How much has been enough for you?
- Thread starter Gcapman
- Start date
The only reason I'm still participating in this discussion is because I like you Heech, and you are incredibly civil, even when skepticism is bursting through your keyboard. I don't think you are judging my abilities at all.
I should point out that the above example is strictly hypothetical, but mainly for the purpose of simplifying the point. I'm not claiming that I can make 350% annual on $30MM. I already stated that returns diminish after about $8MM, and continue to do so up until about $30MM. At that point there would be long stretches where I would have excess equity that was not actually serving any purpose but would be better used elsewhere. That isn't to suggest that returns diminish all the way to 0%, but rather that there simply aren't enough good opportunities to employ greater amounts of capital, so that capital is better used elsewhere. Best estimates suggest that returns at $30MM will not be greater than 100%.
In any case, my statements were only in regard to the idea that every profitable trader should want to manage OPM. I cannot relate to that statement. You see, my intent is to get into the PE/VC arena. That is the area I'm most skilled in. But when I do, I'll own the firm, not work for some other PE group. Given my situation, there is very little gain from jumping through the trading validation hoops. But there are potentially large drawbacks. Disclosure of my trades subjecting me to reverse engineering attempts. Constant irritation. People trying to front-run my trades. I already have evidence of a broker front-running my trades. I wouldn't even dream of a situation where I would have to disclose a list of trades to a bunch of professional investors/traders. Instead, I'll just stay under the radar.
Like I said earlier though, in my 1/2 joking post.
3000 ES daily is ok as long as it is scaled in. Obviously a 3000lot market order is gonna incur some slippage. But six 500 lot buy limits wouldn't have any problem on ES if he isn't catching the bottom of the bar.
This is precisely the problem. By the time you are splitting up your orders into 6 lots you are already changing the expectancy of the strategy from when it was just at 1 lot. He made 33% ROE (ughh I hate using ROE), by the time he is pushing 6 lots of 500 cars, he can no longer expect anything close to his backtests and statistical consistency with just 1 lot.
You both are futures traders, I say you guys get a business dinner meeting going with heech. I will join you guys as marketing. We'll put up banners on ET
To be honest, that hasn't really been a discussion point. With a nascent manager like myself, the question for a potential investor isn't whether I'm offering 0/30 or 2/20 ... but whether I'm:
a) going to blow up,
b) continue my current numbers.
That said, everyone theoretically likes the 0/30 number, since it means our interests are aligned.
I did a lot of high-tech angel investing before getting into this Cache Landing... if you look at the returns from angels/VC funds, you'll see that 30% annualized is a *very* impressive return. And frankly, the volatility out of angel/VC funding is much higher than what you'll get out of trading, unless you're running a billion-dollar fund able to diversify through hundreds of deals.
Only time will tell... I definitely have many of the same questions you have, although my conclusion is different.
Keep in mind I'm trading on an automated basis. I really don't think my expectancy will be changing drastically from what I'm doing now... I'm already doing 20 2-lot trades, for example, and I'm really not sure 200 10-lot trades will be THAT different in these instruments. Only exception might be something like the flash crash...
You guys need to stop congratulating me... haha, I have so many crises of confidence every month, you have no idea. I think I'm getting "close", but I know one bad week/month can put me back 12-24 months.
Quote from DGunz:
This is precisely the problem. By the time you are splitting up your orders into 6 lots you are already changing the expectancy of the strategy from when it was just at 1 lot. He made 33% ROE (ughh I hate using ROE), by the time he is pushing 6 lots of 500 cars, he can no longer expect anything close to his backtests and statistical consistency with just 1 lot.
You both are futures traders, I say you guys get a business dinner meeting going with heech. I will join you guys as marketing. We'll put up banners on ET
Sure, you are correct. I guess we are just assuming two different things. Maybe because in my fast typing I swapped terms here and there.
You--- He is currently trading at a frequency of 1 round trips daily, 50es contracts. Scaling up means 10 round trips daily, still 50 contracts.
Me--- He is currently trading 10 round trips daily, 50es contracts. Scaling up means 10 round trips daily, 300es contracts.
If you are correct, then his numbers will be drastically different. If my assumptions are correct, he won't have a problem at all.
Quote from DGunz:
You both are futures traders, I say you guys get a business dinner meeting going with heech. I will join you guys as marketing. We'll put up banners on ET
Hey, who said anything about futures? .... don't let the cat out of the bag here!!
Certainly, your points are correct. I wasn't really talking about angel investing in tech funds. My skills lie in discovering areas where a company (or investment property) can dramatically cut costs or increase profits, and pulling together strategic partnerships. I have no interest in start-ups, nor do I have interest in a situation that doesn't grant me a director spot, to ensure that things are implemented correctly. There is a reason for this, and it isn't risk/volatility related. I actually have a different plan in mind, which I would be happy to discuss in private, but I don't think it's prudent to discuss it here.