Capital Available for Traders

[mickson]

Quote from rwk:

What RAPA is offering, in theory, is a chance to be "discovered" by showing a performance that is tamper-resistant.

Could not have said it better myself.

There are prop firms that will give most anybody a shot, but require that the trader put up cash to cover losses and perhaps pay for training. Then there are prop firms that don't require cash, but they're highly selective, as are investment banks, hedge funds, etc. What is lacking is a way for someone with no pedigree and little cash to get a start. I think what RAPA has done is noteworthy, but it remains to be seen whether it will work.

Could not have said it better myself.

The sticking points, beside that the whole idea is still evolving, seem to be with giving RAPA access to the trader's IB account and details of the methodology.

These are very real issues. Having said that we are getting a steady flow of new traders willing to post their numbers. I will add this will always be a slow process as a full time trader myself I know how hard it is to make trading profits, and therefore due to its sheer difficulty there will be few people with impressive numbers willing to display them publicly.

On the issue of having access to the IB account, there have been a number of suggestions, here is one that may be an interim solution.

The reason we want reporting access to the IB account is twofold:
1.) So we can update the account on a daily basis to keep the leaderboard current.
2.) So we can verify the returns as real and not "tampered" with.

A possible solution to point 1 is that we rely on the trader to upload the data every day. If you fail to load it on a particular day, you are given a 24hr reminder, if you fail to upload it on a 2nd day you are effectively given a "strike" and then every day it is not updated thereafter you will lose a RAPA point. You would then need to go through a rolling period of good behaviour for those points to be restored. Of course you can just provide us with reporting rights and we will do it all for you.

On point 2, we will make it a condition that in order for the money to be allocated the numbers will need to be verified. In this case people will only need to share this information with the knowledge they are in line to receive something in return. The risk we have with this is that if a "winner" cheats and we only establish this at the end of an allocation period then it will be a bit unfair for the others competing for these funds as they didn't realize they were contenders. To begin with this may be a point we could live with.

The 50/50 split on fees may work for initial allocations, but it will become onerous once the trader has established credibility and the allocation raised to something that could possibly support a business.

I guess a business partnership will only work if parties feel they are getting a fair deal. There is a lot more to growing a business than just posting good numbers, there is the whole regulatory framework, compliance, setup costs, etc. I believe RAPA will be able to assist and wear a lot of these costs with our current infrastructure. At the end of the day each case will need to be judged on its own merits.

There is also an article of faith here that asset allocators will show up in sufficient numbers and accept RAPA's preformance reports as sufficient due dilligence. That's a stretch.

Perhaps. We have an excellent relationship with one of the worlds largest hedge fund administrators with ~10 of our funds/accounts and could possibly work with them on signing off the numbers for due diligence. Gleneagle Securities and Gleneagle Asset Management are licensed entities with the financial regulator and have an extensive back office, which may be a helpful factor.

The social networking and journaling features will probably not get used much.

Partly answering the point above, it is our intention for this portal to create a viable alternative to the classic fund of fund due diligence process. We want the whole process to take place through the portal. There are many useless traders/hedge funds that pass the classic due diligence questionnaire and interviews but they couldn't make decent profits if they knew what the market would do a week from now.

My point is that we allocate 5 points to the RAPA score based on the way you describe your strategy on your Wall and also how you share some of your research ideas. As our Leaderboard stands right now we have not allocated any points to anyone on these factors but we will be doing so in the next few days. We will be doing so subjectively. In the near future we wish to bring in some element of community participation which will give members the chance to vote on peoples Wall or for traffic to the wall to count towards points.

5% of the scoring is qualitative, these weightings will be fine tuned no doubt in the future in the interests of helping investors make the correct choice.

Blogging has become a massive industry, I see no reason why using the Wall as part journal part blog won't become a big part of RAPA in the future. Currently our website is designed by quants, we have had very little outside help so we have lots to learn to fully embrace the usability and social media aspects of our site. But we sure hope to get there quick.

On a personal note, I absolutely love the Wall I am posting away like a maniac and you only see half of what I write as the juicy bits remain in my journal only for me to read. Today was also had a breakthrough as Vladimir just made his first decent post on the Wall

 

[mickson]

Quote from Maverick74:

No need for the rebuttal. I'm trying to give you ET speak. I completely understand the idea behind splitting profits. But there was a 900 page thread where most of ET seemed to not understand the concept of a split. There is another firm here on ET that does 60/40 splits and a good majority of ET thought it was sacrilegious to give away 40% of their profits. Of course that is not the right was to look at it. But that was their argument.

