raising funds

[Martinghoul]

traderwann, here's what I would recommend... I think you need to start by making sure that you don't place the cart before the horse, so to speak.

Regardless of how it all evolves, if I were you, my first and foremost concern wouldn't be raising funds, but rather producing as much insight into the performance characteristics of your strategy as possible. This will be useful not only to your eventual investor(s), but to yourself. Make no mistake, it's a lot of work, if you want to do it properly. You can get as sophisticated as you like when going about it, but the basic stuff that sle mentioned is indispensable. For me, the additional, very important characteristic is the stability of the parameters of the strategy with respect to the choice of the in-sample period.

My view is that if you have insight into how you're making money, why and other important questions, you will find money. If you build it, they will come, sorta thing.

 

[traderwann]

Quote from Martinghoul:
traderwann, here's what I would recommend... I think you need to start by making sure that you don't place the cart before the horse, so to speak.

Regardless of how it all evolves, if I were you, my first and foremost concern wouldn't be raising funds, but rather producing as much insight into the performance characteristics of your strategy as possible. This will be useful not only to your eventual investor(s), but to yourself. Make no mistake, it's a lot of work, if you want to do it properly. You can get as sophisticated as you like when going about it, but the basic stuff that sle mentioned is indispensable. For me, the additional, very important characteristic is the stability of the parameters of the strategy with respect to the choice of the in-sample period.

My view is that if you have insight into how you're making money, why and other important questions, you will find money. If you build it, they will come, sorta thing.

What you say sounds reasonable, thanks. Speaking of putting the cart before the horse, are you suggesting I produce the performance statistics based on simulated results or real results? Answering that may bring us full circle back to the beginning so to speak. Also, if you don't mind telling me specifically what you mean by 'stability of parameters with respect to the choice of the in-sample period'?

 

[Martinghoul]

Quote from traderwann:
What you say sounds reasonable, thanks. Speaking of putting the cart before the horse, are you suggesting I produce the performance statistics based on simulated results or real results? Answering that may bring us full circle back to the beginning so to speak. Also, if you don't mind telling me specifically what you mean by 'stability of parameters with respect to the choice of the in-sample period'?

Simulated results first, real results to follow eventually...

Well, I don't know what is you're doing, but ultimately it's some sort of an algorithm, right? Basically, depending on a whole bunch of variables, you make a choice to enter a trade and then, depending on a potentially different bunch of variables, you choose to exit. The particular set of values for these variables that define your entry and exit conditions are what I call the "parameters" of the system (there is more to it, but that's just an example). The choice of these particular values is based on the (simulated) performance of the strategy when applied to a particular subset of the data (call it "in-sample" or "calibration" or whatever). I am saying that if you notice that the parameters change a lot depending on the choice of the period, it can serve as a warning sign.

 

[oilfxpro]

On this subject , there is a trader making 1 % daily on average , actual returns ,consistently and without compounding , risking a 5 % drawdown .Is it attractive to an investor , and does he need investor money ?

There is no system , just the trader trading on discretion.

 

[Biog]

Quote from oilfxpro:

On this subject , there is a trader making 1 % daily on average , actual returns ,consistently and without compounding , risking a 5 % drawdown .Is it attractive to an investor , and does he need investor money ?

There is no system , just the trader trading on discretion.

There are so many traders on ET that are achieving those returns, nothing special

 

[oilfxpro]

Quote from Biog:

There are so many traders on ET that are achieving those returns, nothing special

I always knew there were some special people on E T .

 

[traderwann]

Quote from Martinghoul:

Simulated results first, real results to follow eventually...

Eventually, ok. So what is the plan to achieve them speaking of putting the cart before the horse ... are you suggesting I simulate for 12 months? How many months of simulation are necessary followed by how many months of live testing for a total of how much time? The number of people with skills vs the number of people with this kind of time makes the proposal useless for almost everyone. There's gotta be a better way. If there isn't, there's money in making that happen.

The particular set of values for these variables that define your entry and exit conditions are what I call the "parameters" of the system (there is more to it, but that's just an example). The choice of these particular values is based on the (simulated) performance of the strategy when applied to a particular subset of the data (call it "in-sample" or "calibration" or whatever). I am saying that if you notice that the parameters change a lot depending on the choice of the period, it can serve as a warning sign.

