Starting/Working for a Hedge Fund

It would take weeks and probably months to fully explain my strategy and even then you may not get it because it is very intuitive and somewhat discretionary. The thing about trading....you can put 2 different traders on a 26/9 MACD cross and get 2 different results. It's not the stratey that makes the strategy successful, it's the trader. So, if you went to Soros or any other big player and asked them their strategy and they actually told you I don't think you'd be able to duplicate their results but all strategies require judgment.

At any rate, if you want to dig a little deeper into my strategy here is a start. One thing I will tell you about it....I break a lot of rules and I will never place a physical stop:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=112126

Quote from syswizard:

BTW: Great thread. However, you haven't told us much about the strategies behind your great success....trading time-frame, derivatives or stocks, any options - on futures or equities or indices ?
If multiple strats, what was your best winning strat ?
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and here's another one that explains what I won't do and why. It's kind of lengthy but if you're up for a good read there's some good stuff in there. Sorry about the bold, I forgot to close the bracket. Only 1 word was supposed to be bold.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=112874

Quote from syswizard:

BTW: Great thread. However, you haven't told us much about the strategies behind your great success....trading time-frame, derivatives or stocks, any options - on futures or equities or indices ?
If multiple strats, what was your best winning strat ?
More...
 
Quote from ProfitTakgFool:

and here's another one that explains what I won't do and why.
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It's obvious you've got darn good entries....but I still don't get your earlier comment about "I don't use physical stops".
I now see something here...scaling-in on entries, eh ?.
I don't see any magic here...just a lot of hard work and lots of time spent in the emini futures "School of Hard Knocks".
Ahhhh.... I got a PM that brings up a very useful question. Why don't you just stop out and re-buy at a lower price?
This is what I started doing. The more I traded fut's the better my timing became . I found I'd buy, set my stop 2 points away, it would get triggered at or near the EXACT bottom/top. I was putting in tops and bottoms with my stops. I would be forced to buy higher or sell short lower, which I did.
I noticed this was happening consistently so I made an adjustment. My first trigger would be a smaller position and instead of stopping out at 2 points I'd buy more. I haven't looked back but I would suggest you start with the strategy I began with.
Take the trigger and put in a stop. If you stop out get ready for the next trigger, with a higher line if the prob of that subsequent trade has a higher prob. If you find your stops are getting triggered at the tops/bottoms of the market then you have something to work with and you just need to make an adjustment.
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Right on, there's no magic. This is just a system that I developed over time. It's based more on price movement than indicators. I rely heavily on my "read" of the market, which isn't always right so I need a scaling method to correct the weaknesses in that method.

Here's why I don't use physical stops....It's my belief that technical analysis has a lot of value but the market is largely random. I realize most trader disagree with this, which is perfectly fine with me. That's what I want to hear. So, if the market is random and you place a physical stop it means your method of trading is now based on timing (which is impossible to do so consistenly that you can profit from just this method) and you've placed the outcome of your trade at the mercy of the market. Will the market punish you? If you give it a chance it absolutely will punish you. I refuse to let the market dictate how I lose money. That's my decision.

Think of this another way......if you have 100 contracts at your disposal, for example, would you put the entire 100 on all at once? Trading that kind of size gives you an incredible advantage over a trader who is trading a 1, 2, 3, 5, 8 etc...lot. You don't have to put your entire wad on with 1 triggger -- scale into it. Nibble at the market and if the iron is hot strike. With this type of entry system there is no need to use stops.

Quote from syswizard:

It's obvious you've got darn good entries....but I still don't get your earlier comment about "I don't use physical stops".
I now see something here...scaling-in on entries, eh ?.
I don't see any magic here...just a lot of hard work and lots of time spent in the emini futures "School of Hard Knocks".
More...
 
Oh, and yes, I definitely went to the school of hard knocks. I tried in vain to get hooked up with a trading firm. Even the prop shops wouldn't hire me for some reason so I had to teach myself. I blew up more stock trading accounts than I can recall getting my "education." I've never blown up a futures account and it's unlikely I will. I have an extremely high level of discipline these days. I spend more time working on "me" than I do the market. It's all about how you think.

Quote from syswizard:

It's obvious you've got darn good entries....but I still don't get your earlier comment about "I don't use physical stops".
I now see something here...scaling-in on entries, eh ?.
I don't see any magic here...just a lot of hard work and lots of time spent in the emini futures "School of Hard Knocks".
More...
 
It is interesting that giving the choices of best way to obtain more trading capital the three best would include:

1. go to PROP firm
2. borrow from financial institution
3. borrow from friends

The one you chose Profittakingfool was number 3.

Those three options are available to most traders as well. The "borrow from friends" one seems to me to be the most stressful b/c if you happen to fail having to live with these people rest of someones life can be difficult. Also the stress of knowing this is friends/family money could cause a trader to made trades he would not normally make.

Personally I would chose the "borrow from financial institution" being that if I failed and actually lost some of their money I would just have to find a job and pay them back. I don’t think the financial institution would even care who I was, they are just looking at me as another borrower and as long as they get their interest back they would not care if I was successful or not.
 
Quote from timcar:

It is interesting that giving the choices of best way to obtain more trading capital the three best would include:

1. go to PROP firm
2. borrow from financial institution
3. borrow from friends

The one you chose Profittakingfool was number 3.

Those three options are available to most traders as well. The "borrow from friends" one seems to me to be the most stressful b/c if you happen to fail having to live with these people rest of someones life can be difficult. Also the stress of knowing this is friends/family money could cause a trader to made trades he would not normally make.

Personally I would chose the "borrow from financial institution" being that if I failed and actually lost some of their money I would just have to find a job and pay them back. I don’t think the financial institution would even care who I was, they are just looking at me as another borrower and as long as they get their interest back they would not care if I was successful or not.
More...


Yoda says: "and yet, there is another"

take $500,
trade options
build up to $4,000
cross over or stay with that as plan

borrow nothing
hold head high
friends stay friends, family still knows your name (instead of some other derogatory)
 
Great info, Profit TF! One quesiton..

What do you pay in short-term capital gains for stock trades under your hedge fund? Is it 15%, 20% or 30%?...
 
Don't know because I don't trade stocks. I'm strictly futures and run as a CPO. But, it's my understanding that the hedge fund would not pay anything in short term capital gains. Those gains would be put to the shareholders in a form of a K1 and taxed at their odinary rate. I'm not an accountant so I can't say for sure but that's how I understand it.

Quote from sophiekay:

Great info, Profit TF! One quesiton..

What do you pay in short-term capital gains for stock trades under your hedge fund? Is it 15%, 20% or 30%?...
More...
 
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