All good thanks.

 

[mickson]

Quote from Maverick74:

I'm not judging your firm. I look forward to your model. As I said, there is a place in the market for you. What I meant by lukewarm is, I know several firms running similar models and I have yet to see anyone of these firms raise the amount of assets that they claim to for good traders. I think they are well intentioned but it's just that it's harder then it looks.

I take your point, and I agree we will only be as good as the capital we are able to allocate.

I am very interested to hear from the community what would the number be that would get us "approval" from the the trading community?

Gleneagle currently has about $35m of seed capital with various local managers.

 

[gmst]

Hi Rapa,

Just went through your offering and website.

You guys are legitimate. I was the guy who had launched an assault on another firm (that Maverick talked about) and that resulted into the 900 page thread.

I would like to write it down that there is no comparison of RAPA with that firm. You guys are as legitimate as it gets. Without naming the other firm, following are key differences between that firm and RAPA:

1) That firm was about selecting traders based on sim trading (yes, you read it right LOL) and throwing guys back to sim from live, once they don't meet profit targets. You guys are sourcing real results and allocating capital based on that rather than wasting your time in sim-wasteland.

2) That firm was imposing unrealistic stop loss conditions, trailing stop conditions etc. etc. That firm wanted to impose tens of different rules on the trader. On the other hand, you guys are willing to allocate capital to traders based on their existing trading styles. RAPA is not forcing traders to change their trading styles.

3) That firm's business model was to charge combine fees - an initial fees of 150-400$, take it from thousands of wannabes and that firm had a great risk-free cashflow coming in month after month. As far as I know you guys are not charging traders any initial fees to post their results.

4) That firm was charging an insane amount of commissions from traders - even higher than what IB offers to retail (modus-operandi of that firm was to make money from traders commissions). RAPA has kept itself out of that ripping off land.

5) No one knew the financier behind that firm. I don't think you guys have disclosed the name of your pvt equity backer. I think if you disclose it, it will add legitimacy.

In short, Rapa get GMST certificate for legitimacy! Looking at your operation, I am confident within 3 yrs, funds available with you for distribution will grow above 100 million. I wish you good luck!!!

 

[mickson]

Quote from gmst:

Hi Rapa,

Just went through your offering and website.

You guys are legitimate. I was the guy who had launched an assault on another firm (that Maverick talked about) and that resulted into the 900 page thread.

I would like to write it down that there is no comparison of RAPA with that firm. You guys are as legitimate as it gets. Without naming the other firm, following are key differences between that firm and RAPA:

1) That firm was about selecting traders based on sim trading (yes, you read it right LOL) and throwing guys back to sim from live, once they don't meet profit targets. You guys are sourcing real results and allocating capital based on that rather than wasting your time in sim-wasteland.

2) That firm was imposing unrealistic stop loss conditions, trailing stop conditions etc. etc. That firm wanted to impose tens of different rules on the trader. On the other hand, you guys are willing to allocate capital to traders based on their existing trading styles. RAPA is not forcing traders to change their trading styles.

3) That firm's business model was to charge combine fees - an initial fees of 150-400$, take it from thousands of wannabes and that firm had a great risk-free cashflow coming in month after month. As far as I know you guys are not charging traders any initial fees to post their results.

4) That firm was charging an insane amount of commissions from traders - even higher than what IB offers to retail (modus-operandi of that firm was to make money from traders commissions). RAPA has kept itself out of that ripping off land.

5) No one knew the financier behind that firm. I don't think you guys have disclosed the name of your pvt equity backer. I think if you disclose it, it will add legitimacy.

In short, Rapa get GMST certificate for legitimacy! Looking at your operation, I am confident within 3 yrs, funds available with you for distribution will grow above 100 million. I wish you good luck!!!

Wow gmst I want to kiss you.

If you haven't worked it out yet, I am so transparent that I wear my underpants on the outside of my pants.

Good point on the private equity story. I need to ask if they are cool with it. I promise you the principals involved (me excluded) are serious players.

 

[Maverick74]

Quote from gmst:

Hi Rapa,

Just went through your offering and website.

