Hey everyone, I've spent most of the last week researching this question but have yet to find an answer specific to my unique circumstances. So I'm hoping someone here can help me out. I have a strong academic background (CFA) and a 13 month track record (managing +200k CAD) which is more buy and hold but I'm confident given the performance it is amenable to swing trading (often 15-20% returns in first 4-6 weeks). The performance has been very consistent as well. +60% W/L ratio with average win size around 40% and average loss -5%. No major outliers that would skew the data, either. My goal at this point is to obtain more capital so that I can make a full-time living doing this. The figure I have seen is that one needs a 500:1 capital to expense ratio to swing trade. I should be able to come up with this on my own but I am looking for options to expand the available opportunity. It seems that many prop firms focus is on day trading however are there firms out there who would back a swing trader like myself with this kind of background and track record? I believe the answer to that is yes (who?) but more importantly, what is a normal range of capital that a firm will put up for a new trader? Is there a normal ratio of capital a firm will put up against the traders own capital? Also wondering what a normal profit split would be in this type of arrangement. I've seen people suggest that its better to trade retail in situations like these but I am looking to get a loan to put up my side of the capital and want to avoid doubling the leverage, if I don't have to. Thanks, BB
It would help us answer your question with more information. This would be a helpful start. Is this a real track record or paper trading? Do I assume that you are in Canada? What asset classes do your trade? Bob
Thanks Bob. This is a real track record that started with 150k USD. I live in Toronto, Canada. Long term I would like to be able to work remotely however I would also be interested in spending time at a trading desk for the first few months to see what I could learn. I trade equities. Primarily US large-cap, mid-cap and to a lesser extent small-cap. Also from time to time trading Canadian equities and sometimes ADRs. As well, occasionally deep in the money call options on mega-cap stocks.
This would be much easier over the phone, but these are my thoughts. JBO Prop firm with your money as 1st loss. You will not be interested in them and they are not interested in you. They will only provide access to the group’s capital to provide excess day-trading buying power, not for overnight positions. They won’t want your trading because it produces very little in revenues for them. Not a good fit for either. Traditional prop firm where they allocate toward your strategy. As general statement, these firms are looking for alpha from automated strategies that have little market risk. Your strategy sounds like a long only one. They do hire analyst, because they need experts in each field for special situation, but a long only manager is not of interest to them anymore. Hedge fund allocation. This is possiblebut hard to find. You need a long only fund that finds your method interesting enough to give you an allocation from a general bucket. Those are rare to find. Hedge Funds crate buckets to allocate. They might be looking for a manager that excels at healthcare or technology. They will create a bucket for that and look for portfolio manager to fill it. Most of these are specific to an industry or a specific strategy like corporate actions or fixed income. I think you, from your basic description, are to general for this to work. I could be wrong. Separately Managed Accounts (SMA) leading to your own hedge fund. This will take a lot of work as you will be running your own business. I’m not familiar with Canadian Securities laws to know when you need to register with them. You will need to continue to build your track record. Keep track of your daily and monthly P/L. Create a presentation and tear sheet to sell yourself and your business to investors. If you were not in Canada, I could help with this. Our Lightspeed reporting makes this easy to keep track of and I have helped some traders find investors to partner with or allocate toward them. This can take time and work but might be the best path for you. Bob
Came across this in my endless wandering on the web. Jack Schwager of Market Wizards fame is involved in this. I am not making an endorsement, I haven't a clue about the how and why and I have no interest in finding out by signing up - I'm happy where I am. At face value, it might be of interest to you, so check it out if you wish. If it's all on the up and up, do share so others will know. https://fundseeder.com/home
What's a regulated trader, if I may ask? I've never been involved in other than a retail capacity so I'm not familiar.
Thanks, that just leaves me with more questions about the Fundseeder concept. As I understand it, those who trade OPM have to turn in audited accounts/reports which establish performance. Why should such a person have to jump through hoops with Fundseeder to prove what is already available? I'm not expecting an answer from you, unless you happen to know, it's just something I'm wondering about.