Buying Power - Pooled Equity - Trading Capital

Man, I think you guys are comparing apples to oranges! Hedge Funds are financial services companies with a certain organizational structure & operating model vs prop trading is only similar in a small way. HF's are about big size and sofisticated risk management and capital managment vs Prop Trading is more about being nimble and systems focused. Allot like the differences between being a Carpenter and a Builder. The Carpenter is a craftsman and the Builder is a White Coller buisness person who specializes in building constrution.

Very different mind sets and ambitions, very difficult to do both at the same time or to evolve to. A trader will commonly be too narrow minded and a charismatic Hedgefund manager could never be a good trader, he would get his ass kicked. In my limited experience oppinion... FWIW Best to do a skills assessment and a reality check before proceeding with either!
 
Quote from MDCigan:



Don,

I have two questions for you regarding your answer above in terms of somebody being a prop trader under Bright vs. forming and setting up their own hedge fund.

1. Do you allow the trader to trade the markets (equities, futures, currencies), instruments (underlying, options), and time horizons (day, month, 6 months, etc.) that they are ALREADY SUCCESSFUL AND COMFORTABLE with or do you force them into whatever the "Bright" system of successful trading is?

An example. In my case, 95%+ of my trading is POSITION TRADING EQUITY OPTIONS. I've identified an "edge" there and I am successful at it. I have no clue and no desire whatsoever to daytrade equities, scalp, or even swing trade. It took me a long time and lots of hard work to get to this point and I have no desire to learn a totally different trading methodology JUST TO GET ACCESS TO ADDITIONAL CAPITAL. I have no concern whatsoever for my daily P/L as that is just noise. My focus is on month to month results.

2. What is the maximum capital and leverage you offer to a potential trader?

I think it isn't a stretch to say that if somebody can genuinely build a strong track record with high returns, low drawdown, that eventually getting AUM over time to 25 million, 50 million, 100 million, or above isn't impossible. Is that same opportunity available under the prop system.

One of my goals is to set up my own hedge fund, but I am interested in the prop trader route if I think I can get the same benefits. But it comes down to, can I

1. Trade the approach and methodology I WANT TO (which in my own hedge fund I obviously could)

2. Get the leverage of OPM. 20% (incentive fees) on AUM of 50 million is going to be a bigger take then keeping 95% tradin profits on trading capital of 1 million.
More...

If your trading stragegies actually work with small capital (under $1mil), then why would they not work with more than $mil. Many people come to us with their "strategies" that "work"...but don't have any money....so, we get a bit cynical...."how can you say it works, if you haven't made any money...? Bring in $100K or so, trade what you like.

And, do you really think that you can get OPM of $50Million? If so, go right ahead....all I can offer is around $2-5 mil or so to get you started. And no "begging" for money from outsiders, and no "investors" to cater to. And you certainly won't hear much from us if your account is bigger every week, right?

You have to earn the ability to ..." Trade the approach and methodology I WANT TO " just like everyone else...there is no sane person on the planet that is going to fall for that song and dance...(let me do it my way, just give me the money) yeah, right.

Reminds of the guy who came to use with a great idea. All he needed was $100,000 of our money to form an LLC. He wanted to "give" Bob back 50% of the profits...and all he wanted us to do was trade the account for him like we do our other family accounts.......(think about it)....

So, if your "goal" is to set up a hedge fund, then do it. If your goal is to make money for yourself, then we may be able to work together....and at some point, they don't have to be mutually exclusive. I just hate to see smart people get caught up in the silliness of "fund raising" OPM, when they may not have to.

Don
 
Quote from bent_prop:

Man, I think you guys are comparing apples to oranges! Hedge Funds are financial services companies with a certain organizational structure & operating model vs prop trading is only similar in a small way. HF's are about big size and sofisticated risk management and capital managment vs Prop Trading is more about being nimble and systems focused. Allot like the differences between being a Carpenter and a Builder. The Carpenter is a craftsman and the Builder is a White Coller buisness person who specializes in building constrution.

Very different mind sets and ambitions, very difficult to do both at the same time or to evolve to. A trader will commonly be too narrow minded and a charismatic Hedgefund manager could never be a good trader, he would get his ass kicked. In my limited experience oppinion... FWIW Best to do a skills assessment and a reality check before proceeding with either!
More...

Thanks, Bent, for pointing this out to our friends. It seems that some people want to call every gathering of OPM a hedge fund. I don't really have a problem with any of this, and have been on both sides of many, many plans...and I have found that over the years...if you keep it simple, and focus on the bottom line (making money by trading)...everything else is academic.

Don
 
Quote from Don Bright:



If your trading stragegies actually work with small capital (under $1mil), then why would they not work with more than $mil. Many people come to us with their "strategies" that "work"...but don't have any money....so, we get a bit cynical...."how can you say it works, if you haven't made any money...? Bring in $100K or so, trade what you like.
Don
More...

Hi Don,

Let me get this straight...

I start trading with your firm and put up $100K.
Now, after a week or 2, it's 3:45pm EST and I'm long $400K of 50 different stocks.
My question is, will your firm automatically liquidate my positions down to my $100K times some predetermined limit or do you call me and tell me...do this again and you're gone?

Do you have some guideline/formula as to what if any overnight leverage one is allowed to use?

Also, if I bring in $100K is there any way I could be certain of getting it back in the event your company failed? (I'm sure you'll be around a long time but you never know)

Thanks for answering these questions.
 
Quote from IndexTrader:



Hi Don,

Let me get this straight...

I start trading with your firm and put up $100K.
Now, after a week or 2, it's 3:45pm EST and I'm long $400K of 50 different stocks.
My question is, will your firm automatically liquidate my positions down to my $100K times some predetermined limit or do you call me and tell me...do this again and you're gone?

Do you have some guideline/formula as to what if any overnight leverage one is allowed to use?

Also, if I bring in $100K is there any way I could be certain of getting it back in the event your company failed? (I'm sure you'll be around a long time but you never know)

Thanks for answering these questions.
More...

We have people that use 10, 20 , 30 or more times their equity for overnight positions....and, yes, we have the money to cover it.

Don
 
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