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Starting/Working for a Hedge Fund
- Thread starter ProfitTakgFool
- Start date
Surf, I do my own administration because the fees firms charge are obscene. There really isn't much to it...reconcile and balance daily, do end of month, quarter, and year close, and handle client communication. I don't touch the taxes but I could probably do that on my own as well. I'm not an expert so I leave it to the pros. When I get a little bigger I'll probably farm out the admin but for now I want to keep costs low.
If you're anywhere near Chicago I'm always open to conversation over a cold beer with another trader.
If you're anywhere near Chicago I'm always open to conversation over a cold beer with another trader.
I take it your capital is all "friends and family" money? Very few, if any, sophisticated investors will invest with you without a reputable third party administrator.
pretty scary!
surf
Perhaps we're talking about 2 different things. I do get an audit but I do the admin. By admin, I'm talking about back office kind of stuff.
I think I understand where the guy is coming from.
I'm in a simular process as I'm trading for 2 clients right now and am in the process of adding more clients. However my set up is very different. I DID work in the securities industry. I created trading systems that extracted $$$ from the markets on a daily basis for well to do clients. My biggest claim to fame was my soybean system and my ultra short positon 2 weeks prior to 9/11 (not that I knew something was going to happen) but because I felt that the market was ready to head down.
I have to say that had I not worked in the industry I would not be trading today. It doesn't matter what you say you can do
it matters what you actually DO! Being an African American it was nearly impossible for me to raise $$$ to trade when I worked in the business so I inveted potential clients to come to our office and watch me trade in real time during market hours. Thats how I raised money. I talked a good game but I also backed it up!
I will tell you though with regard to full disclosure: My first attempt at managing money after I left the firm BLEW UP!!! within a year or 2. I learned alot from that experience and it has made me a much better trader. YOU WILL EVENTUALLY BLOW UP!
Until youve blown up you really don't know what your doing in this business. I have lost peoples money both as a "Broker" and as an individual. Theres alot to learn in this business and the market will teach you. I've decided not to be a hedge fund per se but to rather trade for people as a limited power of attorney on the account. it is then up to the client to pay me once a month based on the previous balance of the prior month. If I don't make them $$$ then I don't get paid. We split the money 50/50.
I like this set up much better. just my 2 cents worth.
best of luck to you.
I'm in a simular process as I'm trading for 2 clients right now and am in the process of adding more clients. However my set up is very different. I DID work in the securities industry. I created trading systems that extracted $$$ from the markets on a daily basis for well to do clients. My biggest claim to fame was my soybean system and my ultra short positon 2 weeks prior to 9/11 (not that I knew something was going to happen) but because I felt that the market was ready to head down.
I have to say that had I not worked in the industry I would not be trading today. It doesn't matter what you say you can do
it matters what you actually DO! Being an African American it was nearly impossible for me to raise $$$ to trade when I worked in the business so I inveted potential clients to come to our office and watch me trade in real time during market hours. Thats how I raised money. I talked a good game but I also backed it up!
I will tell you though with regard to full disclosure: My first attempt at managing money after I left the firm BLEW UP!!! within a year or 2. I learned alot from that experience and it has made me a much better trader. YOU WILL EVENTUALLY BLOW UP!
Until youve blown up you really don't know what your doing in this business. I have lost peoples money both as a "Broker" and as an individual. Theres alot to learn in this business and the market will teach you. I've decided not to be a hedge fund per se but to rather trade for people as a limited power of attorney on the account. it is then up to the client to pay me once a month based on the previous balance of the prior month. If I don't make them $$$ then I don't get paid. We split the money 50/50.
I like this set up much better. just my 2 cents worth.
best of luck to you.
Interesting story pulsescan. I couldn't agree more with you about blowing up. I've never blown up a futures account but I've blown up more stock accounts than I can remember, and you're exactly right, you won't make it until you go through that process.
I keep a very close eye on risk and measure each day and each trade against my history. This doesn't guarantee I wont blow up but it definitely reduces the risk. The first thing I do for a new client is show them how I manage and measure risk and it has nothing to do with a Sharpe Ratio, although that is included.
Just a brief summary....I measure how much margin I use on each trade and balance that against the profits generated on that trade (assuming there are profits), and against the size of the account. I have about 3 years worth of data so I have a long history to base my current trading against. It works very well for me and keeps me in check.
If there is one thing that trading and managing money has taught me, it's if you want to do 100% per year you have to assume a proportionate amount of risk. There is no way of getting around this equation as it is direct and absolute. I don't trade the fund the same way I did my own account because my blow up risk was high but I could easily start over if that happened. It's pretty hard to get investors to start over if their funds disappear so that's never an option. I just shoot for a crap load of singles and once in a while I'll stretch it out to a double. I can't remember the last time I hit a homerun and I've never hit a grand slam because swinging that hard requires more risk than I'm willing to put on. It's all about consistency.
I keep a very close eye on risk and measure each day and each trade against my history. This doesn't guarantee I wont blow up but it definitely reduces the risk. The first thing I do for a new client is show them how I manage and measure risk and it has nothing to do with a Sharpe Ratio, although that is included.
Just a brief summary....I measure how much margin I use on each trade and balance that against the profits generated on that trade (assuming there are profits), and against the size of the account. I have about 3 years worth of data so I have a long history to base my current trading against. It works very well for me and keeps me in check.
If there is one thing that trading and managing money has taught me, it's if you want to do 100% per year you have to assume a proportionate amount of risk. There is no way of getting around this equation as it is direct and absolute. I don't trade the fund the same way I did my own account because my blow up risk was high but I could easily start over if that happened. It's pretty hard to get investors to start over if their funds disappear so that's never an option. I just shoot for a crap load of singles and once in a while I'll stretch it out to a double. I can't remember the last time I hit a homerun and I've never hit a grand slam because swinging that hard requires more risk than I'm willing to put on. It's all about consistency.
Aye, that be the truth. It's only after you've been blown out of the water that you learn not to think yer ship is invincible, aaraaaarrgh....
<b>Interesting story pulsescan. I couldn't agree more with you about blowing up. I've never blown up a futures account but I've blown up more stock accounts than I can remember, and you're exactly right, you won't make it until you go through that process.</b>
isn't it highly unusual to have blown up "lots" of stock accounts and never a futures account? seems like the opposite is the normal course of things....\
surf
isn't it highly unusual to have blown up "lots" of stock accounts and never a futures account? seems like the opposite is the normal course of things....\
surf
third party administrator and auditor are two different functions and firms.
surf