Is having your own hedge fund good idea vs. staying as prop.

Quote from marketsurfer:

INFORMATION and ACCESS is what you are buying from prime brokers. INFORMATION is an EDGE and ACCESS is critical for success at a big level, TA/newswire via discount brokers is not an EDGE in most cases.

surf
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I agree! Not sure if the information flow is as active as it was in the past (disclosure rules, etc.), but definitely takes place.

Don
 
Quote from PhiSigmaIota:

What about ditching the hedge fund route and put 500K into your prop account. Increase your leverage, your position holding power and keep 100% of profits?
Than you do not have to deal with the hedge fund administration headaches per se.
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Aha, yes, you see the whole picture. We have many in that situation.

Don :)
 
Quote from PhiSigmaIota:

What about ditching the hedge fund route and put 500K into your prop account. Increase your leverage, your position holding power and keep 100% of profits?
Than you do not have to deal with the hedge fund administration headaches per se.
More...

Missing the point: As a HF manager you own 100%. As Prop guy you MUST obey what rules they lay down to you.

DON, if thread was titled “PROP vs PROP” or “Name best PROP firm out there” no doubt that Bright Trading would be in the top 3. Bright Trading does provide a good service to traders, However

Reread title of thread (its HF vs Prop)not even a good Prop trader can earn what an average HF manger can make. Those HF just rake in ssooooo much revenue.

Yes, HF do pay a lot in commish cost no doubt. A $1000 a day is not uncommon and they still are insanely profitable firms. Someone like Cramer would never last what 2 or 3 weeks at a Prop, he would go insane that someone else is telling him that: you can’t hold this much overnight, you own too many share of XYZ, you are overleveraged in this position.

HF are the way to go for those TRADERS that have more trading experience, can or are willing to raise money and put up with the headaches of having clients. HF are waaaaaay more profitable.

DON, an interesting question about the PROP firm model would be:::

“Why don’t PROP firms compete more against Retail brokerages”??????????
 
I think i'll jump in on this conversation and ask Don a question.

Don, how much trading capital do I have access to with my $25K?

If the commissions are $.005, I can see how that's a better deal than the HF route.
 
Quote from spreadem:

I think i'll jump in on this conversation and ask Don a question.

Don, how much trading capital do I have access to with my $25K?

If the commissions are $.005, I can see how that's a better deal than the HF route.
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(sorry, been away for the week).

You can "use" a $million or more for working strategies with $25K. The commission rates are based on a sliding scale, but all shares above 1,000 on any given order are .004 no matter what.

Don
 
The ability of HF model to deliver greater profits to its trader is exactly that, the trader is able to trade with more capital and thereby earn more money for the investors and themselves.

Prop trader who is able to earn say 30% 4 of last 5 yrs and one bad yr at 15% is probably a top trader at his Prop shop.

With just $30 million of capital at a HF and a 30% return for a single year not bad.
Yes, give back 80% of HF return to your investors and thank them for allowing you to trade/invest their money for them this year.

Keep 20% of HF return: pay expenses this year of $1 million: keep the other $1 million for yourself.

Are some of the top Prop traders cheating themselves out of additional monies?

I guess “Different Strokes for Different Folks” (Wasn’t that a hit TV show in the 80’s)
 
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