My experiences as a Hedge Fund Startup

I just dont get it. Ok. The guy blows 2 or 3 accounts at various prop firms. He admits he is a daytrading failure...but then wants to open a hedge fund.

So what do you say or show interested investors? Your tickets demonstating you are a failed trader and then inquire as to how you are going to get them to invest in the fund? I guess my mind is a bit slow because I dont understand it. So you have to blow a few prop trading accounts prior to opening your fund up?
 
Quote from retaildaytrader:

I just dont get it. Ok. The guy blows 2 or 3 accounts at various prop firms. He admits he is a daytrading failure...but then wants to open a hedge fund.

So what do you say or show interested investors? Your tickets demonstating you are a failed trader and then inquire as to how you are going to get them to invest in the fund? I guess my mind is a bit slow because I dont understand it. So you have to blow a few prop trading accounts prior to opening your fund up?
More...

There are many different methods to trading and each one requires a different psychological makeup. What I have come to learn through my failures in daytrading (the account blowouts you refer to) is that I am just not a daytrader.

However, after trading a longer-term trading style over the years and being consistently profitable with it, I have found a style that suits me well. My hedge fund is built around this system and not daytrading. (I tend to hold positons an average of 45 days).

What I have shown to the investors who provided capital is simply the brokerage statements and spreadsheets demonstrating that performance. And I am very open and honest with them about all of my failures as a daytrader, because it is these failures that make me a better trader. Ultimately, I think they invested based on a relationship of trust that we have developed over the years.

So if you want to raise capital focus first on building a great trading system and strong personal relationships built on mutual trust (and respect) and only then, worry about raising money.

I apply this strategy to my marketing efforts now as I strive to build relationships for when I will be prepared to manage more capital years down the road.

Hope that helps to clarify.

Thanks.
 
Quote from JoePaterno:

As this was called a hedge (not "mutual") fund, I am assuming that leverage is used. If not, no biggie. But if so, I cannot imagine anything more foolish than someone accepting money from friends and family for trading purposes. It is quite likely they do not really understand what is really at stake and it is also quite likely that someone trading $125K "as a hedge fund startup" really does not grasps the impact of losing their money if the likely eventual risk of ruin hits him/her.

It is a great way to turn them into former friends.
More...

Let's sprinkle some facts among the uninformed opinions. From Investopedia:
  • An aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark).
  • Legally, hedge funds are most often set up as private investment partnerships that are open to a limited number of investors and require a very large initial minimum investment. Investments in hedge funds are illiquid as they often require investors keep their money in the fund for at least one year.
  • For the most part, hedge funds (unlike mutual funds) are unregulated because they cater to sophisticated investors. In the U.S., laws require that the majority of investors in the fund be accredited. That is, they must earn a minimum amount of money annually and have a net worth of more than $1 million, along with a significant amount of investment knowledge. You can think of hedge funds as mutual funds for the super rich. They are similar to mutual funds in that investments are pooled and professionally managed, but differ in that the fund has far more flexibility in its investment strategies.
 
Quote from HFStartup:

It amazes me how we seem to lose our civility just because we are on the internet. I certainly have my faults, but since starting this thread I have been called a liar, gay, a cheat, a trader wanna be. I have even been barred from quoting Einstein. :D But seriously, why? What is the point? All of this has been done by people that don't even know me...
More...

When I was younger I believed participating in certain activities would permit me to associate with a "higher class" of people than the world in general. During my training to become a private pilot, I was certain that pilots was such a group. To my chagrin, there are class A jerks who are pilots. Trading is no different.

Ignore the crap and embrace the gold. You will find both here.
 
Maybe I might be doing the guy a favor by discouraging him from going down this path. On the internet, I have found a lot of seemingly intelligent hardworking people who put a lot of time into the markets when they could be doing something else to make a comfortable living. This guy seems pretty smart. His intelligence and good work ethic could be used in a different industry.

There is no shame in having a career and working a real job, but there is shame in losing money in the market or losing someone else's money in the market.
 
Quote from retaildaytrader:

Maybe I might be doing the guy a favor by discouraging him from going down this path.
More...

Maybe you can do everyone a favor by shutting up. You don't know what you're talking about yet keep trying to put him down, for no apparent reason.
 
Quote from HowardCohodas:
Let's sprinkle some facts among the uninformed opinions.

Yes. You did a fantastic job of showing an uninformed opinion by completely missing the point of the post you were quoting
 
Quote from JoePaterno:

Quote from HowardCohodas:
Let's sprinkle some facts among the uninformed opinions.

Yes. You did a fantastic job of showing an uninformed opinion by completely missing the point of the post you were quoting
More...

Well now, you have accomplished something I did not think possible. I have absolutely no response.

I'll leave it to others to judge my contributions.
 
Quote from retaildaytrader:

Maybe I might be doing the guy a favor by discouraging him from going down this path. On the internet, I have found a lot of seemingly intelligent hardworking people who put a lot of time into the markets when they could be doing something else to make a comfortable living. This guy seems pretty smart. His intelligence and good work ethic could be used in a different industry.

There is no shame in having a career and working a real job, but there is shame in losing money in the market or losing someone else's money in the market.
More...

Depression is common with trading, but overcomable.
 
You must log in or register to reply here.
Back
Top