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Here's a good allocation deal for you if you are really getting your own servers.

Allow my futures app to run on one of your servers with 24 hour 7 day a week up time.

See if you like what you see. If after you like the returns I am generating, allocate the app just $ 20,000 with the signals going to your own or the allocators brokerage account, for example, don't give me any money. My own money will be in my own brokerage account.

I will sign a contract to cover any or all losses with the money I am already managing, but I get 25% of all profits on leverage. Your 75% profits will cover your infrastructure costs. I will also pay my own commission costs and margin for example I don't want to route trades through your allocator.

If I continue to generating outstanding returns we can work on allocating more capital for the app.

Please be advised I will not teach anyone how the app works or allow anyone to reverse engineer my trades or see my charts.

Also, note as an former Senior Network Admin, I can tell you that my application will not cause performance issues for any other applications you want to run on your server. However, I would require you to do the following setup. Have the server running on a UPS in case power fails. Do tape backups on the server. Also, use at least RAID IV on the hard drives, and have a CISCO firewall protecting your servers, and don't forget to change the default password for your routers.
 
Quote from oraclewizard77:

Here's a good allocation deal for you if you are really getting your own servers.

Allow my futures app to run on one of your servers with 24 hour 7 day a week up time.
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Yep, we are really getting our own servers. PM me with details, deeper description -- can't take hurt to take a look.
 
I sent you the details. Make sure you provide good air conditioning for the servers.

Quote from darkhorse:

Yep, we are really getting our own servers. PM me with details, deeper description -- can't take hurt to take a look.
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all these negotiations going on... homeboys is checking out your deal just to shop... window shopper.. hell sometimes thats a great thing.. see whats on the market... .what deals are being priced at..
 
Quote from Maverick74:

I think it goes to show that these structures are filled with holes. If one is risking 5k or 10k that is one thing. But putting 500k in one of these? Hell no.
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Q
http://www.interactivebrokers.com/en/general/education/hdi_port_margin.php

Customers who maintain a balanced portfolio of hedged positions could benefit from lower margin requirements and greater leverage using IB's Portfolio Margin account. Customers who are currently approved for options trading and who maintain an account minimum of USD 110,000 are eligible to apply for an account upgrade to Portfolio Margin. Portfolio Margin is calculated for cash and equity products only; futures margin is always calculated and applied separately using the SPAN margin algorithm.
UQ
 
i've researched portfolio margin a little bit... seems like to me your guessing as to what your margin is going to be considering all of your concentration, corrolation, etc.. the more basic things are easy to calculate.. but if you get into any kind of concentrated risk positions you don't get the same 1 to 5 leverage.. Devil is in the details.. and of course your risk is always changing.. so if i end up getting porfolio margin.. i'm going to have to figure the thing out a little better... some correlation trading that decouples.. some large volatility changes.. Blow ups are always right around the corner.. its not that there isn't buried risk/bombs.. its how far you are away from them!
 
I'm curious about the mechanics of these "First Loss" type of deals. Feel free to chime in if you know the answer.

Say I put up 500k of my own capital and receive an allocation of $4.5 mil for a total account value of $5 million. I think it is safe to assume that all this capital goes into some account, most likely held at a prime broker (where I - as "portfolio manager" - have trading privileges on the account but no withdrawal privileges).

Here is my question: Can I margin up this 5 million using a Portfolio Margin account? For example, say I have a tightly risk controlled, market-neutral strategy. As a result, it is within the realm of prudence to leverage this up to, say, 10-to-1. Would the allocator allow for this?

Basically, what I'm asking here is if the allocator allows for portfolio margin accounts such that the $5 million account is leveraged up to $50 million in gross exposure?
 
Quote from Jay_Ap:

I'm curious about the mechanics of these "First Loss" type of deals. Feel free to chime in if you know the answer.

Say I put up 500k of my own capital and receive an allocation of $4.5 mil for a total account value of $5 million. I think it is safe to assume that all this capital goes into some account, most likely held at a prime broker (where I - as "portfolio manager" - have trading privileges on the account but no withdrawal privileges).

Here is my question: Can I margin up this 5 million using a Portfolio Margin account? For example, say I have a tightly risk controlled, market-neutral strategy. As a result, it is within the realm of prudence to leverage this up to, say, 10-to-1. Would the allocator allow for this?

Basically, what I'm asking here is if the allocator allows for portfolio margin accounts such that the $5 million account is leveraged up to $50 million in gross exposure?
More...

I don't think you understand. You're account is already levered 10 to 1. You want 100 to 1 leverage? So a 1% loss would wipe out your 500k completely.
 
Quote from Jay_Ap:

I'm curious about the mechanics of these "First Loss" type of deals. Feel free to chime in if you know the answer.

Say I put up 500k of my own capital and receive an allocation of $4.5 mil for a total account value of $5 million. I think it is safe to assume that all this capital goes into some account, most likely held at a prime broker (where I - as "portfolio manager" - have trading privileges on the account but no withdrawal privileges).

Here is my question: Can I margin up this 5 million using a Portfolio Margin account? For example, say I have a tightly risk controlled, market-neutral strategy. As a result, it is within the realm of prudence to leverage this up to, say, 10-to-1. Would the allocator allow for this?

Basically, what I'm asking here is if the allocator allows for portfolio margin accounts such that the $5 million account is leveraged up to $50 million in gross exposure?
More...

No, it is my understanding that portfolio margin is not an option (unless you have some very specific hedged strategy with extremely low volatility) - even then, it's tough to see how this would be advantageous as maverick points out that a 1% loss would wipe out your entire equity.

This is why the program isn't fit for everyone - and doesn't apply to all trading strategies. It's just a resource that might help SOME managers in the process of raising AUM and attracting institutional investors.
 
Quote from Maverick74:

I don't think you understand. You're account is already levered 10 to 1. You want 100 to 1 leverage? So a 1% loss would wipe out your 500k completely.
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Yes, that is exactly the case I am asking about. With many market neutral strategies, risk goes down as leverage goes up. Ergo, higher leverage results in a higher sharpe ratio and smaller drawdowns. Of course, this is all predicated on the assumption that one could generate returns that outweigh the funding cost.
 
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