Taking into consideration affecting the markets thru volume, and and assuming that a trader has office support, that is clerical staff, it help and sales, etc. How much could one person trade and manage. I got to thinking about this with the Madoff case. Obviously, you can't buy 10 billion of oex calls without being noticed. I have heard that at a certain point size is going to be a problem, can one guy effectively manage 1 billion, 5 billion? There are no right or wrong answers. Along the same lines how much do you think Madoff was actually trading in the markets?
How much money can one trader manage?
- Thread starter kinggyppo
- Start date
in the late "70's ,when iowa was auctioning off foreclosed farms,pru bache and othe rlarge insurance companies were the largest buyers,they had so much money ,they couldn't find enough investments to park there money in.......99.99999999% of us will never have this problem but it is the opposite of never having enough
In (equity) hedge funds the ratio of AUM to fund employees is approximately $100M per employee. The ratio is about the same in venture capital funds. In managed futures it drops down to something like $25M per employee, because of all the giveups and other daily busywork-producing effects of nonpooled accounts.
(SI units: k = kilo = 10^3 ; M = mega = 10^6 ; G = giga = 10^9 ; etc (link))
(SI units: k = kilo = 10^3 ; M = mega = 10^6 ; G = giga = 10^9 ; etc (link))
Does any one know, if a CTA, who is trading mostly futures and has let's say $100 mln under management, does hold most of it in T-bills (say $80 mln), because he really needs about $5 mln to $10 mln for margin at any one time (i.e. if he wants to take positions about as large as his capital under management)?
I noticed most of the CTAs have annual standard deviation (volatility) about 30-40%, which means that they take slightly leveraged positions relative to their whole capital. This requires very little margin, so they could keep the rest in an interest earning bank account or T-bills. This means that if they earn zero profit after commissions for the year from their futures trading, they will still be 1-2% up, depending on the interest rates.
I noticed most of the CTAs have annual standard deviation (volatility) about 30-40%, which means that they take slightly leveraged positions relative to their whole capital. This requires very little margin, so they could keep the rest in an interest earning bank account or T-bills. This means that if they earn zero profit after commissions for the year from their futures trading, they will still be 1-2% up, depending on the interest rates.
$1. The other $49,999,999,999 was fake.
