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need advice to whether to join a hedge fund or a prop shop or to go solo?
- Thread starter vita
- Start date
You NEVER expose yourself to risk that you cannot afford when trading. That is a fundamental rule of trading. Doesn't matter what else is said.. you never break that rule.
Quote from negativetrend:
even if its scared money, why not go to a prop firm trade their money and keep 100% of the profits. something makes no sense
NT
Where does this exist? Trade somebody else's money and keep the loot? Surely we all would have signed up by now if this were readily available . . .
I lost my job in a prop firm in a situation that is really complicated to explain. I have one warning though, make sure before signing a contract that you have the full fonctionality of the technical indicators. Like, I'd rather not even name the indicator, but let's suppose an indicator has two lines that cross and you depend on those lines to make a trade and their platform only has one line, then I wouldn't work there.
My own circumstances were pretty bizarre. I took months to develop a method then realized I had to make some changes along the way. I learned a lot more on technical analysis and trading in general just from the practice I got from the 3 months I was in a prop firm. But, at one point, since I was pretty close to the maximum of what I could lose, I could not trade more than 100 shares and this meant I could not scale out of my positions to improve my risk/reward ratio. So, I guess in some ways you could say I was kind of trading scared and it ruined my trading anyway.
The positive side of this for me is the same day I lost my job in the prop firm, I started examining different parameters and time frames and even different markets. And I saw things in a clear way (not the tunnel vision of when you're trading scared). And a couple of weeks later, I combined some of my new ideas with some ideas I had right before joining the prop firm (that I had put aside because of the limitations of their platform) and have some ideas that really show a tremendous amount of potential (even to the point of almost calling every market turn lol). So, right now I'm practicing with a demo Forex platform because I have to adapt myself to my new method (and ideas as well).
And because I was kind of trading scared if you will in the end, I'm also trying to practice holding on to positions longer instead of taking real quick small profits that put you in jeopardy anyway.
It's kind of weird that I have to find a job so I can save up and start over again. But, this time, I may not do it with someone else's money anyway. I thought I would be OK trading someone else's money but I found in the end, it was almost clouding my judgement. The positive thing I got out of the last year is I know more about trading and technical analysis than ever before. So, I'm going to keep trying out on demo Forex platforms until I really get it right.
My own circumstances were pretty bizarre. I took months to develop a method then realized I had to make some changes along the way. I learned a lot more on technical analysis and trading in general just from the practice I got from the 3 months I was in a prop firm. But, at one point, since I was pretty close to the maximum of what I could lose, I could not trade more than 100 shares and this meant I could not scale out of my positions to improve my risk/reward ratio. So, I guess in some ways you could say I was kind of trading scared and it ruined my trading anyway.
The positive side of this for me is the same day I lost my job in the prop firm, I started examining different parameters and time frames and even different markets. And I saw things in a clear way (not the tunnel vision of when you're trading scared). And a couple of weeks later, I combined some of my new ideas with some ideas I had right before joining the prop firm (that I had put aside because of the limitations of their platform) and have some ideas that really show a tremendous amount of potential (even to the point of almost calling every market turn lol). So, right now I'm practicing with a demo Forex platform because I have to adapt myself to my new method (and ideas as well).
And because I was kind of trading scared if you will in the end, I'm also trying to practice holding on to positions longer instead of taking real quick small profits that put you in jeopardy anyway.
It's kind of weird that I have to find a job so I can save up and start over again. But, this time, I may not do it with someone else's money anyway. I thought I would be OK trading someone else's money but I found in the end, it was almost clouding my judgement. The positive thing I got out of the last year is I know more about trading and technical analysis than ever before. So, I'm going to keep trying out on demo Forex platforms until I really get it right.
I admire your tenacity. As stated in an earlier post, it all boils down to whether we have "full confidence" in our strategies. It's hard to jump off an airplane when you're not sure if your parachute will open as you expect. The strategy can be phenomenal but it'd lead to losses if one doesn't believe in it and let the subconscious and primal fear affect the operation. Check out this post I am sure we are all at one stage or other of it:Quote from clambill:
I lost my job in a prop firm in a situation that is really complicated to explain. I have one warning though, make sure before signing a contract that you have the full fonctionality of the technical indicators. Like, I'd rather not even name the indicator, but let's suppose an indicator has two lines that cross and you depend on those lines to make a trade and their platform only has one line, then I wouldn't work there.
