Survival characteristics of CTAs, traders, & hedge funds

[ellokn]

It is true. Trading for the BIG HIT will not survive over time. Yet, that is what most traders and investors want and expect, or hope for. That is always the killer.

Consistent, steady and systematic returns are what will survive and profit. If you look at CTA who have a track record going out more than five years likely see some down years, but a pattern of consistency point to an overall positive return.

Those are trading programs to consider.

 

[murray t turtle]

Quote from candletrader:



I totally agree with you... slow and steady is the only sensible way to play this game...

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Not my cup of green tea; however Bright brothers doing all right for many decades with thier faster model.

Bonds had a real return of 39.9% , in 1982
Bonds had a real return average of 3.2%, 1950-1993

Stocks had a real return average of 9.3% 1950-1993
[Ron Blue CPA & bookwriter]]
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Survivors DON"T abuse capital like Long Term Capital;an absurd , killer whale use of leverage. Didn't live thier name.

Interesting percentage of the great ones are amazingly helpful ; knowing helping others reaps a wise harvest. Amazing the mostly free help thru Bollinger Capital Management.


LOVE reading futures trader kings for thier technical info -not leverage. Amazing that John Henry would share quotes like ''stocks '' &''What you call luck I call a small sample.''

 

[NYSEtradinglog]

Interesting numbers you brought up JT!

So IF

CTAs have a 50% survival rate

and there average yearly profit >= there average yearly max draw down and they shut down there trading if they reach max historic DD *1,5 or 2 then you are on the secure side if you can diversify you portfolio in many CTA's and let the money run for et least 3-4 years....


I think a viewpoint that is widely under valued when looking on CTA's or Hedgies is the personality of the manager.

What we are looking for are numbers: risk, max dd, averge yearly gain, what is the strategie and so on...

But what's going on with the manager?
Where do he life.... eduction..... lifestyle.... family and kids... and other aspects of the personality.
He has to make very important decisions for my money day after day and I think we all know how
hard it is to be not over confident when the equity has a run up or not
to fell in the minor depression when the DD do not will end.

Past performance can only show us that he could handle this in the last few years .....

Many Hedgies fail when they have decide to take to much risk.
Why they have done so?
Maybe the manager needs the money for his divorcement and only get paid high whater mark performance.
Betting on all or nothing.....

Would be interesting to know how many of the failed CTA's are financial independent, do sports
on a regular basis and life in a healthy relationship.