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Professional traders working in IB's make salaries somewhere between $100k-$140k depending on their seniority. Any trader (or the desk collectively) has an "annual budget" to meet (the budget here refers to the amount of profit they're expected to generate). The bonus is normally negotiated but...

IMO, the most robust way to backtest a systematic strategy is to do the following. I will give a simple example later to clarify. 1) use a historical data set that is long enough to cover multiple periods of market regimes including bullish, bearish and ranging. 2) select "Training Period...

The combination of naked shorts and long CDS's is even more destructive. Check out these Financial Sense Newshour interviews. The July2008 one comments on Bear Stearn. http://www.financialsense.com/Experts/2008/Burrell.html

I'd suggest NetMeter. I found it robust and free from spywares, etc. I only used the stable version 1.1.3. http://www.metal-machine.de/readerror/index.php?page=10

When I think about several of my friends who are working or worked in hedge funds, I can see the validity of your point here. However, there are some hedge funds with a better business model, e.g. Millennium Partners (MLP) which offers a carved out deal including a silo'd trading environment and...

You have a point about the redemption risk in hedge funds. Are there any of prop shops who specialize in Futures?

Thanks for the great advice. I realize how difficult it is to trade when your chips are low. But it feels more difficult to lose a great strategy just to get seed capital. I'm digesting all objective feedbacks you guys spared so far. Thanks.

Thanks for the feedback Anaconda. Most of your points I've already realized in a hard way. About the confidence on a strategy, one needs to "witness" its success while making it successful, which is challenge as all successful traders concur. For me the confidence is there but the platform is...

I admire your tenacity. As stated in an earlier post, it all boils down to whether we have "full confidence" in our strategies. It's hard to jump off an airplane when you're not sure if your parachute will open as you expect. The strategy can be phenomenal but it'd lead to losses if one doesn't...

You should be a trading coach. I love the optimism. I congratulate you for the mind power.

That is exactly one of the offers I got going like "we are a team here, we will give you a programmer to help you "automate" your strategy and make it better...etc. Of course I responded that I won't need any help. The point is that the whole dialog starts and runs on mistrust. Not a preferred...

You surprisingly summarized my entire thought process in one paragraph. I know that there must be a few exceptional minds who made it trading with scared money. But, I keep hearing the more pessimistic view that no one can succeed when he trades the money he depends on. I totally appreciate the...

Thanks for the advice. One comment about 20k hedge fund layoffs is that most of these guys are not PM's or traders, they're compliance officers, operations, accountants, etc. The hedge fund redemptions will "eventually" end and the $8 Trillions cash on the sideline will be vested somehow.

I agree. Laid off traders regroup and form new (but small) funds. Any systematic strats with no overnight risk and a track record of ~20% & Sharpe~3 sees traction.

Appreciate your objective suggestions. They're well taken. Thanks.

Thanks for the tip for the legal issues. And you're also right about avoiding more leverage. But I think you're slightly more optimistic than I am about hedge fund loyalty. My lack of optimism comes not from fear but from the warning of market insiders including prop traders and hedge fund PM's...

Great and concise words of wisdom. Thank you. I was warned by several professionals about 2 things which can go wrong when joining a hedge fund. First, is the non-compete clause and the other legal bindings which gives the hedge fund the shared ownership over the model. Second is the high...

I am in a crossroad that am sure is familiar to many of you. I have to decide how to move forward from here. I left my quant position in wall st a couple of years ago to develop and test trading models. I finally came across a great model, and build a production level trading system around it...

Only those hedge funds which had the partners' skin in the game are legit. The rest are ponzis. Remember, the investment banks with brokerage operations love to encourage (i.e. push) their older partners out by helping them raise capital and form a hedge fund. Once up and running they get the...

Return is not enough. Hedge funds like MLP or Schonfeld won't care if one had 2000% if Sharpe ratio is low, drawdown high and the strategy is regime-dependent. Of course, if one manages own capital all these are irrelevant as long as profit flows.