I've had a lot of success as a trader over the last 18 months. I made over 200% profit on capital during the first 12 month period, trading the emini's. I do NOT daytrade, I trade only a couple times a day, sometimes I do not trade at all for several days, I just hold a position. Like many people, I have all my friends asking to invest money with me. So far I have told them all it is illegal for me to manage their money for them. But its not like I haven't thought about professional money management. Not the chump change my friends want to invest, no, I would want to manage much larger sums eventually if I wanted to do that at all. So like many people here, I have looked into what it takes to get into this field, the obvious one being to start your own hedge fund. But that looks like an EXTREMELY difficult task. It's like a "what comes first chicken or egg" problem. You can't attract investors without a proven track record, and you can't create a track record without investors. Of sure, I have my PERSONAL trading record, but from what I have read, these are largely ignored by the investment community. They are looking for several years worth of AUDITED trading results. My question is this: Is there any way to create an AUDITED trading record that will be taken seriously by potential hedge fund investors, without actually going out and starting that hedge fund? Because from what I read, you need at least $1 million to start a hedge fund, because you will incut $75,000 in costs your first year, and $25,000 a year after that. So you need some size to the fund to justify these costs. What about alternatives? Is it possible to create a REGISTERED COMMODITY POOL instead, and get that thing audited, therby developing a track record that would be taken seriously by potential investors when you take the next step and start a hedge fund a couple years later? My understanding of the Registered Commodity Pool requirements are that that it be limited to $5 million and 99 investors, but that the investors don't need to invest huge sums of money. This would allow me to tap into all the $10,000 amounts that most of the people I know want to invest. I also think that there are no auditing requirements for a Registered Pool, am I correct about this? Or do you need an annual audit? Like I said, I would probably want an audit anyway, so I can use the PROVEN results to attract hedge fund money a few years from now. Does anyone know what the costs are to run a Registered Commodity Pool versus a hedge fund start-up? I would think the Pool would be much cheaper to run? Thanks for some answers.
It might be possible to have your proprietary results audited. Not sure. A commodity pool is another name for a hedge fund -- a private investment limited partnership. Equity and managed futures hedge funds have similar start up requirements. If you are an exempt pool you don't need to have a disclosure document or an annual audit. Exempt pools are those with fewer than 15 investors and less than $200k in capital, IIRC. You've got the wrong mindset if you are calling your friends' $10k accounts "chump change". Because that chump change is all you are going to get for the first 12+ months of the existence of your fund, so you should treasure those friends and their trust in you. Another alternative is to manage separate accounts. Have your friends open accounts and then give you power of attorney to trade them. This is the route many CTA's go.
Here is an important question. How much money did you start with when you made %200. And yes it does make a difference.. dont let the pikers tell you otherwise. If you made $5k into $15k then you can keep dreaming.. but if you made $250k into $750k then I would take you seriously. --MIKE
YOU CAN TRADE YOUR FRIENDS MONEY UNDER THE RULES IF ITS LESS THAN $200,00 AND LESS THAN 10 PEOPLE AND YOU KNOW THEM AS FRIENDS AND YOU DID NOT SOLICIT THEM. THEN YOU CAN TRADE THEIR BLOCK ACCOUNT SEPARATELY FROM YOURS AND KEEP A VAMI RETURN ON THOSE ACCOUNTS. THEN YOU WILL WANT TO GET YOUR license AND GET REGISTERED AND D DOC DONE. JUST don't SOLICIT ANYONE OR ADVERTISE BECAUSE IT BECOMES A WHOLE NEW BALL GAME. IF THEY KNOW YOU AND ASK YOU, YOU SHOULD BE ALL RIGHT.
Sure, I realize that, but you have to understand I have no desire to make any money from my friends $10 K investment, for many of them I would do it for free. I trade with a personal capital base of of about $425,000 these days, so all I am saying is that having their extra $10 K is a small drop in the bucket for me. I am more interested in using their money to create a track record, I have no desire to extort large profits from their accounts. That comes later I hope, when I invest much larger amounts for people I do not know.
The honest truth is I started with $110,000 in capital in April 2002, and in the first 12 months I turned it into over $330,000. The return was about 202%. In the next 4 months, I built the $330,000 into about $430,000 as of today, including about $10,000 in new capital investments. I am the REAL deal. I have documented on paper every single trade I have ever made including the date and time of purchase, the number of contracts purchased, the dollar gain, the percentage gain, etc. I also have every single daily statement in PDF format that any broker has ever sent me, and every single monthly statement. I no longer work at anything else for a living besides trading, it pays much more than I could ever hope to earn doing anything else. I will be living in the Bahamas as of 2004 soon to take advantage of the tax situations there for traders like me. My friends have all seen what is going on in my life and greed/trust has gripped many of them. They want in on the deal. I would be happy to accomodate them in the right situation, if it is legal, and if it serves the purpose of my developing a solid track record that I can use to start a hedge fund 12-24 months from now. So those are the numbers. I turned $110 K into about $430 K (in US funds) in 16 months. I don't know if you "take that seriously", but I sure do, it has changed everything in my life.
You might try this site. If you can do 200% again, you'll be the number one man, and they'll be calling you. Good luck...
http://www.nfa.futures.org/compliance/publications/selfexam/self_exam.pdf http://www.nfa.futures.org/compliance/publications/dd2001/DD2003.pdf http://www.cas-info.com/ http://www.cftc.gov/opa/backgrounder/opacpocta.htm http://www.greencompany.com/ http://www.nfa.futures.org./
Why do u want to start a hedge fund for? If you think you got the skills, why not continue what u are doing? 300k in 16 months... why consider anything else? I mean, how much did u expect to get paid as a hedge fund manager? Lets say you get some investor that willing to put 1 million in. You really think you can turn that into 3 million in 16 months? If you think you can.... which I highly doubt, why bother making some schmuck rich, when you can do the same with your 400k and not have to split the profits. If you really want to own a hedge fund, I would recommend working for one first. If you can't even get a hedge fund to hire you, dont expect any investor to throw millions at you. Build your name, and one day you might own your own hedge fund managing 100 million+. xbrxx
I would say that the best way to establish a track record AND at the same time place yourself in a position to attract potential investors is to trade with a hedge fund incubator firm. These firms will allow you to build an official record and because of their business relationships with other hedge fund managers along with investors and capital pools, they can help you launch your career as a hedge fund manager, CTA, or CPO. I won't bore the readers of this thread with the details, as I doubt many people are interested in such a thing. However, PM if you want and I'll give you more info. I'm actually in a similar situation as you. I have been making on average 8% a month in my own account (my account is much smaller than yours though), and I would like to start managing money for other people.