Non-Employees Trading Prop Shop Money

It can be done but most shops you'd be interested in wouldn't really be interested in jumping through all the hoops you'd want. The approach should more be 'let's make some money together' rather then coming in and immediately defining what is yours vs not.

There's a reasonable amount of work to hook up whatever you have to anybody's existing code base. Then you'd get exposed to what is who's IP. All this for just the possibility of it actually working just wouldn't be worth it. Strategies are cheap. It's the implementation that's difficult and the actual mechanics of keeping it running 24/7. 'Outsiders' with a strategy idea tend to way overvalue their own contribution and undervalue what the firm is actually doing for them.

Look at the top three firms and pitch it to them. If they turn you down, at least you'll understand why.

I run a mid-size firm and if I had a nickel for every random group of PhD's who approach me with some magical strategy every month I wouldn't have to trade anymore.
 
Thanks, garachen.

Indeed, let's figure out how to make money together.

That is exactly what our approach is, although, perhaps, I failed to make it clear.

I realize we're going to have to surrender something for the money to trade. We don't want to get into a situation of where we're competing vs. ourselves either.

If we can pitch it to you on that basis, i.e. WE ALL make money perhaps, you can PM me with your details.

If it's helpful, one of out team members is a Stanford Ph.D. algo programmer. We have or can do the algorithms. Keep it running 24/7. Yeah. Fitting it into shop's coding?

If you - or another member - can identify the top three firms for us as well, that would be helpful and appreciated as well.

Two "zero investment" strategies. The "secret sauce" of both is the Rachev ratio.

  1. A long-term one, i.e. trades daily/weekly. "Live" traded by two large banks pre-Dodd-Frank. We have the results, but can not disclose the banks. Recent backtesting and paper trading. 14.8% unleveraged returns. $50,000 and 3-6 months required to confirm the results via "live" trading. $1m - $10m to trade.
  2. A short-term one, i.e. trades every minute. Back and paper trading in 1 week. No "live" trading. <$50k and <3 months required to prove via "live" trading. Theoretically $100k doubles daily.
 
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garachen said:
I run a mid-size firm and if I had a nickel for every random group of PhD's who approach me with some magical strategy every month I wouldn't have to trade anymore.
More...

What type of performance would you have to see from an outside strategy to make it worth your while?
 
aucociscokid said:
If it's helpful, one of out team members is a Stanford Ph.D. algo programmer.
More...

There's no such thing as a Ph.D. in algorithm programming. And there's very little evidence that Ph.Ds in anything correlates with programming ability.


aucociscokid said:
If you - or another member - can identify the top three firms for us as well, that would be helpful and appreciated as well.
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Is there anything you are willing to do for yourself? It's comments like these that lowers the credibility of what you are doing to something akin to a poorly executed fraud. How would you show your appreciation? I'll sell you the names for $3k each.
 
@aucociscokid You're fairly new here, trust me, ^this is not an unreasonable or unsympathetic guy. Take his advice. Getting a top prop shop to even entertain a job interview is nontrivial, coming at them with a strategy proposal that discusses "theoretically 100K doubles daily" is gonna be a tough angle.

He's giving you good advice, the same advice he gave me a year ago that helped me a lot. Coming up with trading strategies is easy, bringing them to fruition and maintaining them is hard. Just going in and asking for 1MM to trade because you have an idea is a very tough value proposition.

A word of advice: if you do do this, don't go pitch three places within a month. You aren't ready. Very few people who want to enter this industry are ready when they start, that's not a reflection of you or your group's experiences or abilities. Do one pitch, if it goes well, great--if not, take their feedback and go back to the drawing board. Don't be convinced you're right and strike out at three places. This industry is just way too small to mess up three places before you know what it takes.

Good luck.
 
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Thanks, all.

What we'd be pitching is a updated daily, zero investment, Rachev-ratio strategy which two large banks traded 5 years ago and made billions. It's been updated to reflect changes which have taken place since, with new backtesting and paper trading and the calculation on a new true alpha. Posting anything before we had the true alpha was premature. Blame me. I've never sold a trading strategy before. Based on the backtesting/paper trading we thought we trade $10m and leverage 6x. However, rmorse informed us that because of OCC regs $10m can't be leveraged 10x. OK. We were unaware of that. But, that's not a problem because with a little money there are competent people we can hire to tell us that. Forget about the strategy which trades $100k a minute which doubles daily. We want to trade strategies with prop shop or whomever as employees or independent contractors to fund the development of it which involves multi-integer programming which - if anybody in the world can do such programming. But, it is difficult because it requires solving equations in 4-dimensions.

One of our principals is Svetlozar "Zari" Rachev and his other company is FinAnalytica, which is the 2nd largest provider of risk management services in world. It provides risk management services to those with $500 billion+ AUM.

https://en.wikipedia.org/wiki/Svetlozar_Rachev

http://www.finanalytica.com/

We can (with a proven track record of doing so):

  • Devise strategies.
  • Program them.
  • Maintain and run them.
(Up until last this semester Zari was at Stony Brook U. where his colleagues were Jim Simons and Bob Frey which should help identify one on the funds which used his strategies.)

What we require is some "seed" money to continue to develop and sell/trade strategies. We are thinking that a way of doing that is by trading - preferably as independent contractors which we're told is not an alien concept in the prop shop world - the strategies we have - which are numerous - which are ready to trade or can be gotten to the state in a few weeks.

What we're looking for here is advice on who the prop shops are with whom we might be a fit, pitching them, etc. which we're receiving and which we appreciate.

Anybody in finance that involves Zari, can't go wrong.
 
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@aucociscokid : Are you even legit? I find it difficult to believe that someone who was involved with rentec is looking for trading capital on a public forum full of bs. Tbh, I know kids who are half your age who work for Google and who can easily put up the capital you're looking for.. and they might even know your Stanford Ph.D. algo programmer, what was his name? Keyser Soze?
 
If members here can help us with identifying a prop shop or other capital source and give us trading advice, we're grateful and members have been helpful. Rmorse has, for instance, pointing out why $10m can't be leveraged 6x. We're willing to prove our bona fides privately to any/all interested parties. We good at strategies and programming. We've never raised capital before for ourselves and, therefore, are less skilled at it and are unfamiliar with the players, protocols, etc. We're more than willing to let them make the decision or judge whether or not we're legitimate as I believe they're more than capable of doing. Frankly, if I read what you wrote from a capital source, I'd say it sounds more like they don't have the money, or don't need the strategy, and it is a way of saying "No" without having to say "no."
 
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