Starting a Hedge Fund

All I ask is a little credit here. I have a pretty good understanding of most markets, and am approached almost daily by those wanting our participation in one marketplace or another. Those who push Forex are very high on my radar screen, because of the market structure and the unfair advantage to the "house" (banks).

The OTC market is fine for equities (yes, even the NASDAQ is fine for investors), but when trading currencies without a centralized, established market....I cringe a bit.

Philosophically, I am a strong supporter of open markets, new markets, new technology, and all the rest. Pragmatically, I like to see the more easily successful road for myself and our traders.

Anyway, let us know how you're doing with the Forex, and I would be interested in hearing what approaches and/or strategies you find to be working.

:-)
 
Don,


You got enough credit left.... :0))

The wave of the future is the Internet
and together with it the electronic
market.

I like to compare the revolution Internet
will cause with the Industrial revolution.

Very few people really see the coming impact of
the internet on the world ecomnomy.
Everybody seems to be afraid of inflation,
Forget it, deflation is the real treath...

Suppose I want to buy certain product at
the best price, for example go to www.
pricewatch.com for computer related things.

But this trend will come for every product
there is.

A bank with people behind the glass will
disappear in a few years.

Price competition will increase like crazy,
causing a fall in prices....
 
Sabena, interesting thoughts. Nothing new though, I heard all of those arguments during the heyday of the internut mania. As a student of the Austrian School of Economics, I would have to respectfully disagree.

In a fractional reserve monetary system, de/inflation is in the hands of the central bank.

www.mises.org
 
You sound like you are a fan of Prechter's Ewave vision for the future.

Deflation maybe on the cards, but I think the real mystery that will be puzzled over in 100 years or so is this: Why did so many people rush to invest in sand in the early 21st century? Of course I am referring to the glass optics that connect the world to the internet. They would have decomposed by then!
 
Originally posted by sabena

Price competition will increase like crazy,
causing a fall in prices....
More...

This is getting off topic, but disagree. Prices may fall, but there will still be people who need haircuts, restaurants, ect. There are still people who want to read a book before buying it.

It is just like trading the market. If you believe that the Internet makes prices drop to marginal cost, then you have to believe that makes traders earn nothing but minimum wage. It is all about market efficiency isn't it? It is improving but will never be perfect.
 
Babak,



I think for a few decades we will be in a
transition period, with a complete different
climat.

Talking about economy ; my friend who studies
economics told me that there exists such
a thing as the "efficient market hypothesis"
meaning that all information is always imme-
diatly reflected in the prices so that nobody
can has an edge and can consistent beat
the market averages.

Do they still have this "hypothesis" in place ?

Well, what I and others do is so statistically
significant that there must be something wrong
with this hypothesis......
 
does anyone know of other platforms like hotspotfx anyone do business with them. i know island has a ecn for futures interesting to see this with forex. anyone deal with forex ecns what are they like in relation to arca, isld etcetera. is there any type of acct protection whats the leverage like in the forex i know this is ot but it is certainly indirectly related to hedge funds. thanks
 
sabena,

Don is giving you good advice re these internet fx sites. Hotspot is an interesting site, but you have no idea whom you're dealing with, how they are capitalized, what happens if they blow up or some trader blows up and can't pay off a losing trade. If major banks can have these problems, isn't it possible that soem fly by night internet site could? I have nothing against Hotspot, in fact I read their commentary and like it, the same criticism applies to all these fx sites. In short, they control the game you are playing, you play by their rules, unless you have an independetn fx quote feed you have no idea if their bid/ask is on the market, you are totally exposed to credit issues. What happens if you have a gripe on a fill or the site goes down and you are stuck in a trade or a hundred other issues? Unless you are big enough to trade with a real bank, you are better in the currency futures, where you have an exchange, a clearing organization and government regulators backstopping you.
 
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