Trading Ideas/Potential Trades

chartwiz;

I'm sorry I missed this particular question the first time around. As far as placing a position that's larger than the liquidity can handle......You never place a position that is larger than the liquidity ratio of the stock. If you do, you lose a limb. Really simple stuff, like I said....
 
One thing to keep in mind is that most "hedge funds" don't really technically "hedge" anything.

The original idea behind it was that a hedge fund would have more freedom than a traditional mutual fund both in what instruments they traded and the methods they could use to mitigate risk and limit potential losses.

Hence the name - since to hedge a position implies that you've done something to limit your downside exposure.

However, if many of the hedge funds were actually doing that, there wouldn't have been so many with spectacular losses.

LTCM is certainly the most eggregious example, although Soros had a couple of his funds take big spankings over the last couple of years too -- mostly the result of unhedged (maybe they should have been called unhedged funds), highly leveraged bets.

Nowadays, the term hedge fund neither implies nor necessarily involves actual "hedging" and simply refers to a particular kind of structural organization that usually has access to a special backoffice and financial arrangements that provides access to extreme leverage.

Actual hedging methods come in different shapes and composition and can often be easily implemented even for a fairly small investor/trader - e.g., to hedge some long term equity position you have can be as simple as buying puts to limit downside exposure (or alternatively collaring the position).

There's a whole spectrum of more complicated methods of course, but generally hedges are rarely free to implement and may involve paying up (like insurance) or capping potential profits in exchange for limiting downside risk. Larger portfolios might involve index options or index futures/options hedges adjusted for both portfolio beta and hedging instrument delta as/if appropriate.
 
Thank you for your comments. I wanted to add that the points you clarified are really, I mean REALLY old stuff.

The term "hedge fund" faded away in the 70's, when directional derivatives in markets such as mortgage backed began to take shape. We drifted further when the arabs were flooded with Dollars during the energy crisis. Their excess cash created the Euro-Dollar market, which then opened up several other markets in currency crosses.

Within the industry nowadays, we don't even call it a "hedge fund" but rather an Alternative Investment Vehicle (AIV) so that the term "hedge" does not get confused with the actual act of hedging one's exposure.

Pejman Hamidi
 
Originally posted by Pejman Hamidi
To effectively "trade" this type of size, you need a minimum of 3-5 assistant traders on your desk. They will be responsible for particular position placement, management and risk control once they are given the trade parameters. You do NOT do this alone. The head trader rarely manages in and out of a position. Rather, they monitor the more complex aspects of the overall portfolio.

Chartwiz, I suggest you let your guards down some. You can teach us common folk a thing or two much more effectively that way, and I sure am anxious to see some interesting dialogue from you.
More...


My guard is down, I wasnt asking a sarcastic question, I was just asking thats all.....I am intrested in what you have to say thats all......you have my word, I myself trade a large acct & just intrested in your point of view for doing the size you where talking about a few posts ago........I am always opened to learning......there are 3 of us that work togther to trade the size you mentioned & your right the multiple exectuters are needed to work the positions, I agree......chartwiz
 
Watching the daily Charts of the DOW SP & NASDAQ..........


The last rally UP.....

DOW...cash tested 12/06 highs.....and failed

SPY .....cash tested just under its 200 ma & put in lower high to its 12/06 highs......

Nasdaq Comp.......test below 12/18 pivot highs .......weakest of the 3 indexes

( SOX- Semis...also same pattern as Nas comp, weaker)


For now, I am watching many nas stocks that look weaker....PMCS RFMD ALTR QLGC KLAC AMAT ect......all have houlry bear flags........

Any breakdown in 3 indexes will confirm sell divergnces & short signal..........

Since its a holiday tomorrw I have no overnight positions & commiting nothing today short or long term........but this is what I am watching for now.....

Chartwiz
 
Pej -

Presumably your comments were directed at my post, even though my post was geared toward AAA's comment that "...that's why they call it a hedge fund - the manager is supposed to prevent a big loss like many mutual funds...".

Which of course is why I pointed out that so-called hedge funds aren't actually doing any "hedging" and that the term "hedge fund" is a misnomer.

But as far as "...the term hedge fund faded away in the 70s..." - since the term is still widely used today (albeit as I noted earlier, it's a misnomer) both within and outside the sector, obviously the term did NOT "fade away in the 70s".

Unfortunately, (in spite of its purported demise 30 years ago) the term is so widely used and misunderstood that many hedge fund investors have been unhappily surprised by the steep losses incurred by their funds over the last couple of years because even some accredited investors had the mistaken belief that their hedge fund was actually "hedging" to limit downside risk.

Of course, the more conservative funds do actually use hedging and other techniques to manage their risk. But the majority of the funds out there are geared toward arbitrage (which depending on what you're arbing is not risk limited) or are merely placing highly leveraged, unhedged directional bets.

The "...within the industry nowadays, WE don't even call it a hedge fund..." is interesting - so far on this thread it hasn't been clear that you were actually part of "the industry" - merely that you hoped to start a fund.

While the latest euphomism "alternative investment" is being picked up, no doubt the many current hedge fund operators (and others who are actually in the industry) who continue to refer to their operations as "hedge funds" will be interested to know that they're evidently 30 years behind the time.
 
Chartwiz;

I see the bear flags all over the place as well. To me, it appeared the action over the past few sessions has been a potential trap to the downside.

I remain neutral here and more engaged in forex:

Long: EUR/USD, AUD/USD, EUR/JPY, GBP/USD

As you can see, I am short Dollar against three majors. Therefore, I have a "bearish" bias against dollar denominated.
 
Well .....possibly the sell divergnces starting to kick in that I was looking at early today...............we will seee Wed on..........any sign of weakness & continuation to the downside I will become agressive to short side........
Chris
 
Good reading mostly all over this place...............That was a bit light that Christmas rally,do like to look at numbers ,charts more than my guesses...............Most of the Nasdaq stocks I watch,trade are so near thier 50 day moving averages they look very choppy...................Tend to be too cautious,bullish as a general rule,30,60 minute charts help keep on the right side of the moving averages.............Reads ,works like so-would probably if PMCS had all the choppiness below 50 day,look,work 30,60 minutes trades rather swing trade.[PMCS last january,chopiness]...................Another example,most of tech stocks looked bad Sept 17,looked at two airline stocks,thought the airline stocks would be chopped in the ground.Entered too slow like a turtle,LUV, to make a profit,however the first position in LUV,that day was profitable{NYSE] So even though was wrong in slowness,30 minute chart helped any way. Like to ignore CNBC noise,but like Art Cashin. .... Jim Cramer, used to be with Cramer-Berkowitz hedge fund ,makes helpful comments.........................................
 
Murray T Turtle and Chartwiz,

Can you please try to use proper grammar when posting a message? I'm getting a huge headache trying to decipher your cryptic sentences.

Thank you.
 
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