CTA Prop Trading Record - Notional?

[Chicago_CTA]

Quote from chinook:

I have a similar question. I went through the NFA guidelines fro CTA disclosure statements. I wasn't still clear about reporting notional and nominal accounts...

http://www.nfa.futures.org/NFA-compliance/publication-library/disclosure-document-guide.pdf

On the first month, an account is notionally funded starting with $250k (but treated as $1M nominal) and thus is traded at 4x leverage. Then another $1M comes in second month and is traded at 1x leverage. The first $250k is still traded at 4x leverage... Will it be OK to report the AUM as:

Month 1, Month 2
$1M, $2M

Thanks.

My understanding is you that a client's money management decisions should not change a CTA's performance results.

In other words, if the program size is $100,000 USD, whether a client actually deposits $50,000 or $35,000 or $96,000, the performance calculations are based on the account being $100k.

When clients sign an Advisory Agreement, they must state at what level their funds will be traded, i.e. "Mr. CTA, here's $45,000 - trade it at $100,000 funding level."

Hope this helps.

NFA is pretty helpful if you call them on the phone. Just say "CTA Compliance question" when you call and they'll route you quickly.

 

[chinook]

Quote from Chicago_CTA:

My understanding is you that a client's money management decisions should not change a CTA's performance results.

In other words, if the program size is $100,000 USD, whether a client actually deposits $50,000 or $35,000 or $96,000, the performance calculations are based on the account being $100k.

When clients sign an Advisory Agreement, they must state at what level their funds will be traded, i.e. "Mr. CTA, here's $45,000 - trade it at $100,000 funding level."

Hope this helps.

NFA is pretty helpful if you call them on the phone. Just say "CTA Compliance question" when you call and they'll route you quickly.

Thanks this is what I thought too. I'll definitely check in with NFA when the times. I talked to them couple of times previously and indeed they were very helpful.

Thanks.

 

[heech]

Ha, that's awesome this thread is still here. Good memories, trying to navigate the NFA.

Have to say, almost 2 years later... these guys are pretty harmless (so far).

 

[ASusilovic]

Quote from heech:

With an earlier FCM (RCG), they were charging me 200% of SPAN margin... and they were doing it incorrectly, to boot. Idiots. I was able to compare to my PC-SPAN results and figure out what was happening.

I am laughing at my end very loud...

 

[nakachalet]

Quote from chinook:

I have a similar question. I went through the NFA guidelines fro CTA disclosure statements. I wasn't still clear about reporting notional and nominal accounts...

http://www.nfa.futures.org/NFA-compliance/publication-library/disclosure-document-guide.pdf

On the first month, an account is notionally funded starting with $250k (but treated as $1M nominal) and thus is traded at 4x leverage. Then another $1M comes in second month and is traded at 1x leverage. The first $250k is still traded at 4x leverage... Will it be OK to report the AUM as:

Month 1, Month 2
$1M, $2M

Thanks.

if and when you have a consistently profitable setup or setups and you are successfully and consistently trading them with great successes....

why do you wish to migrate to trade for someone else or use someone else capital to generate profit for others....?

i note that most of you must be great traders.....

and not that i am skeptical about what you are doing or what you intend to do or capable of doing, in terms of much greater profitability in terms of vast commissions and all.... but i am just curious and like to know from the horses' mouths.

any successful prop trader(s) care to enlighten others not in your challenging field?

thanks for your time and response, prop traders.

no, personally, i won't consider migrating into prop trading or whatever you might call the process. am very happy trading my own cap and for my own self without having to explain to anyone or any entity which might or might not be happy when i take a month off in december to skii in french or italian alps....

 

[southbeach4me]

nakachalet, as a CTA my clients have no problem with me taking vacations(usually 1 week every 3 months), as long as they are making money with me.

.......can't wait to go back to Cortina D' Ampezzo

 

[heech]

If I wasn't working to build this business, I'd be working to build a different one. I enjoy it.

And (in theory at least) fund management is a very profitable business.

 

[caementarius]

heech (or anyone) - how much did it cost you to set up the CTA?

I've formed LLC and passed Series 3 - I need to do fingerprinting and disclosure docs. No performance info in DDs, as I have not managed anyone else's money before. Purpose is to start with family and friends to build a record since I've been profitable the last 6+ months. I know that's not long, but I feel optimistic for the first time in my trading.

I'm following the NFA guide on disclosure docs and it looks fairly formulaic. Do I really need to hire a specialized lawyer for DD and specialized accountant for recordkeeping (I am using Interactive Brokers)?

NFA Guide: http://www.nfa.futures.org/nfa-compliance/publication-library/disclosure-document-guide.pdf

I know this is one of those "If you don't want to spend the money then you shouldn't be doing it" type of questions but I always try to save money where I can and find that I learn the most doing work myself (fixing cars or whatever else).

Feel free to PM me (or anyone going down this road), I'd be happy to share information as things develop.

 

[Chicago_CTA]

Quote from caementarius:

heech (or anyone) - how much did it cost you to set up the CTA?

I've formed LLC and passed Series 3 - I need to do fingerprinting and disclosure docs. No performance info in DDs, as I have not managed anyone else's money before. Purpose is to start with family and friends to build a record since I've been profitable the last 6+ months. I know that's not long, but I feel optimistic for the first time in my trading.

I'm following the NFA guide on disclosure docs and it looks fairly formulaic. Do I really need to hire a specialized lawyer for DD and specialized accountant for recordkeeping (I am using Interactive Brokers)?

NFA Guide: http://www.nfa.futures.org/nfa-compliance/publication-library/disclosure-document-guide.pdf

I know this is one of those "If you don't want to spend the money then you shouldn't be doing it" type of questions but I always try to save money where I can and find that I learn the most doing work myself (fixing cars or whatever else).

Feel free to PM me (or anyone going down this road), I'd be happy to share information as things develop.

You'll pay approximately $1,000 for your first year's registration. $900 per annum for NFA dues for CTAs; and $100, I believe, for initial registration. I wish you luck with your startup - it's a great business.

Try to keep your drawdowns small. There's no shortage of cowboys who can make decent returns with 50+% max drawdowns.

The real pros protect capital.

GL!

 

[caementarius]

Quote from Chicago_CTA:

You'll pay approximately $1,000 for your first year's registration. $900 per annum for NFA dues for CTAs; and $100, I believe, for initial registration. I wish you luck with your startup - it's a great business.

Try to keep your drawdowns small. There's no shortage of cowboys who can make decent returns with 50+% max drawdowns.

The real pros protect capital.

GL!

Thanks! I have the NFA invoice. I'm just wondering if I can do the due diligence/records on my own or if it is strongly recommended to hire someone. I think I can do it on my own.

Another question: is there a comprehensive list of where CTAs submit their numbers to? (Barclay, ITR etc)