You guys are legitimate. I was the guy who had launched an assault on another firm (that Maverick talked about) and that resulted into the 900 page thread.

I would like to write it down that there is no comparison of RAPA with that firm. You guys are as legitimate as it gets. Without naming the other firm, following are key differences between that firm and RAPA:

1) That firm was about selecting traders based on sim trading (yes, you read it right LOL) and throwing guys back to sim from live, once they don't meet profit targets. You guys are sourcing real results and allocating capital based on that rather than wasting your time in sim-wasteland.

2) That firm was imposing unrealistic stop loss conditions, trailing stop conditions etc. etc. That firm wanted to impose tens of different rules on the trader. On the other hand, you guys are willing to allocate capital to traders based on their existing trading styles. RAPA is not forcing traders to change their trading styles.

3) That firm's business model was to charge combine fees - an initial fees of 150-400$, take it from thousands of wannabes and that firm had a great risk-free cashflow coming in month after month. As far as I know you guys are not charging traders any initial fees to post their results.

4) That firm was charging an insane amount of commissions from traders - even higher than what IB offers to retail (modus-operandi of that firm was to make money from traders commissions). RAPA has kept itself out of that ripping off land.

5) No one knew the financier behind that firm. I don't think you guys have disclosed the name of your pvt equity backer. I think if you disclose it, it will add legitimacy.

In short, Rapa get GMST certificate for legitimacy! Looking at your operation, I am confident within 3 yrs, funds available with you for distribution will grow above 100 million. I wish you good luck!!!

Dude, this model already exists and has for years. Look up newmax advisors. There are 20 of these firms out there. There is nothing new here under the sun. If getting what a amounts to a 10k allocation gets you a hard on, then go excuse yourself and rub one off real quick. You'll think more clearly.

 

[sle]

Quote from mickson:
That is correct and also $100k to the top trader on the 7th December.

A stand-alone print of a 100k is too small for anyone planning to do this full time and not a significant enough addition to existing capital for anyone who is already managing enough capital to do this full time.

Which brings me to the next question - what sort of trader is the geared for? Feels like this the only people who would care are either beginners or part-timers. In that case, who is the target investor audience?

 

[Maverick74]

Quote from sle:

A stand-alone print of a 100k is too small for anyone planning to do this full time and not a significant enough addition to existing capital for anyone who is already managing enough capital to do this full time.

Which brings me to the next question - what sort of trader is the geared for? Feels like this the only people who would care are either beginners or part-timers. In that case, who is the target investor audience?

You nailed it sle. Which is exactly why there is never a serious allocation delivered. I don't blame this firm. All the other firms that do this suffer the same fate. No serious institution is going to allocate capital to a soccer mom part timing her IB account. Again, the intention is all well and good, this model has been around for years and I have yet to see it executed. It looks great on the drawing board but never works in reality. Yeah, I'm sure David Einhorn is licking his chops to allocate some serious dough to some dude with a high RAPA score. LOL.

 

[gmst]

Quote from sle:

A stand-alone print of a 100k is too small for anyone planning to do this full time and not a significant enough addition to existing capital for anyone who is already managing enough capital to do this full time.

Which brings me to the next question - what sort of trader is the geared for? Feels like this the only people who would care are either beginners or part-timers. In that case, who is the target investor audience?

Yes, pretty clear that this model is for retail traders, you don't expect a jpm pedigree guy to seek capital via this model. As someone else said, this model is for non-bank trading guys who are trading on their own - it seeks to introduce capital to them, albeit in very small size. Its just a start.

Maverick - watch out your language. Maybe you are drunk after having turkey today, but this is not chitchat forums. I am asking Mods to clean the venom you spitted. And my response was to your suggestion that this firm is somehow similar to the firm you shill for. I wanted to point it out that this firm has no matching grounds against that firm. I never said this firm is going to compete with FoFs in the alternate investment space. So, don't draw stupid and faulty comparisons.

 

[mickson]

Quote from sle:

A stand-alone print of a 100k is too small for anyone planning to do this full time and not a significant enough addition to existing capital for anyone who is already managing enough capital to do this full time.

Which brings me to the next question - what sort of trader is the geared for? Feels like this the only people who would care are either beginners or part-timers. In that case, who is the target investor audience?

Let us let the quality of the leaderboard do the talking.