Where can I find a Hedge Fund/prop office business plan?

Discussion in 'Trading' started by ronin266, Jun 6, 2012.

  1. Hi,

    I have a couple of people interested in investing into a trader group to develope it into a hedge fund in a couple of years and they asked me a business plan to have everything on paper. I´ve written bp before but for "common" business. I would like to take a look to some examples before structuring my own.

  2. Did you try www.yahoo.com?

    A prop office business plan is very similar to a stock brokerage business plan and you may have better luck searching for a stock brokerage business plan.
  3. Tried Www.google.com :D. No one uses yahoo this days lol.

    I´m still googling,but maybe someone has some old one around there. My main problem is that in this case one doesn´t deal with a product, and I´m finding dificulties structuring all the descriptive stuff in better language than "this gonna make money from nothing". :/
  4. You want a prop business plan?

    Hire a bunch of people. Have them trade on a sim account but don't tell them it's a sim. Take the opposite of their trades in a real account.

    Most of them will blow their accounts (and you will make money from taking the opposite trades). The few who do make money, you can pay them their share of their "winnings" with the money you made off the other people's trades. Remember, these "winners" actually lost you money since you were taking the opposite side of their trades, but you'll have more than enough to cover it from the losing traders.
  5. For example, you hire 20 people. Each of them puts up $5,000. That's $100,000 right there.

    15 of these people lose $500 their first week. Their "accounts" are now worth $4,500 each.

    You took the opposite of their trades so you actually made $7,500.

    5 of the people were profitable. Let's say they each made $500 their first week. Their "accounts" are now worth $5,500 each.

    You took the opposite of their trades so you actually lost $2,500.

    Your net profits at this point are $5,000.

    Your firm has a 50/50 split so each of those people gets paid $250.

    After you pay your people 50% of their $500 winnings, you have paid out $1,250.

    Your profit for the week is $3,750.

    Repeat. Encourage people to over trade so they lose more money. The more they lose, the more you make. When they blow their accounts they can deposit more money or you can fire them and hire new people.

    In the event you get someone who is consistantly profitable (unlikely), just set it up behind the scenes so his trades actually go through and make money on his trades.
  6. Lol thanks for the scheme, but the people wanna hire traders for real. Not opening accounts for them on their own money.
  7. That's how some prop shops work.

    I wasn't actually recommending it.
  8. Now I know that you´re not a "bad" guy :D.
  9. c0l$il


    When it comes to trading a business plan has 1 line.

    "I will make $...... per month, otherwise fire me."
  10. 1245


    What asset classes? Equities, options, futures, options on futures, fx, etc....

    You need to discuss:

    Source of funds
    Where custody
    How you will allocate capital
    How much leverage you will use
    Risk management
    Monthly/yearly goals for each strategy
    Description of your background
    Setup costs
    Expected monthly costs
    How you will be compensated
    How investors will be compensated
    What technology will you require including cost

    Just a quick list. A business plan for a trading group online will be hard to find. In general, most traders with their own money or friends and family, develop a track record, provide a description of the strategy, leverage, returns, your background and a copy of brokerage statements. Then investors start with SMA until you reach enough funds that formation expenses for a hedge fund make sence. Find good fund admin to guide you though the process and a good introducing broker to service your account. Investors like to see infrastructure.

    Good luck.
    #10     Jun 6, 2012