Any good traders out there looking to start a prop firm?

[wenzi]

Nope, I am asking techguychicago.

I am not giving him a hard time, but when firms are JUST starting out, not ones with tons of capital for infrastructure, you need profitable traders strategies.

techguychicago said he was a tech guy, but that is not the first thing you need if you are starting a firm.

So one needs to bring capital, a profitable track record, a profitable strategy or SOMETHING to the party. I was just asking what that something was in his case.

Quote from mabenn:

Who?

me: both.

 

[BMasters]

myself and someother friends are also interested in opening up a prop firm let me know whoelse is interested maybe we could all talk.

 

[Worldcrusher]

I am a full time trader that has a profitable, non-directional system trading options on the Nasdaq 100 index. It has almost 2 years of verifiable history producing returns of 30-38% per year with a 14% draw down. Ten of those months were spent trading my own money with it, but it was a small account. It is currently posted on Collective2 at http://www.collective2.com/go/qqqqubert

The system is a consistent cash generator with a smooth equity curve and is highly scalable. I have posted it on ET previously trying to convince others of its potential, but there is no interest. I have explored trying to start a hedge fund but I keep running into the typical roadblocks: no wall street contacts or pedigree, not a long enough track record, black swan event concerns, I don't have millions currently under management, blah, blah blah (not saying they aren't important, just tired of the fact that the validity of system counts for so little). So 30-40% on a small account still won't pay the bills and so it goes nowhere.

As I said, I envisioned this system as the basis of a hedge fund and I am not sure how a prop firm would use it or if you are even set on that particular track. However, I am tired of hitting walls and so I'll consider any option at this point...

So now you have a potential system. Let me know if there is any interest and we can see where it goes.

Sincerely,
Daryl

 

[mabenn]

Quote from Worldcrusher:

I am a full time trader that has a profitable, non-directional system trading options on the Nasdaq 100 index. It has almost 2 years of verifiable history producing returns of 30-38% per year with a 14% draw down. Ten of those months were spent trading my own money with it, but it was a small account. It is currently posted on Collective2 at http://www.collective2.com/go/qqqqubert

The system is a consistent cash generator with a smooth equity curve and is highly scalable. I have posted it on ET previously trying to convince others of its potential, but there is no interest. I have explored trying to start a hedge fund but I keep running into the typical roadblocks: no wall street contacts or pedigree, not a long enough track record, black swan event concerns, I don't have millions currently under management, blah, blah blah (not saying they aren't important, just tired of the fact that the validity of system counts for so little). So 30-40% on a small account still won't pay the bills and so it goes nowhere.

As I said, I envisioned this system as the basis of a hedge fund and I am not sure how a prop firm would use it or if you are even set on that particular track. However, I am tired of hitting walls and so I'll consider any option at this point...

So now you have a potential system. Let me know if there is any interest and we can see where it goes.

Sincerely,

Daryl

Sounds great! What position sizing model are you using to size your positions? Adjusting the risk level per trade and using more equity might make a nice system. My idea is to combine several systems on different markets, styles, etc to produce one heck of a managed fund!! I will check out your link. Where do you currently live?

 

[bespoke]

Quote from Worldcrusher:

I am a full time trader that has a profitable, non-directional system trading options on the Nasdaq 100 index. It has almost 2 years of verifiable history producing returns of 30-38% per year with a 14% draw down. Ten of those months were spent trading my own money with it, but it was a small account. It is currently posted on Collective2 at http://www.collective2.com/go/qqqqubert

The system is a consistent cash generator with a smooth equity curve and is highly scalable. I have posted it on ET previously trying to convince others of its potential, but there is no interest. I have explored trying to start a hedge fund but I keep running into the typical roadblocks: no wall street contacts or pedigree, not a long enough track record, black swan event concerns, I don't have millions currently under management, blah, blah blah (not saying they aren't important, just tired of the fact that the validity of system counts for so little). So 30-40% on a small account still won't pay the bills and so it goes nowhere.

As I said, I envisioned this system as the basis of a hedge fund and I am not sure how a prop firm would use it or if you are even set on that particular track. However, I am tired of hitting walls and so I'll consider any option at this point...

So now you have a potential system. Let me know if there is any interest and we can see where it goes.

Sincerely,
Daryl

13% closed drawdown. If you look at open drawdown I see one trade that has a 20-25% open drawdown. Is it an error? It shows "no calc' there. Just curious.

 

[Worldcrusher]

Quote from mabenn:

Sounds great! What position sizing model are you using to size your positions? Adjusting the risk level per trade and using more equity might make a nice system. My idea is to combine several systems on different markets, styles, etc to produce one heck of a managed fund!! I will check out your link. Where do you currently live?

