and I simply don't have that kind of capital laying around. If it also works in other markets, well, you can see that getting even a slice of that kind of action as an employee of a company capable of that kind of diversification would be huge.
     
  4. Petro

    Petro

    It will be very tough to do anyting with OPM with a 26% drawdown. Most institutions wouldn't put up with that large a loss from someone new and without a track record. Even an established fund manager will have trouble keeping clients if at one point he was down 25%.
     
  5. gmst

    gmst

    Logic_man,

    I would like to offer you some advice based on my own research in a very similar condition. Can you answer following for your strategy?

    How many trades per year, average points per trade or total points per year and how much money needed in account for trading each contract? Win % and win:loss ratio also. Thanks

    Edit: Also it seems you are not working currently. Whats your opportunity cost in the sense if you can get a job today, how much would it pay you per year ? Also how much capital do you have in your account today and for how many years have you backtested this strategy?
     
  6. Right, but the CALMAR ratio is over 7 (196% gain in less than a year vs. 26% drawdown). Granted, that's over a smaller time period than CALMAR typically measures, but I have decent trade data going back to 2009, although the strategy has evolved since then, so that data would need to be re-checked under the current strategy.

    My bet sizes are typically bigger, yielding deeper drawdowns, but going in the opposite direction and making the bets smaller to avoid those drawdowns is easy enough. If, all things being equal, you could get a 98% gain with a 13% drawdown, or 49% with 6.5% drawdown, by cutting bet size in half or by 3/4, I would think that would be attractive. I ran the same outcomes with 1% at-risk per trade and got a 43% return with a 4.9% drawdown.
     
  7. You just need ONE edge to make more $ than you'll ever need. Don't mess with your strategy or diversify into other markets.

    Find some hobbies outside of trading to occupy your time.
     
  8. In the ES, it gives a valid trade every two days, although some days it will give multiple signals and other times it can go a while in between signals. Since you sometimes have to hold overnight, you need to be able to maintain enough margin per contract to do that. Win percent is about 68% and win/loss ratio is about 2.5 to 1. Average points gained per winning trade is a little over 10. I've just been paper trading the same concept in the Euro for a few weeks, but it appears to have about a similar trade frequency. Sometimes, the ES and Euro trades are concurrent and other times they are not. I'd like to keep adding markets until I am pretty much always in a trade. Again, that assumes that the same strategy will work across markets. The strategy has been backtested for 3 years. It gives both long and short signals, so the results don't simply stem from being long in a bull market.

    My opportunity cost is pretty high, which is why I'd like to change careers and work as a trader, rather than do what I have been doing (corporate consulting). I can afford not to work for a couple of years, but if I can actually get a trading job paying me something akin to what I was making in my old line of work, that would be more of an ideal. The problem is that the potential opportunity cost of not seeing if these 8 months of profitability can be extended to eventually become years of profitability is also potentially high. Since I'm trading the ES, there is no reason why this can't scale up to trading hundreds of contracts at a time. My hypothesis is that the main limiting factor to the scalability is that you sometimes need to exit trades overnight and unloading a few hundred contracts without moving price at 3AM Easter time might be an issue, although I have seen blocks over 1000 contracts traded even at that hour. With the current win/loss ratio being so favorable, even a couple of ticks of slippage won't kill it.

    I know that trading is all about results, which is why I was curious if anyone had gotten a well-compensated position (I'm talking over 6 figures in base, which actually isn't that much for a successful trader. I don't really want to go into a situation where I am only compensated on results because if I want that, all I have to do is keep trading my own account) by showing the results of their personal trading. I have an MBA from one of the top b-schools, which doesn't hurt, but I wasn't a finance major and I didn't work on Wall Street after school, I was a strategy major and all of my post-MBA work has been in that area. Trading has always been something I did "on the side", but I've finally developed something that clearly works and would like to do it full-time. So, I can either not get a job doing consulting and just trade without any other income coming in or I can get a job trading that pays over $100K base plus a results-based bonus. The problem is that no one will hire me for that second option based only on my resume, but I was wondering if they would hire me based on my results. Of course, there is some element of "You won't know until you try" to the question.
     
  9. Right. The problem is that between where I am now (having enough money to make more money than I'll ever need, if past is prologue and the results hold up) and having more money than I'll ever need, I'd like to have a salary. Yes, I want to have my cake and eat it too.

    I have two hobbies outside of trading: Drinking and women. I'd eventually like to hire someone to do my trading for me so that I can dedicate more time to both. :)
     
  10. oraclewizard77

    oraclewizard77 Moderator

    Why not get a CTA to raise money, and/or start a friends and family account. Once you get it to a certain size have your results audited to be able to attract enough money to start a hedge fund.

    You could charge a 3% fee to manage accounts and also ask for 20% of profits. If the fund gets too big, close it to new subscribers.

    If this strategy is not automated, then yes, hire some traders to watch the charts for you in shifts so they are doing it 24 hours per day.
     
    #10     Mar 31, 2012