How to Raise Capital?

F

FXTRADER40

I have developed a quasi-automated no-touch system that gives me roughly a 50% return per year. Meaningful drawdowns are infrequent, and always hedged. The system is fully backtested over a 5 year period. I have about $500K of my own money which is actually enough capital start trading. My problem is the other costs associated with setting up the system and business. I figure that it will take about $200K per year to run the business. This means I quit my current job (software engineer) and dedicate all of my time to starting up the business. I pay myself a $100K salary per year, and the other $100K goes to operating costs like office space, computer systems, legal, accounting, and most important of all.....marketing and sales!! This is my biggest problem. I do not want to sweat it out for 5 years in some crummy office in some crummy town. So the main question would be how does one attract investors to such a business? Initially, I just really need normal business loans to pay for the operating costs. Of course the next or concurrent steps are convincing other people let me manage their money. At the moment I have no network to draw on, as I am in the software engineering business, not in money management or trading comercially. Most of the private equity news letters seem to focus on businesses that make a physical product or provide a service. As far as starting a hedge fund, this appears even more daunting, as the capital requirements are usually above $5M. Any advice on how to get this seed capital for operating costs and a feasible strategy for getting people to let me manage their money?
 
Quote from FXTRADER40:
. . . system that gives me roughly a 50% return per year. . . have about $500K of my own money . . .
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You cannot live on $250k per year (50% on $500k) with NO overhead? Do you want us to pass the hat?
 
Quote from rwk:

You cannot live on $250k per year (50% on $500k) with NO overhead? Do you want us to pass the hat?
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You forgot to add the "ET Modifier", cut the last zero off every number. Sometimes there is a need for the "ET Super Modifier", but these nubers are much to low for that application at this time.

:D

Good Luck!
 
Quote from FXTRADER40:

I have developed a quasi-automated no-touch system that gives me roughly a 50% return per year. Meaningful drawdowns are infrequent, and always hedged. The system is fully backtested over a 5 year period.
More...

Really hate to bust your bubble, but a backtested system is worthless without a verifiable record of real time results.

If backtesting had monetary value to investors, this site would be overflowing with very wealthy traders.

Trade your system for a year, and if your results are as you project, your record will be your calling card and doors will be open.

If you don't have enough confidence in the system to leave your present employment, then why would someone else invest in you?

At some point in time, every successful independent trader on this site had to make the decision to go it alone. No guts, no glory.

Or, to use a well-worn but very appropriate phrase: "Money talks and bullshit walks."
 
Quote from FXTRADER40:

I have developed a quasi-automated no-touch system that gives me roughly a 50% return per year. Meaningful drawdowns are infrequent, and always hedged. The system is fully backtested over a 5 year period.
More...

What does "fully backtested" mean? Did you account for the simple fact that when you actually trade a system the trades are real whereas when backtesting a system the trades are fake?

The only way to see if reality makes a difference is to trade the system.

Ron
 
Quote from Algorithm:

You forgot to add the "ET Modifier", cut the last zero off every number. Sometimes there is a need for the "ET Super Modifier", but these nubers are much to low for that application at this time.

:D

Good Luck!
More...

LOL!
 
Quote from Algorithm:

You forgot to add the "ET Modifier", cut the last zero off every number.
More...

Hard to live off 5% on 50k indeed..
 
Quote from FXTRADER40:

I have developed a quasi-automated no-touch system that gives me roughly a 50% return per year. Meaningful drawdowns are infrequent, and always hedged. The system is fully backtested over a 5 year period. I have about $500K of my own money which is actually enough capital start trading. My problem is the other costs associated with setting up the system and business. I figure that it will take about $200K per year to run the business. This means I quit my current job (software engineer) and dedicate all of my time to starting up the business. I pay myself a $100K salary per year, and the other $100K goes to operating costs like office space, computer systems, legal, accounting, and most important of all.....marketing and sales!! This is my biggest problem. I do not want to sweat it out for 5 years in some crummy office in some crummy town. So the main question would be how does one attract investors to such a business? Initially, I just really need normal business loans to pay for the operating costs. Of course the next or concurrent steps are convincing other people let me manage their money. At the moment I have no network to draw on, as I am in the software engineering business, not in money management or trading comercially. Most of the private equity news letters seem to focus on businesses that make a physical product or provide a service. As far as starting a hedge fund, this appears even more daunting, as the capital requirements are usually above $5M. Any advice on how to get this seed capital for operating costs and a feasible strategy for getting people to let me manage their money?
More...

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Fine place for "networking" ! ;=) :)
 
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