My own circumstances were pretty bizarre. I took months to develop a method then realized I had to make some changes along the way. I learned a lot more on technical analysis and trading in general just from the practice I got from the 3 months I was in a prop firm. But, at one point, since I was pretty close to the maximum of what I could lose, I could not trade more than 100 shares and this meant I could not scale out of my positions to improve my risk/reward ratio. So, I guess in some ways you could say I was kind of trading scared and it ruined my trading anyway.
The positive side of this for me is the same day I lost my job in the prop firm, I started examining different parameters and time frames and even different markets. And I saw things in a clear way (not the tunnel vision of when you're trading scared). And a couple of weeks later, I combined some of my new ideas with some ideas I had right before joining the prop firm (that I had put aside because of the limitations of their platform) and have some ideas that really show a tremendous amount of potential (even to the point of almost calling every market turn lol). So, right now I'm practicing with a demo Forex platform because I have to adapt myself to my new method (and ideas as well).
And because I was kind of trading scared if you will in the end, I'm also trying to practice holding on to positions longer instead of taking real quick small profits that put you in jeopardy anyway.
It's kind of weird that I have to find a job so I can save up and start over again. But, this time, I may not do it with someone else's money anyway. I thought I would be OK trading someone else's money but I found in the end, it was almost clouding my judgement. The positive thing I got out of the last year is I know more about trading and technical analysis than ever before. So, I'm going to keep trying out on demo Forex platforms until I really get it right.
http://www.elitetrader.com/vb/showthread.php?threadid=147518
Quote from vita:
Thanks for the advice. One comment about 20k hedge fund layoffs is that most of these guys are not PM's or traders, they're compliance officers, operations, accountants, etc. The hedge fund redemptions will "eventually" end and the $8 Trillions cash on the sideline will be vested somehow.
Ok, this is simply not true. Redemptions are happening because investors are being hit with reality that they do not have as much money as they thought. There is no $8 Trillion on the sidelines, I don't even know where you're getting that figure from. The traders and PMs that have been laid off may want to start a new operation, but who is there to fund it?
I think you are for real, so I will give my honest advice. The key issue is that you have no track record and the system has not traded real money. If it had and performed close to your triple digits, >5 Sharpe, you would be on your way to riches. From an investor standpoint, the real question is why would you seek giving up your edge at a hedge fund if you're so sure about the system. I don't think you are and I think you realize that it is very likely that in live trading, your system will run into many problems and will not perform anywhere near where you think. It is likely that it will blow out due to unforseen circumstances. Because that is what usually happens. The competitive futures/equities/options/ markets have no quant edges like that left. The funds doing high double to triple digits are not dealing with markets where every other Tom, Dick & Harry are involved. Not unless they are pulling a Maddoff, using insider connections or working off exclusive information.
I think out of your choices, the answer is more than obvious if you truly believe your system works. You grab a hedge fund gig that has nothing to do with your system, take out the $10k line and start trading. Assuming a $70k-100k annual salary, you would be rock & rolling within months.
If you had a track record and the system was for real, you would easily get placed within a hedge fund while protecting your IP, or even getting a mini fund of your own. But you don't have any proof, and you get offers that reflect that. The hedge funds are taking a risk that in live trading your system won't be worth much. Parts of it may be useful, hence they do want access to the code, because in reality, they are taking a risk. And, you are a position of weakness at the moment.
Thanks for the feedback Anaconda. Most of your points I've already realized in a hard way. About the confidence on a strategy, one needs to "witness" its success while making it successful, which is challenge as all successful traders concur. For me the confidence is there but the platform is not.
I appreciate all the objective feedbacks on this thread. I hope the dialog can serve and motivate other ET members as well.
I appreciate all the objective feedbacks on this thread. I hope the dialog can serve and motivate other ET members as well.
Quote from vita:
About the confidence on a strategy, one needs to "witness" its success while making it successful, which is challenge as all successful traders concur. For me the confidence is there but the platform is not.
Well the question then becomes, what is preventing you from testing the system in live trading? Are their extensive software & hardware requirements? Do the commissions have to be rock bottom, hence requiring a steep minimum account size?
Quote from vita:
......The strategy can be phenomenal but it'd lead to losses if one doesn't believe in it and let the subconscious and primal fear affect the operation. ......
This is the first warning sign that your system is most likely "fools gold". Do not trade it with your last 10k.