Hi, some problems I would encounter, please value add here only if you are already at this level. I have some shared posts over at the automated trading, most discretionary trades are kept quiet by me 
p) probably handing at most $200,000 - $500,000, but it seems that the majority of ppl here are still stuck with the basic trading mechanics.
just needed some ideas to give myself a break.
I have a friend, partner whose on hand a couple of UHNI. Ppl worth at least > 10m, and they want to pour money into hedge funds, something not traditional business, not mutual funds, not real estate, not fixed deposits. We were thinking of starting a $15 Million hedge fund, taking 2-3 years to raise it.
In simple terms the fund, is not gonna be hedged like market neutral you think it is, nor is it a quant fund with exotic models (that might fail like LTCM), nor is it spilling 200 million on a single credit trade bet with leveraged to 2 billion just for that 1 pip/yr trade.
Without the hedge fund management experience, but after some talks and my performance I was asked to see if I could handle and manage that much $.
Initially I was happy. A chance to start my own firm, my partner's job to bring in new funds, my job to print money, be it blackbox low frequency trading or discretionary. a 2/20 on 15 mil works out around >300k. Let's just say we are not selfish, we hit it at 1.5/15, less away fund expenses like acct and audits, we could bring home a 100k each, or just near 8k a month That is full time trading and fund manger, and luxury to work form home, at its peak.
Then theres a set of problem. My trading, would become so different with the talks of trading here and I foresee a lonely world, even lonelier than what I am now (only less than 3% of social frends and ppl I met understand what im talking in terms of trading and investing. - thats a 3 standard deviation or 98% confident away from norm =p)
Problems like:
- Like looking at % of portfolio instead @ per stock/ sector/ industry / asset class, and balancing between them (eg. a 2% of 15 mil stands at 300k. eg Ford @ $9, gives me around 33333 shares.)
- Buying and selling securities thru algo trading, literally position trading, requires like buy/sell 200,000 shares thru 500 x 400 in randoms of +- 500 shares, btwn 20 seconds to 20 minutes over 1 week, over several accounts with TWAP or VWAP, instead of the usual buy/sell And then calculating the cost for these block trades. U know what I mean if you've done this.
- Hedging and all sorts of derivatives options and futures to dismantle, uncorrelate, protect and insure each security and VaR, the index performance to my fund returns. The investors will turn off if the returns are directly correlated to SP500 or World index.
- Looking at overall world index and macro investing. im based in Asia so I have better access to HK, SG, JP markets and making sure the fund is well diversed, then comes those problems with markets without derivatives, no short selling, or no liquidity.
Some brokers like IB have many cool functions to support them. Others, like prime brokerages in banks, not as great.
Well, afterall, my dream of becoming a hedge fund manager ...(trading on my personal acct => look for a trading job ? Why not start one yourself and be the boss =)
- Not forgetting the licenses to obtain
- The regulations to go pass, accounting audits and all tons of expenses
- Hiring anaylsts and traders, not some bookworms or gamblers
- High watermark, fund liquidations, redemptions or investors pull out problems
- Quitting my current $80,000/yr job ? Hell no, its also 1 of my dream job - just that Im already in it.
Just something to share not looking for any solutions, pls share ideas if you've been in my situation before.
p) probably handing at most $200,000 - $500,000, but it seems that the majority of ppl here are still stuck with the basic trading mechanics. just needed some ideas to give myself a break.
I have a friend, partner whose on hand a couple of UHNI. Ppl worth at least > 10m, and they want to pour money into hedge funds, something not traditional business, not mutual funds, not real estate, not fixed deposits. We were thinking of starting a $15 Million hedge fund, taking 2-3 years to raise it.
In simple terms the fund, is not gonna be hedged like market neutral you think it is, nor is it a quant fund with exotic models (that might fail like LTCM), nor is it spilling 200 million on a single credit trade bet with leveraged to 2 billion just for that 1 pip/yr trade.
Without the hedge fund management experience, but after some talks and my performance I was asked to see if I could handle and manage that much $.
Initially I was happy. A chance to start my own firm, my partner's job to bring in new funds, my job to print money, be it blackbox low frequency trading or discretionary. a 2/20 on 15 mil works out around >300k. Let's just say we are not selfish, we hit it at 1.5/15, less away fund expenses like acct and audits, we could bring home a 100k each, or just near 8k a month That is full time trading and fund manger, and luxury to work form home, at its peak.
Then theres a set of problem. My trading, would become so different with the talks of trading here and I foresee a lonely world, even lonelier than what I am now (only less than 3% of social frends and ppl I met understand what im talking in terms of trading and investing. - thats a 3 standard deviation or 98% confident away from norm =p)
Problems like:
- Like looking at % of portfolio instead @ per stock/ sector/ industry / asset class, and balancing between them (eg. a 2% of 15 mil stands at 300k. eg Ford @ $9, gives me around 33333 shares.)
- Buying and selling securities thru algo trading, literally position trading, requires like buy/sell 200,000 shares thru 500 x 400 in randoms of +- 500 shares, btwn 20 seconds to 20 minutes over 1 week, over several accounts with TWAP or VWAP, instead of the usual buy/sell And then calculating the cost for these block trades. U know what I mean if you've done this.
- Hedging and all sorts of derivatives options and futures to dismantle, uncorrelate, protect and insure each security and VaR, the index performance to my fund returns. The investors will turn off if the returns are directly correlated to SP500 or World index.
- Looking at overall world index and macro investing. im based in Asia so I have better access to HK, SG, JP markets and making sure the fund is well diversed, then comes those problems with markets without derivatives, no short selling, or no liquidity.
Some brokers like IB have many cool functions to support them. Others, like prime brokerages in banks, not as great.
Well, afterall, my dream of becoming a hedge fund manager ...(trading on my personal acct => look for a trading job ? Why not start one yourself and be the boss =)
- Not forgetting the licenses to obtain
- The regulations to go pass, accounting audits and all tons of expenses
- Hiring anaylsts and traders, not some bookworms or gamblers
- High watermark, fund liquidations, redemptions or investors pull out problems
- Quitting my current $80,000/yr job ? Hell no, its also 1 of my dream job - just that Im already in it.
Just something to share not looking for any solutions, pls share ideas if you've been in my situation before.
