Hi cornixforex,
Quote from cornixforex:
but I basically scalp the market so every tick matters and the current bid/ask offered is quite critical liquidity wise. Still quite down the road indeed.
You know I keep saying this to people on this board that think they are at, or closing in on their strategies liquidity restraints but think of your edge as less of a scalping set up and more of a methodology and it might be a lot more scalable that you currently realize.
I cut my teeth in the 80s in FX interbank market making and then options market making on the CME. Along with market making I used to scalp futures and day trade futures throughout the day as opportunities appeared.
Later when I went into money management my first CTA mentor who hired me as a short term swing guy to supplement his long term trend following angle convinced me to systemize my setups into an algorithm and test them in longer time frames.
It worked out ok and then years later when the floors started to die and high frequency came along my programmer took my swing/day/long term stuff and brought it into high frequency time frame.
So think about trying the same with your scalping set ups and you might get a pleasant surprise and suddenly that liquidity issue disappears over the horizon.
At this point in my trading career unless some idea works all along the time line I drop it since working every where and across most markets is one of my personal litmus tests for robustness.
Anyway itâs just a suggestion?
Quote from cornixforex:
That's good idea you have about communicating with the broker on the matter.
Just to be clear I didnât mean talk to your retail broker who handles your account since he will just hook you up with some of his other retail clients and the car dealer down the road etc.
What you want to do is talk to the FCM institutional desk which handles the big CTAs/Hedge Funds etc. If you have the numbers etc and your track record passes their risk/reward algorithms they are the guys that will pass the reports relating to you onto the institutional asset allocators to see it there is any interest in your profile.
As far as I am aware this is the way that most independent traders get discovered verses coming out of an investment bank prop group or international bank treasury etc.
Best of luck!
Quote from braincell:
Nobody mentioned the fact that even with 20% ROI as retail, in contrast to a regular "stiff" job, as a trader you have unlimited potential forward. In other types of jobs you get promoted, maybe you make it to a management position one day, but that's it, there's a cieling.
This is true but it depends on your personal definition of âunlimited potential forwardâ.
For example, back in the 80s a floor scalper on the Merc once said to me that career happiness is being self employed with no clients and no employees. So for him being a successful but modest scalper making a good living but not holding any over night positions or doing horse and pony shows to raise money etc was as big as he wanted to get (at the time).
This guys ambition verses someone with a more competitive nature that isnât satisfied making a good living as an independent scalper so they more or less âinstitutionalizeâ themselves by either joining an institution or creating their own hedge fund/CTA so they can leverage their edge and complete at the highest level.
To get to the âunlimited potential levelâ you really need to tap into OPM.
As an ironic aside the above scalper ended up in the 1990s leaving the floor and doing a career 180 and for years has been running a very successful CTA with dozens of employees and institutional clients.
I havenât spoke with him for years but have to wonder if he is happier today making millions per year verses cranking out 200k a year on the floor (which was a pretty sweet annual income in the 80s)?
Quote from opt789:
Smoker,
I know of several independent traders who made millions,
With such personal success I am assuming these guys popped up on the radar of their FCM/brokerâs risk/return algorithms so with such a fantastic track record must have got shopped to the international asset allocators; so do you have any idea why they turned down an asset allocation to the âshowâ?
Quote from opt789:
and I am sure Don Bright would be happy to point out that he knows a lot.
Sorry I sitting offshore in the sandbox I am a bit out of the mainstream of the elitetrader world and I havenât heard of Don Bright so had to Google him.
Isnât this guy the type of dude that does retail seminars on âhow to make a millionâ rather than one of the international asset allocators running an seeding program for emerging hedge funds etc? How does he know all these independent traders that have become millionaires trading out of their house?
Also I asked earlier what kind of entity are people on this forum referring to when they say âpropâ firm?
Is a âpropâ firm a hedge fund/CTA running serious wedge or is it an entity like this Don Bright Trading that gives retail trading seminars, retail brokerage services etc?
Is this Don Bright the kind of guy stateside that offers stuff like that 1:1 deal that cornixforex was talking about?
Quote from opt789:
You basically answered your own question, and I feel the exact same way, when you wrote that you are more aggressive with your own money. The psychological and risk parameters are different when you are trading only your own money with no one to answer to about anything ever vs. having every single thing you do constantly examined and scrutinized when running a fund. I don't remember the link, but as with most trading related issues I was assuming it was more anecdotal than scientific, but I remember thinking the article matched quite well with my couple decades of experience and dealing with a few thousand traders.
Yes but there is a very important but subtle difference between what each of us said.
You said:
Quote from opt789:
There have also been some studies, which I personally agree with, that show most traders are either better at trading their own money, or better at trading their own money with other people's money. It is very rare to be equal at both.
I think it is normal to be equal at both since methodology is methodology even if leverage is not leverage.
While I said:
Quote from Smoker:
Antidotal evidence: I do know I am a lot more aggressive with my own money than I am with OPM. [/B]
I am more aggressive with my own money verses the institutional allocation but successful with both because the method thus signals are the same etc and the only difference is my personal risk profile is different than the institution.
If the institution had the same risk profile as my personal risk profile their performance would line up with my personal account.
That said in the interest in full disclosure I stopped trading my own account several years ago because I felt I was already over exposed to my edge from the performance fee on the allocation. So in the interest of diversification I divvied my personal cash up between several hedge funds/CTAS I know in the business in the interest of getting some exposure to a bunch of other guyâs expertise.
And for icing on the cake two of them are running my cash far hotter than I emotionally can deal with which makes looking at the performance reports at the end of the year kind of exciting (only look at the statements once a year and it minimizes the temptation to interfere).
All the best,
Cheers Smoker
