Trying to reach the $110k mark for IB's portfolio margin. Strategy is fully hedged (no directional risk) and would yield at least 50% return on capital in a year at 10x leverage, but around 100% at my target of 18x leverage which IB's risk calculator seems to allow with ample margin to spare. I already run this strategy in my account at about 2x and the IB margin is under 20%, but Reg T is the limiting factor and I'd like to scale it up more. Regular unsecured loans don't really go this high, so where would I borrow from at say 20% to fund the strategy? Or are there companies that do profit sharing that might put up the capital?
How would you raise $70k in capital if you have $40k and a viable trading strategy?
- Thread starter BinaryAlgorithm
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Sounds too good to pass up for me, I'm in where do I send my $2 ???
I've only got 4Mil I need 5Mil so if anyones got a spare 1Mil lying around please PM me, I absolutely guarantee you'll never see or here from me again ( actually pretty good deal )
Just keep trading with the capital you have and perhaps start a journal and post real time results. If you can get results opportunities will present themselves.
What is the product traded? That's important to some investors
A million times what fan27 says above.
People begin to notice.
Your accountant notices.
Your lawyer notices.
Your family and friends notice.
People talk.
Phone calls start happening.
The OP's number one job? Keep trading the strategy. Built a typical grid / tear sheet, for each month. That's the job of any trader. Build the track record. Maybe use something akin to Fund Seeder to track the results, and give you all your stats, or use it to double-check your own stats. Or, spend the very low cost to register as a CTA ($125 for the Series 3, and then about $3,000 to set up the firm), and report to IASG, CoquestTraders, or any of the other databases.
Money will find you. And fast.
The traders job? Is to grind the track record.
Number one thing where I see people fail? They don't fully test MAE's and the scenarios that produce those MAE's, and they don't just ... GRIND; and worry too fast, about getting capital before they have the auditable track record to support that napital.
You're going to have to grind an auditable track record, for a minimum of 3 years to get noticed.
The good news? Is you can grind it out? One day you just have to throw it out in the ether: I'm thinking about accepting more capital and within a WEEK, you have people offering you up to $250,000
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Yes OP's problem is putting the cart before the horse. When your friends, family, accountant, and neighbors see you able to live the same life you have (maybe even better) and you tell them you're a trading firm everyone will want in on the game.
OP should keep grinding away at the total and sack as much of his personal wealth into it that he can without compromising emergency funds and retirement plans.
(Side note I didn't realize becoming a CTA was so cheap)
Amen and amen.
Yeah, it's not expensive at all. Main work is studying for, and passing the Series 3 (I have).
It's mainly a math test, and learning the way that they want you to work the math for bona fide hedging, for options, etc, and getting that done in the time limit. Learning how they want it done, is most of the work. But it's only $125.00 to sit for the test (at least when I sat for it).
Then $750.00 to register with the NFA, and then another $1500 or so, paying the NFA for CTA fees, getting fingerprinted, and sending that off, fees for registration for the first time, etc.
Maybe $80 to $90 a month in E&O Insurance. Past that? That's it. That, and just grinding like a sunuvagun and $750 a year in NFA Membership fees. All told? Yeah, maybe about $3,000 to rock and roll?
That, and TRULY, in almost a quantitative way, knowing where the strategy can go wrong, and when it does, and what you do about it. Because High Net Worth, QEP's ... WILL ... be asking those sorts of questions. As well as questions about where you'll run into Scaleability problems.
Remember, Barlcay Hedge is filled with about 20,000 Dead and Liquidated CTA's that couldn't make it.
But that's just on the CTA route. The LAST low-entry pro route available to traders.
On the other part? Absolutely agreed. You can count on two things with humans.
People notice.
And people talk.
As long as you don’t have a solid track record you only have 2 options:
1. Keep trading the account and build it yourself.
2. Friends and family. In your case you could make some kind of arrangement that your own money is first loss. So you start a business with one of your friends or a family member as an investor. You put in writing that your own money will be first loss and once you lose a certain amount of your money you just quit with the business and they get their money back in full.
Basically 0 risk for the investor, you just need the money for margin. In return offer them something like 10% of the profits.
You will have to find someone that you trust and someone that trusts you, who ever it is make sure you get every detail in writing with a lawyer.
That way it shouldn't be to difficult to find someone or some people who want to invest some money since the risk is near 0 for the investors.