OK guys....I gotta know, I gotta know. PM me if you don't want to post here, LOL.
Thanks!
Don
Thanks!
Don
How to self clear
- Thread starter nitro
- Start date
nitro, something does not add up here. To be trading 100m shares a day, you will need to trade a few thousand names. Assuming you trade in 500 share lots in each name, you will be holding millions of shares long or short all the time. To be able to do that, you need at least
500 shares/lot * 3000 names * 20$/share = $30M
in capital, without leverage. Since it is unlikely that you can coordinate your positions to be market neutral, you should not have leverage too high with this gameplan. Now, i dont have doubt you guys possess that kind of money, but wouldnt you need dozens of people to administer all this as it is, without starting to worry about clearing and all that?
500 shares/lot * 3000 names * 20$/share = $30M
in capital, without leverage. Since it is unlikely that you can coordinate your positions to be market neutral, you should not have leverage too high with this gameplan. Now, i dont have doubt you guys possess that kind of money, but wouldnt you need dozens of people to administer all this as it is, without starting to worry about clearing and all that?
kotika,
nitro
300 symbols.
anywhere from 500 up to 10000 up depending on the stock.
When you are doing this, most of the time you are short 1/2 the symbols and long the other 1/2. Or some statistical property close to 50%. Sometimes it gets skewed. You are very very rarely in a position in anything close to the number of potential symbols you can trade.
It often works out that way, but not anywhere near as often as you think.
We don't personally have anywhere near $30M. However, the people that back these sorts of strategies have easily that much risk capital. In order to do this right, you need about $10M of your own money and then the clearing firm on a BD gives you "unlimited" risk capital [you are constantly monitored by the risk department in realtime.]
nitro
You are right that it takes a team. Our experience is that it takes ~30 traders and at least one IT person full time to run this operation. We have automation ideas to reduce the number of traders to five. No way around having at least one IT/Admin person, and probably one good programmer or best is two.
As to scientists, imo you can never have too many. For this operation, two people figured out most of it.
nitro