The position sizing is based on trading out of a retail trading account so I limit leverage to 2:1. Of course, I could double that and effectively double the returns and drawdown, but I was trying to make it easy for my subscribers to trade in their accounts. With that said, there is a level of discretion involved in order sizing and I have learned to maximize it during the strongly trending and volatile markets over the past several years. I recommend reading the QQQQubert forums on Collective2 to learn more about the methodology.

Your idea to combine multiple systems is a good one, because my system is 100% long and needs to be hedged by either other funds or other investment vehicles within a well diversified portfolio. My system is intended to be only one component of that portfolio, rather than the entire portfolio.

I live in York, PA but I have found location to be a minimal issue due to means of communication such as IM, chats, virtual conference rooms, Skype, webcams, etc. For the right opportunity, I might be able to talk the wife into relocation. (Maybe I would even come with her).

Sincerely,
Daryl

 

[Worldcrusher]

Quote from bespoke:

13% closed drawdown. If you look at open drawdown I see one trade that has a 20-25% open drawdown. Is it an error? It shows "no calc' there. Just curious.

Only subscribers are able to see my open positions, so I am not sure where you are seeing open stats. However, it is quite possible that one trade has such a drawdown. I would ask you to keep three things in mind: 1.) positions are entered during times of extreme volatility and incur a great deal of movement, 2.) any one trade has only a small impact on the fund as a whole due to the low leverage used, and 3.) in this system, profits are locked in when positions are established because options are being sold and a drawdown only indicates the extent of the profit rather than a loss. For these reasons, I feel the closed systemic drawdown is the most accurate indicator of the (entire) system.

Sincerely,
Daryl

 

[bespoke]

Quote from Worldcrusher:

Only subscribers are able to see my open positions, so I am not sure where you are seeing open stats. However, it is quite possible that one trade has such a drawdown. I would ask you to keep three things in mind: 1.) positions are entered during times of extreme volatility and incur a great deal of movement, 2.) any one trade has only a small impact on the fund as a whole due to the low leverage used, and 3.) in this system, profits are locked in when positions are established because options are being sold and a drawdown only indicates the extent of the profit rather than a loss. For these reasons, I feel the closed systemic drawdown is the most accurate indicator of the (entire) system.

Sincerely,
Daryl

I meant for a trade in September. Max drawdown was -$5000, and it closed for a profit of $500. But it showed "No Calc" above the trade. I've never seen that before. Maybe you should report it to Matthew.

Unfortunately, C2 only calculates max drawdown by closed drawdown. And most times the equity curve doesn't reveal those nasty positions as well. It's wise for everyone to check every trade in every system. I've seen 50%+ drawdown (intraday!) on trades yet the system only tells you max drawdown was much less. Usually see that in systems with high leverage. But if people could see what's behind those smooth and pretty equity curves....

Sorry, I'm not trying to target you but just to warn neophytes of other systems on C2. Your system looks fine. With a longer track record you should be able to attract some subscribers. It would be nice to see a higher sharpe ratio though.

Best of luck.

 

[Worldcrusher]

Quote from bespoke:

I meant for a trade in September. Max drawdown was -$5000, and it closed for a profit of $500. But it showed "No Calc" above the trade. I've never seen that before. Maybe you should report it to Matthew.

Unfortunately, C2 only calculates max drawdown by closed drawdown. And most times the equity curve doesn't reveal those nasty positions as well. It's wise for everyone to check every trade in every system. I've seen 50%+ drawdown (intraday!) on trades yet the system only tells you max drawdown was much less. Usually see that in systems with high leverage. But if people could see what's behind those smooth and pretty equity curves....

Sorry, I'm not trying to target you but just to warn neophytes of other systems on C2. Your system looks fine. With a longer track record you should be able to attract some subscribers. It would be nice to see a higher sharpe ratio though.

Best of luck.

Ok, I see what you are talking about now. I think the reason this particular trade is showing such whacked out figures is because I scaled down the system and it wreaked havoc on many statistics such as some trades and the inflated figure for the realism factor (used to be in the high 90's before scaling down) which is only supposed to range from 1-100.

Yes, I would like to see a higher Sharpe ratio as well!

Thank you for pointing out the corrupted figures on C2. I will bring it to Matthew's attention.

I wish you all continued success in your trading.

Sincerely,
Daryl

 

[TM_Direct]

Quote from BMasters:

myself and someother friends are also interested in opening up a prop firm let me know whoelse is interested maybe we could all talk.

i have two firms you could buy that are FINRA approved for prop trading...50k...now all you need is :

120k for net cap
$$ above and beyond that to trade with ( 500k?)
a series 24 principal
a series 27 principal
100k + to give to a clearing firm
20k for trading software
a complicance officer to review everything above daily
WSP's
AML audit
BCP plan
CPA audit
....and a lot of vodka to help ease the headaches of an unprofitable day