When I read this it seems like it's directed at a mechanical strategy. I am in a trade now on Euro, I look back as I just clicked trade out. There were two parameters as you describe above. As I interpret the next sentence I see it saying: I choose these parameters if they work to make money. Yes I do. How stable are they? You can tell by the same ratios and performance results already discussed. Either I'm missing something (I think so) or this is redundant.

EXAMPLES - 1 min chart
The trade was at 10:35 EST, sell 3 @ 1.3468 and buy 3 @ 1.3478 for $400. With more contracts as originally posted, I only have to do that 1 time in a couple markets and I'm at 6% - 15%.

After that I saw something on Russell. 11:07 EST buy at 748.50 and sell at 749.20 lack of momo. I missed entry around 748 and change because I was writing this message so I only took 1. I got out early before it pulled back to entry. If I was playing with more contracts I likely would have gotten double the profit per contract.

Take the money and run, I think that's how I sum up my strategy in one sentence.

 

[traderwann]

Quote from oilfxpro:
I always knew there were some special people on E T .

Sigh. See my original post starting with "I hesitate to post this..."

I'm surprised it took this long to start the useless posts.

 

[Martinghoul]

Quote from traderwann:
Eventually, ok. So what is the plan to achieve them speaking of putting the cart before the horse ... are you suggesting I simulate for 12 months? How many months of simulation are necessary followed by how many months of live testing for a total of how much time? The number of people with skills vs the number of people with this kind of time makes the proposal useless for almost everyone. There's gotta be a better way. If there isn't, there's money in making that happen.

Sorry, when I talk about simulated I am referring to backtest. In terms of how long it takes to demonstrate viability, I would suggest it's years. As an example, take someone who trades in an institutional context. How long do you think it takes for someone to be given their own risk to run?

When I read this it seems like it's directed at a mechanical strategy. I am in a trade now on Euro, I look back as I just clicked trade out. There were two parameters as you describe above. As I interpret the next sentence I see it saying: I choose these parameters if they work to make money. Yes I do. How stable are they? You can tell by the same ratios and performance results already discussed. Either I'm missing something (I think so) or this is redundant.

EXAMPLES - 1 min chart
The trade was at 10:35 EST, sell 3 @ 1.3468 and buy 3 @ 1.3478 for $400. With more contracts as originally posted, I only have to do that 1 time in a couple markets and I'm at 6% - 15%.

After that I saw something on Russell. 11:07 EST buy at 748.50 and sell at 749.20 lack of momo. I missed entry around 748 and change because I was writing this message so I only took 1. I got out early before it pulled back to entry. If I was playing with more contracts I likely would have gotten double the profit per contract.

Take the money and run, I think that's how I sum up my strategy in one sentence.

Right, so, basically, you're saying that the "secret sauce" is you and your trading ability? That's a very different kettle of fish entirely. I don't quite know what to tell you about this, without sounding too skeptical and dismissive. Maybe, heech/sle can help more than I.

 

[traderwann]

Quote from Martinghoul:

Sorry, when I talk about simulated I am referring to backtest. In terms of how long it takes to demonstrate viability, I would suggest it's years. As an example, take someone who trades in an institutional context. How long do you think it takes for someone to be given their own risk to run?

I don't know how long, if you look back to the original question that should be clear. Years may seem right if you're at a bank or other blue chip type environment. All this seems to be avoiding the issue and questions at hand though.

Right, so, basically, you're saying that the "secret sauce" is you and your trading ability? That's a very different kettle of fish entirely. I don't quite know what to tell you about this, without sounding too skeptical and dismissive. Maybe, heech/sle can help more than I.

You're starting the same illogical pattern: ask no questions, just assume it can't be true based on not giving any opportunity to show it is! You're pulling my leg yes? Same question, around and around we go: what do you need to prove it? Then, how do you find sufficient funds to prove it live? Then what? Etc..

Are you equally skeptical of all discretionary traders or just this specific situation because the returns are (so far and will go down) stated as being top tier? I thought the whole definition of discretionary means it is NOT mechanical, which also means it can't (usually, often) be coded or else it would then become mechanical, not discretionary. The fact that I'm pointing this out to you worries me.

I didn't get to trade before 10:30 today but I managed to squeeze out just over $1500 with max 5 contracts, 2 trades used all 5, few other trades used a couple. Worst inter-trade drawdown was maybe a few thousand, I don't recall as I was managing multiple positions in 3 different markets at the time. I can probably scale down what I'm doing but it's more stressful and actually means more risk in some ways, perhaps less in others but I'm not seeing it yet.