How to Raise Capital?
- Thread starter FXTRADER40
- Start date
"Take a year off work and trade [his] system," based on nothing more than a back test? I wouldn't... but that's just me.
FXTRADER40, why not keep your current job as a software engineer - which, you implied, pays $100K+ per year - while trading your "quasi-automated no-touch system" on a fraction of your $500K risk (?) capital initially? Continue doing that for... however long it takes to reach the next logical step in your decision-making process.
At this stage, "raising capital" shouldn't even enter the picture on your end and, in any case, would not be a remotely productive use of your time.
FXTRADER40, why not keep your current job as a software engineer - which, you implied, pays $100K+ per year - while trading your "quasi-automated no-touch system" on a fraction of your $500K risk (?) capital initially? Continue doing that for... however long it takes to reach the next logical step in your decision-making process.
At this stage, "raising capital" shouldn't even enter the picture on your end and, in any case, would not be a remotely productive use of your time.
Let me see if I understand this right. You have developed a system that produces 50% returns on a backtest, has never been tested with real money, hasn't had the "human element" involved and you want to start at the TOP?
Is this correct?
I started with $5000 in my basement and spent YEARS to get where I'm at today. Blood, sweat, and tears. Shit, my basement wasn't even finished at the time. I was trading in a room with 2x4 walls and concrete floors.
Is this correct?
I started with $5000 in my basement and spent YEARS to get where I'm at today. Blood, sweat, and tears. Shit, my basement wasn't even finished at the time. I was trading in a room with 2x4 walls and concrete floors.
You should have made the investment in the capital equipment (shoes in this case) in order to become more productive. Then saved with your earnings and reinvested for a car to increase productivity.
Sort of like our friend here that wants to take a $100K salary. Sorry, but if I'm investing in a start up fund, you're not going to make a dime before you make me some money.
The O.P. needs to do A LOT OF HOMEWORK besides just his paper trading system.
At least this thread is good for a laugh or two.
Good Luck!
Thank you for those that have responded with helpful comments or constructive criticism. I'll now reply or post more info to clarify the situation:
I spent about 1000 hours (6 months) developing the system in Trade Station. Fully backtested means that the results from the TS stategy simulator are my basis for all numbers specified (e.g. return, drawdown, etc). The system is configurable so that variables such as trading period, indicators, position amounts, etc, can be defined, and then the the system runs. At the moment, it is working for 2 FX spot majors. My goal is to extend it to other quantifiable tradable objects.
I am not selling myself as a expert trader. I am an software engineer, and I am pretty confident that the system will work based on the specifications. If anybody has info on the reliability of TS backtesting, I would be very interested to hear about it and any alternatives. As an algorithmic developer, I focus on tweaking the automated system until it yields a good reuslt. A good analogy would be how a professional pilot trains in simulators, and then flys for real. If you know he avaiation industry, you know that simulators have come a long way, and now comprise a large portion of pilot training. I beleive this is also what IBs and HFs are doing as well with huge teams of engineers. No sense in slogging along alone.......use computation and other people's money instead.
No offence to those starting with much less, taking more risk or working harder. My hat is off to you. I know $100K per year sounds like a lot of money, but if you have a family and are a bit older, you will realize that it is not that much. "Working from a basement" will have serious negative impacts on my marriage/family. Although you cannot see it, $500K taken alone from my own capital will have a huge impact on my non-trading risk. Also, doing this part-time along with my day job is not an option. If you think I have a high salary as a software engineer, it's because the work is time consuming with little time left over.
Regarding the auditable track record, I would be interested to know what this means exactly. I have looked a little bit at the admin side (e.g. accounting systems), but this takes huge time as well. I have no live experience. If I set this up on a smaller scale, most of the costs/time will be identical to if I did it with a lot more of OPM (e.g. computer systems, office space, accountant, etc). Example: test this out on my own with 100K and make 50K (50%). After expenses, I have nothing left over. Hence my goal to get more working capital. Example: test it out with $1M, and make only 200K (20%) = better!!! Then grow it really large!
I spent about 1000 hours (6 months) developing the system in Trade Station. Fully backtested means that the results from the TS stategy simulator are my basis for all numbers specified (e.g. return, drawdown, etc). The system is configurable so that variables such as trading period, indicators, position amounts, etc, can be defined, and then the the system runs. At the moment, it is working for 2 FX spot majors. My goal is to extend it to other quantifiable tradable objects.
I am not selling myself as a expert trader. I am an software engineer, and I am pretty confident that the system will work based on the specifications. If anybody has info on the reliability of TS backtesting, I would be very interested to hear about it and any alternatives. As an algorithmic developer, I focus on tweaking the automated system until it yields a good reuslt. A good analogy would be how a professional pilot trains in simulators, and then flys for real. If you know he avaiation industry, you know that simulators have come a long way, and now comprise a large portion of pilot training. I beleive this is also what IBs and HFs are doing as well with huge teams of engineers. No sense in slogging along alone.......use computation and other people's money instead.
No offence to those starting with much less, taking more risk or working harder. My hat is off to you. I know $100K per year sounds like a lot of money, but if you have a family and are a bit older, you will realize that it is not that much. "Working from a basement" will have serious negative impacts on my marriage/family. Although you cannot see it, $500K taken alone from my own capital will have a huge impact on my non-trading risk. Also, doing this part-time along with my day job is not an option. If you think I have a high salary as a software engineer, it's because the work is time consuming with little time left over.
Regarding the auditable track record, I would be interested to know what this means exactly. I have looked a little bit at the admin side (e.g. accounting systems), but this takes huge time as well. I have no live experience. If I set this up on a smaller scale, most of the costs/time will be identical to if I did it with a lot more of OPM (e.g. computer systems, office space, accountant, etc). Example: test this out on my own with 100K and make 50K (50%). After expenses, I have nothing left over. Hence my goal to get more working capital. Example: test it out with $1M, and make only 200K (20%) = better!!! Then grow it really large!
Look friend the criticism of 100K as salary isn't about the number, it's about your expectations. You even stated that your expectancy is on 1MM is 200K (20%). Do you know who Steve Cohn is? Even some of the best of the best are barely able to take 50% of the return as compensation. I suggest you familiarize yourself with the industry norms before you start to raise capital. How about 1 - 2% of initial deposit and 20% of profits as a performance bonus? Well, that's the going rate, and as a matter of fact, the industry has become so crowded there are many now that take less and have less lock-up time.
1MM isn't nearly enough to start a serious hedge fund with, let alone back a system that the creator of said system has yet to make a penny from. So you see, that's the basis of the remark. You need connections and experience. I suggest you work on experience then seek the connections to the money.
Until a system has been actively traded over time and independently audited for results your inquiry is premature. Belive me, if we all had a dollar for everyone that asked to manage our money, we would all be rich (let alone some software programmer with no experience in the financial markets).
There's a point at which reality has to set in. If you need 100K per year to live and can't make that trading 500K worth of money, then either your system has to change or, like every other small business owner that ever started....... your expectations have to change. It's that simple.
Good Luck!
1MM isn't nearly enough to start a serious hedge fund with, let alone back a system that the creator of said system has yet to make a penny from. So you see, that's the basis of the remark. You need connections and experience. I suggest you work on experience then seek the connections to the money.
Until a system has been actively traded over time and independently audited for results your inquiry is premature. Belive me, if we all had a dollar for everyone that asked to manage our money, we would all be rich (let alone some software programmer with no experience in the financial markets).
There's a point at which reality has to set in. If you need 100K per year to live and can't make that trading 500K worth of money, then either your system has to change or, like every other small business owner that ever started....... your expectations have to change. It's that simple.
Good Luck!