How to fund a successful strategy?

[smacdtrader]

What is the frequency? Does it hold overnight? You said you used large caps for equities, right? How sensitive to latency? Minimum buying power needed for equities?

Requires 15min and 5min data, avg 1.5 trades a day on equities. By latency I assume you mean penalty from being scalped by HFT in order execution. This I don't know and I don't currently have a data based method to discover this although working on it seems interesting. Hold time is usually a few hours, so it can hold overnight and that cost has been considered. All slippage, fees and margin costs have been considered.

If I'm understanding you correctly by min buying power, you could easily implement it with 10k. You would not want to start taking positions larger than depth at best price since it would have a large effect on mean return.

 

[smacdtrader]

Let us be honest. You do not get any money for testing or ideas. But you can get money for cheap on FTMO prop firm for example. You need to pass a test and then you can get up to $400k there and nothing stops from you to make it on several prop firms altogether. After you first payout you can scale it that way, to make your first million with those retail props, or at least couple of 100k so you are independent on your strategy on your chosen broker. There is no other way. Because licensing also cost a bunch of money where you can convince wealthy people but amateur traders or investors when you have your license. Also much time you need to spend there to do prospects and doing sales interviews. But you said you do not have connections so this is by far the worse option. The cheapest and immediately way is doing a prop challenge on FTMO for example. There are also other props around where you can get "additional capital". That is all what you can do. But still enough to do your first 100k at least, then it is much easier for sure.

Ok. I had considered that but started to feel that those places are scams. Can you say from experience that they are not?

The other barrier there isn i have to find a way to automate without api access, which i thought might be possible by building it with pine on tradingview and running it through there.

 

[smacdtrader]

If it works there is no need to beg for $$$, just trade it yourself. Is this hard to understand ? Why would someone give their money away to a person who does not understand this basic fact ?

Well, I didn't exactly ask for money, just looking for suggestions on a way to launch a strategy when I don't have many resources. It is long/short and requires high leverage which makes it some what prohibitive since hard for poor people to get margin account.

 

[smacdtrader]

I don't think you've thought this through.

Say i have 100k saved and on my trading account. And say I have a strategy that earns consistently 20% a year with a pnl peak to trough ratio of 5:1. That's pretty much better that 99.9% of hedge funds out there. Now, how much do i earn with this? 20k a year, that's 1670 usd / month gross. Is that enough salary for you and you really don't need OPM? Especially when your strategy is scalable without extra effort ?

So it actually has potential for way more than 20% annual. Also if I were to trade it myself I would pick forex, has much better volatility performance there. It requires long short and probably 200x leverage, so the barrier to get an account like that is preventing me for the time being.

I mean you are right, that just 10K would actually launch this, but I don't have it or the requirements to get the proper account if I did have it.

And yes, it is might conclusion that this strategy is probably in the top 10% of available strategies. A little about me, I have investigated hundreds of strategies for myself and others as a consultant maybe over a thousand and not one has ever seemed viable for the amount of effort and risk. In my experience most funds make money by amassing huge AUM and skimming from market performance, blaming the market on bad years and taking credit on good years. Or there are the firms that find a way to legally exploit the structure of the market, a prime example is HFT front running trades. Out performing the first kind is not that big a deal, a lot of their advantage is cost arbitrage. Like you could run exactly the same startegy from home, but lose case you have too much friction. Out performing the second kind is a very very big deal.

I'm just here to get some suggestions from the trading community to help expand my options. Investigation of the options of the domain experts.

 

[smacdtrader]

Dont know where you are from, but a good statician can get a reasonable job which pays 150-200k p/annum. This should be enough to get started and get the wheel rolling. Think in a decade, not months.

People with good mathematical and statistical background are almost always in demand

Won't go into it publicly, but unfortunately I have developed a disability that makes it not possible for me to work a steady job like that, which is a main reason I started working on a fully automated strategy to begin with.

Ideally I would love to sell the strategy and tech off and collect a royalty of some kind and keep myself available for improvements and patches. I don't even know if that's a thing.

 

[smacdtrader]

The only reason these people beg for money is because they don't believe in their script, looking for an easy way.

So if you notice, I'm not begging for money, I'm appealing to a forum of experts for advice and suggestions on how to do something. And if you look at my other responses you will see that for people with no money, starting a trade has some barriers to entry.

 

[TrAndy2022]

Ok. I had considered that but started to feel that those places are scams. Can you say from experience that they are not?

The other barrier there isn i have to find a way to automate without api access, which i thought might be possible by building it with pine on tradingview and running it through there.

FTMO is trustworthy. You need to do some research because not ALL props are good. Only a few of them are good. Like Alpha Capital Group, and maybe 5ers or FXIFY. You can make a lot of money with them. They are good for what they are built for. If you can trade Forex, Gold, or Indices they are best way to accumulate some capital.

 

[smacdtrader]

How much capital do you actually have (or can get)? Do you know SPAN and Reg-T? You can easily lever up with CME products and especially spreads.

Well I literally have none. Probably hard to imagine, but actually zero. I stole crackers a few days ago.

Doesn't mean I can't raise a little or get a bar job, but under most conditions it's nearly impossible to save 10k with regular job and then getting the proper account for long short and high leverage is also a barrier.

I will look into those suggestions, never heard of them. Thank you!

 

[smacdtrader]

most time when you think you found a super strategy it is just a loophole in backtest. It is extremely hard to find a strategy with profit factor around 2-3 in big stocks

I do know this and have actually had the experience of making a few faulty backs tests only to discover the error after being totally elated for a few days. I have run a lot of data analysis for other people including back tests. This one is solid though. I even had an old colleague of mine from grad school audit the code because I was skeptical, but its legit. Now to be clear, I actually don't know that much about trading a short term strategy on equities, so I might be neglecting some fundamental friction on those particular assets, but I know about crypto and forex pretty well, and that analysis is complete and solid.

 

[smacdtrader]

Backtest results are worthless to anyone who knows about markets and trading. You need a live track record, at least a couple of years.

Your options are as follows:

1) Trade the system with your own capital. Take out a mortgage, work multiple jobs to save, whatever.

2) Raise funds from friends & family.

3) Trade the system live for a couple of years, with your account linked to a platform like Fundseeder. Obtain an audit or attestation and be prepared to show the trades, etc. Pitch the live results on fundseeder, on ET (there are some pros here with industry connections) and to legit prop firms, and if the system is any good you will attract interest.

Awesome. Thank you for the legit sincere suggestions.

I will totally disagree with you on the back-testing though. Prepared properly a back-test should be pretty close to the truth. That has been my experience in the past anyway. If you don't believe me, give me a shot at something you're toying with or something you have already been working and I'll prove it.

But also seriously thanks for the advice. Just kinda thing I was looking for.