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The accepted method of trading is to put on a trigger and manage risk by using stops. It has been my experience that a system that relies on stops to manage risk reduces the performance of a similar system that using Money Management instead. Case in point, today's fall on the Russell. The...

what the government fails to say is that many of these hedge fund -- not to mention pension funds -- invested in assets they thought were safe and when the payments stopped coming in it triggered massive margin calls that otherwise wouldn't have happened. So, are the hedge funds who were misled...

And the reason I wouldn't lie about my performance is because an anonymous board isn't as anonymous as you think. I'd be in deep shit if I came out here, lied about my performance, and then get caught a few years down the road. I'd be done. My license would be gone and I'd be banned from...

This is where you're supposed to rip on him for assuming too much risk and being on the verge of blowing up :D

Oh, and when you are dealing with non-accredited investors be sure to read Rule 506. The manager is still required to ensure these investors possess the sophistication and knowledge of the risk involved in their investment.

Disclaimer: I'm not an attorney or an accountant so all information provided below needs to verified independently. ---------------------------------------------------------------------------------- You can manage funds of up to $400k and for up to 15 non-related people so your family members...

Interesting because I'm up 9.19% this month. Surf, there ain't nothing I can say that you are not going to rip on. It just might be the case that I'm one of the best traders out there. God forbid someone like that shows up on ET.

I believe the Sharpe Ratio is an ineffective way of measuring risk for the hedge fund industry but that is the standard so I report it. Instead, hedge funds that use margin, specifically those who trade the futures markets, should track data such as: 1. How much profit, or lack thereof, are...

The 680% is not the funds account and the sharpe ratio I provided is from the fund. At the end of 2007, in the account in question (the one stated at 680%), the sharpe ratio was 4.48, which is very consistent with the number in the fund but here's the rub. When I trade my own account I take...

No, that's not necessarily how it has to work. I began trading stocks and by virtue of not having a clue what I was doing I blew up a few accounts. Once I had the experience and a track record in stocks I began trading futures. I entered this market with a lot of experience, and the only...

Interesting story pulsescan. I couldn't agree more with you about blowing up. I've never blown up a futures account but I've blown up more stock accounts than I can remember, and you're exactly right, you won't make it until you go through that process. I keep a very close eye on risk and...

Perhaps we're talking about 2 different things. I do get an audit but I do the admin. By admin, I'm talking about back office kind of stuff.

Surf, I do my own administration because the fees firms charge are obscene. There really isn't much to it...reconcile and balance daily, do end of month, quarter, and year close, and handle client communication. I don't touch the taxes but I could probably do that on my own as well. I'm not...

Looks like the file was too big. Let's try again.

The most important daily thing you need to do is trade reconcilliation. In the beginning, managing your clients will also be time consuming but that will drop off once you've been running for a while. Your investors will either be emailing you or calling you "just to check in." They are...

Surf, I just couldn't disagree more. Being successful in the HF business comes down to generating profit while managing risk and just being good at business. I firm handshake and a kick ass presentation squashes an MBA from NYU. I have presented in front of individual investors, research...

I'll try to make this as brief as possible. The 5MM is more invested capital than profits. I used 523% as an extreme an example. I've never even come close to a number like that, nor do I try to do a number like that. I watch my profit curve very, very carefully and when it speeds up I slow...

JMHO....airlines are a good buy down here.

Oh, and it's an accepted business practice for the fund to pay the startup costs. Traditionally, what you do it front the money and the fund reimburses you over time. Startup costs are typically amortized over a 4 year period but if your investors agree you can expense them in the first year...

Oh man....this is very easy. I started with 150k managing money for people I knew. Once I grew to accept clients I didn't know and accepting larger investments I couldn't get to a lawyer fast enough. Since you are estimating your startup at 10-15M don't even hesitate -- get a lawyer. It will...