Perhaps a simpler approach, if possible, would be to re-write your risk parameters thus bringing down the funds needed to properly trade one ES contract.
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raising funds
- Thread starter traderwann
- Start date
Thanks all for you reply, indeed it seems that warning people about the high leverage is the only solution if they are not able to put more capital.
I don't want to re-design the system, as the system is good as it is...
Even if that $200K example was to make the explanation simple, let's say it's the truth. I do have a system trading ES (and some other markets (bonds/currencies) with the same parameters) with an historical DD of ~$20K on 14 years of test. The system is taking swing positions.
The avg win and loss are around $700 with a %win of 58%. For me it's a good system... (see equity curve) if I want to respect some risk parameters and potential future DD of ~40K where I may start thinking to stop the strategy (double the historical DD, if I don't want to bother with monte carlo simulation), I think that $200K is a minimum... (allows for a 20% DD before stopping).
Unfortunately often due to the lake of capital people on forums try to find systems with 4 ticks stop... and never go anywhere. The same goes for their discretionary trading.
Also for that $200K you may want to trade 1 lot ES, 1 lot of 10Y, 1 lot of coffee.. etc. you will have a diversified good overall system... but still the problem of scalability.
I'm interested to know how you define what is a good or poor system?
Quote from Superman MMX:
You must have meant deleveraging.
Agree, my mistake. I should have written, re-design the system.
The point I am making is that if a system trades one ES per 200K, in my opinion it is a very poor system.
I don't want to re-design the system, as the system is good as it is...
Even if that $200K example was to make the explanation simple, let's say it's the truth. I do have a system trading ES (and some other markets (bonds/currencies) with the same parameters) with an historical DD of ~$20K on 14 years of test. The system is taking swing positions.
The avg win and loss are around $700 with a %win of 58%. For me it's a good system... (see equity curve) if I want to respect some risk parameters and potential future DD of ~40K where I may start thinking to stop the strategy (double the historical DD, if I don't want to bother with monte carlo simulation), I think that $200K is a minimum... (allows for a 20% DD before stopping).
Unfortunately often due to the lake of capital people on forums try to find systems with 4 ticks stop... and never go anywhere. The same goes for their discretionary trading.
Also for that $200K you may want to trade 1 lot ES, 1 lot of 10Y, 1 lot of coffee.. etc. you will have a diversified good overall system... but still the problem of scalability.
I'm interested to know how you define what is a good or poor system?
Quote from Superman MMX:
You must have meant deleveraging.
Agree, my mistake. I should have written, re-design the system.
The point I am making is that if a system trades one ES per 200K, in my opinion it is a very poor system.
IMO, there is no way you can make that assessment from the information provided. If the system trades just 1 ES per $200K, then it is probably scaling into positions, rather than picking tops and bottoms. That isn't a sign of a bad system, it just might be different than what you do.
Start trading your system on Collective2. You can do so without real money and C2 will post "audited" results. If you do really well, then people who want to trade systems may subscribe and you can get some incremental income.Quote from traderwann:
So the question seems to now be: what options does someone with a good set of simulated results have to secure the initial capital necessary to generate real results, besides friends and family?
There must be billions and billions of dollars in this world generating just a few percent. Unfortunately no one I know is a HNWI, it seems redundant at best to beg for money from people who only have a little when there's so much out there. There's gotta be a better way.
I've been thinking about trying to start my own fund after successfully trading on my own, but like others here I can't really get the math to work. Estimated capacity on my main equities strategy is only $5-10M, so too many setup costs to just run a buck or two in initial OPM even at 0/30 and not enough total dollars on the line to get the hedge funds excited. Live returns around 25-30%, Sharpe 4-6 depending on how you count it, worst day and max DD under 2% for the past year. Seems a shame not to run it bigger though...
So I was thinking maybe what I need is more debt, instead of the hassles of taking on equity investors. I know hard money lenders who offer 10% or so, which I'd be happy to take but they want collateral. Is there any way to let them have my IB account as collateral somehow? They aren't (that) worried I'll lose their money trading given the level of risk I'm taking and my own capital as a buffer, but they are worried I might not pay them back. I could maybe add them as joint to the account, but I'd really rather not let them see my trades.
Any ideas along these lines, or is this just not going to work?
So I was thinking maybe what I need is more debt, instead of the hassles of taking on equity investors. I know hard money lenders who offer 10% or so, which I'd be happy to take but they want collateral. Is there any way to let them have my IB account as collateral somehow? They aren't (that) worried I'll lose their money trading given the level of risk I'm taking and my own capital as a buffer, but they are worried I might not pay them back. I could maybe add them as joint to the account, but I'd really rather not let them see my trades.
Any ideas along these lines, or is this just not going to work?
Quote from MoreLeverage:
So I was thinking maybe what I need is more debt, instead of the hassles of taking on equity investors. I know hard money lenders who offer 10% or so, which I'd be happy to take but they want collateral. Is there any way to let them have my IB account as collateral somehow? They aren't (that) worried I'll lose their money trading given the level of risk I'm taking and my own capital as a buffer, but they are worried I might not pay them back. I could maybe add them as joint to the account, but I'd really rather not let them see my trades.
Any ideas along these lines, or is this just not going to work?
my 0.02 USD - don't do this, period. just trade your own account if there's capacity constraints.
Those that have tried to manage money invariably realize that you must "go big or don't go". Do you really want to be in bed with the lender who believes you will not lose their money yet is worried you'll decide not to pay them back?
Sounds like you are doing quite well and should think long and hard before you change anything.
Sounds like you are doing quite well and should think long and hard before you change anything.
Quote from MoreLeverage:
I've been thinking about trying to start my own fund after successfully trading on my own, but like others here I can't really get the math to work. Estimated capacity on my main equities strategy is only $5-10M, so too many setup costs to just run a buck or two in initial OPM even at 0/30 and not enough total dollars on the line to get the hedge funds excited. Live returns around 25-30%, Sharpe 4-6 depending on how you count it, worst day and max DD under 2% for the past year. Seems a shame not to run it bigger though...
So I was thinking maybe what I need is more debt, instead of the hassles of taking on equity investors. I know hard money lenders who offer 10% or so, which I'd be happy to take but they want collateral. Is there any way to let them have my IB account as collateral somehow? They aren't (that) worried I'll lose their money trading given the level of risk I'm taking and my own capital as a buffer, but they are worried I might not pay them back. I could maybe add them as joint to the account, but I'd really rather not let them see my trades.
Any ideas along these lines, or is this just not going to work?