How to start a hedge fund?

If you set up one of these things in the the U.S. in ANY FORMAT just pray everything goes well and no attention comes your way. Because if it doesn't go well the only trading your going to see is when you can persuade the federal prison guard to put on CNBC on the cafeteria TV.
 
These things are set up as LLC's - limited liability corporations. The "limited" liability doesn't apply if any fraudulent activity takes place. As someone managing other people's money, you're held to a much higher standard.

Investors are understandably (and rightfully) concerned about what goes on in a fund they've invested in - and they have the right to demand an accurate and timely account from their manager.

If you don't stick exactly to the rules as laid out in the prospectus (use any instrument not explicity defined, exceed leverage or risk mgmt guidelines, trade any security not described in the prospectus, etc), fail to provide timely and accurate accounting or misrepresent returns or positions held and you could be in significant trouble, civil and criminal, state and federal. not a good place to find yourself...btw there's no 3 strikes in the securities industry, you don't get a second chance.

If anyone is seriously considering starting a hedge fund - consult a knowledgable attorney who has experience in setting these things up, get a good accounting firm and a good administrator (if offshore)...Sure they're expensive, but you'll sleep better.
 
I'm absolutely confident that I could turn 100%+ a year. Not to sound boastful, but I just know I could.
I already have a room. I would feel like a prick if I made people pay for my thoughts.... Trust me, they're not that great. Besides, no one in my room even trusts my ideas. It's very difficult for people to catch falling knives. It's very contra normal trading practices to take a large loss at first.
 
Pretorian2 Hey I trade a lot of the same stocks you do. It was one reason I visiited your chat room. You should know that. It is also why some of the same guys keep coming back.

Michael it is a chat room on yahoo he is referring to.
He has been thinking of joining my firm Echotrade soon though


I haven't been visiting as often due to having trouble logging in, having enough of my own signals, and latetly taking most of the week off due to the holdiay and low volume.

They are right though. It is usually a lot harder to do the big returns with bigger accounts. Peak to Trough is extremely important. If you can return 100% than your drawdown shouldn't be above 20%. You usually have to become more conserative with other investors money. You are on the right track though and thinking the right way. Helping others is the best way to help yourself.

Rtharp
 
You must log in or register to reply here.
Back
Top