Non-Employees Trading Prop Shop Money

[syswizard]

Thanks for that Xela....very interesting.
re: "Achieve an Average Net P&L greater than $0 for each product traded (evaluated at the end of the 10th trading day)"
That is the only rule for the 10 day period that could be difficult to meet.
Many systems can easily go into drawdown mode for 10 days or more.
Thus, it's best to only trade one or two instruments during the 10 day trial.

 

[Xela]

Many systems can easily go into drawdown mode for 10 days or more.

Those aren't the type of traders TST wants to fund, though, I think. (I can kind of understand why.)

Certainly it's not suitable for everyone.

Thus, it's best to only trade one or two instruments during the 10 day trial.

Yes; I agree.

 

[syswizard]

Those aren't the type of traders TST wants to fund, though, I think. (I can kind of understand why.)
Certainly it's not suitable for everyone.

That would include many outstanding hedge fund managers who achieve 10 out of 12 months of profitable trading....with only two 30 day periods of unprofitability.
So that 10 day rule is not very reasonable IMHO.

 

[Xela]

That would include many outstanding hedge fund managers who achieve 10 out of 12 months of profitable trading

Yes, certainly. I'm sure TST isn't set up to attract and identify hedge-fund managers. They want small-scale, private traders who understand risk-management and have trading skills but inadequate capital.

that 10 day rule is not very reasonable IMHO.

My guess is that it works for them, and in a situation in which it isn't easy to come up with rules that protect their capital while also being able to offer traders with no capital 80% of the profits. They seem to be successfully funding about 300 people per year, anyway.

 

[aucociscokid]

Basically, I'm member of a team of experienced traders, quants, academics, and algorithmic programmers with track records at sovereign wealth and hedge funds and a German-based NY bank. One of our back-tested and paper traded strategies, for instance, shows unleveraged returns of 14.68% September 2014 - September 2015. Are there prop shops which would allow trading of their money with our strategies, but not so we're employees because of IP ownership issues? We'd been looking to trade $10m.

 

[syswizard]

That's strange.....why doesn't the bank purchase the strategies ?
After all, they've been tested for over a year.

 

[aucociscokid]

Because then THEY (and not US) would own the IP and, and more importantly, the algorithms. + We'd probably be prohibited from trading them ourselves. All of our strategies contain - or are based on - the same "secret sauce." We want to trade using a strategy containing the "secret sauce" to make several $100k to trade ourselves, which gets us a crazy amount of money in 32 trading days. They'll do pretty good as well. We'll trade using the "secret sauce" for any one who wants us to trade their capital, but we're not turning over ownership of anything to anybody. Not for any amount of money. That's how valuable the "secret sauce" is.

A corollary question is: Why do all prop shops want kids just out of college and as employees. Why can't we - aging in range from 40-66 (mostly Ph.Ds in statistics and CS) - just trade someone else's capital, make them a fairly interesting amount of money in a short period of time, and be on our ways?

We've made billions for others (as a company we're the second largest risk manager in the world, providing risk management for institutions and funds with $500 billion AUM). Prior to my arrival (I'm a lawyer), the principals made the lousiest deals in the world. Now, WE want to make the billions for ourselves.

 

[lawrence-lugar]

the "secret sauce" to make several $100k to trade ourselves, which gets us a crazy amount of money in 32 trading days.

MmM~ ...i lov me some SS.

 

[aucociscokid]

Very helpful, lawrence-lugar. Thanks.

If you want to know what the "secret sauce" is: What we're trading is a "zero investment" strategy. "Zero investment" strategies are - to the best of my knowledge not widely known employed in the trading community or finance because of the computational difficulties. While a misnomer (because you couldn't start with $0), you could start with a relatively small amount and make a crazy amount very quickly at low risk. They are, however, widely known and tested by the academic one. Ours have been "live" traded by two major banks. While we have the results, the names of the banks can't be disclosed.

I was informed by a member here in an email that potentially we could be paid as private contractors for our work, which is helpful, and the sort of answer for which I was looking.

We know strategies, but not shops. Shops don't know as much as us about strategies. That's the disconnect. What can I tell you?

Any recommendations for a shop, etc. which would allow us to trade - and, more importantly, pay -us as private contractors, would be appreciated.

 

[lawrence-lugar]

Very helpful, lawrence-lugar. Thanks.

If you want to know what the "secret sauce" is: What we're trading is a "zero investment" strategy. "Zero investment" strategies are - to the best of my knowledge not widely known employed in the trading community or finance because of the computational difficulties. While a misnomer (because you couldn't start with $0), you could start with a relatively small amount and make a crazy amount very quickly at low risk.

I'm happy with my own performance. i easily beat the indexes. -- i'm not out to hunt for some people's own secret sauces. (just here to kill time and get amused)