So let's assume that a trader has indeed

SelfMadeDude said:
created a great trading system....solid stats....logical risk management.....proper scaling ladder.

What are the next steps for him to create his own hedge fund?
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Why do you need to create a fund? I've always envisioned fund managers....as people who can't trade, but just plan to leach off of the management fees and the occasional, rare, actual performance fees.

If a trader can truly trade....that person....can grow their own funds into many millions, all for themselves. No splits and headaches and people to answer to.
 
MacBookProHo said:
Why do you need to create a fund?
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Good question. And very valid reasonable points btw.

I guess initially when I started trading it was just about me. But as someone who has bettered themselves as a person in order to become a better trader. Yes, you read that correctly. I basically became the opposite of an ugly, mean, selfish person not the exact polar opposite but I'm still working on getting better.

Now. It's about having a bigger platform to do some good and help people.

I want to be the first billionaire hedge fund CIO who donates 10% of his net profit to "small communities" in need and as a stipulation, this would have to be agreed upon by all incoming investors, of course. Long story short: I expect to beat Simons' ROC track record.

That would be so fucking awesome.
 
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That is a hard question to answer, as I do not know your strategy or target investor. If you are going to target wealthy investors vs allocators, I'd say the minimum for futures would be $100K and the minimum for Equity/Options is $250,000, but they are not hard numbers. The less access you have to those that are looking to invest, the more mature the business needs to be to find investors. I have personally invested in several CTAs and Hedge funds. I invest in a business, not a trader. I want to see 12 months or more of real trading/investing/managing where they can show they can handle money and stress. The Yearly returns vs monthly changes need to fit my profile. My profile is very conservative. I look for 8% to 12% per year with very low drawdowns for the bulk of my investing. I also look for non-correlated returns to the market. It is very easy to have a great run for long manager during an up market. That does not impress me. I can do that and do not need to pay 2/20 for that.

SelfMadeDude said:
So $5M of my own capital (grown from a meager $10K initial account) would be the absolute minimum to attract some outside money is what you're saying?
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Robert Morse said:
That is a hard question to answer, as I do not know your strategy or target investor. If you are going to target wealthy investors vs allocators, I'd say the minimum for futures would be $100K and the minimum for Equity/Options is $250,000, but they are not hard numbers. The less access you have to those that are looking to invest, the more mature the business needs to be to find investors. I have personally invested in several CTAs and Hedge funds. I invest in a business, not a trader. I want to see 12 months or more of real trading/investing/managing where they can show they can handle money and stress. The Yearly returns vs monthly changes need to fit my profile. My profile is very conservative. I look for 8% to 12% per year with very low drawdowns for the bulk of my investing. I also look for non-correlated returns to the market. It is very easy to have a great run for long manager during an up market. That does not impress me. I can do that and do not need to pay 2/20 for that.
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This might be one of the most helpful "food for thought" posts I have ever received as a response from anyone on this site. Thank you. Very much. I will have more "investor thinking" questions in the coming months as I build my track record.
 
SelfMadeDude said:
created a great trading system....solid stats....logical risk management.....proper scaling ladder.

What are the next steps for him to create his own hedge fund?
More...
Beside what others already pointed out, trading your own account (unless you're a whale) is not the same as trading a hedge fund with high AUM. Everything must be recalibrated at that point and your great system might not work as once it did.
 
Why does one want to become a fund manager and have to deal with the investors? That’s a big headache and a big waste of time.

If one is a truly good trader $100k is enough to start and within no time to get to a significant amount to trade big. I would never want to trade other people’s money and deal with all the headaches.
 
It is a matter of direction and scale. If you choose to go it on your own and can make the money you want to make on your own, then that is your path. If your goals or expectations are larger, you need scale. "Small" hedge funds manage $5mm to $50mm. Yes, that is my opinion. Some say small is under $100mm. $25mm with 2/20 and a 10% return is about $3mm/year before expense. Would you manage a business with investors for that?


Jzwu2017 said:
Why does one want to become a fund manager and have to deal with all the investors? That’s a big headache and a big waste of time.
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I guess it is the personal preference/personality thing. Some fund managers actually end up trading/managing his/her own money only.
 
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