What type of a track record do prop firms think is good enough prior to funding you?

[rb7]

Last job offer I ran into on LinkedIn, they were requesting a Sharpe above 3.
I don't do 3 Sharpes, I just don't.
Mid 2's on nice markets and mid 1's over the cycle (Nice market+ Shitty market combined). And that's with 35% SD and close to 50% max drawdown for a puny close to mid-double digit CAGR.
So I guess I don't qualify.
Heck, I didn't even know consistent 3's existed. Jesse Livermore and Niederhoffer maybe but it didn't necessarily end well.

I don't know what my Sharpe ratio is. Would need to calculate it.
But I don't really care.
It won't change anything in my life.
Those are metrics used to prove yourself to the rest of the crowd. For those who need them.

 

[ETJ]

We are not prop. just a simple backer. First and foremost we look at results as opposed to plan. We look at the product(s) you trade and conflicts. Talk Sharpe and you'll be shown the door. We look at plays well with others for fit in issues. Complexity of risk management and how you fit into the existing risk management technology. CRD issues if there are any. Initial capital deployment and a barrier cap charge. Time zones for what you trade and geography.
Numbers are the easy part - we look at you. Right now converts are shy of good people and worldwide volatility trading have room to grow.

 

[Laissez Faire]

You know why people seek external capital even if they don’t need it?

it diversifies their risk and can give them an higher expected value by either getting a beta higher than 1 or creating a cheap call option.

that’s why rich movie producers still source outside funding. And why real estate developers look for partners when doing projects.

Makes sense - and no counter-arguments on my end. However, I still think what I said is true. I've read some accounts of people who managed money and disliked the pressure and went back to trading their own money exclusively.

Curious. How easy would it be for a retail nobody to raise any external capital if he had a good track record?

I have at times wondered if a better path for me would have been to decrease my risk significantly and simply focus on building a good record and see if that would get me somewhere as opposed to trying to get somewhere on my own taking on a much higher risk profile.

 

[rb7]

Makes sense - and no counter-arguments on my end. However, I still think what I said is true. I've read some accounts of people who managed money and disliked the pressure and went back to trading their own money exclusively.

Curious. How easy would it be for a retail nobody to raise any external capital if he had a good track record?

I have at times wondered if a better path for me would have been to decrease my risk significantly and simply focus on building a good record and see if that would get me somewhere as opposed to trying to get somewhere on my own taking on a much higher risk profile.

If you have friends with 'parked' money and they know your % return, they will likely ask you to manage their money.
If you do, then you are stuck with the pressure to perform as good as their expectations. And not everybody can understand and tolerate risks.

Been there done that (with limited success!).

 

[taowave]

Ive traded at major IB's,Hedge funds and last but not least for myself...In that order..

Assuming you cant get a job at an IB,but have the opportunity to manage money/trade for a hedge fund,you have to be out of your ever loving mind to pass on that opportunity.Yeah,and I am pretty dam sure the guys who leave Hedge Funds on their own free will have already banked millons,and Im not talking 1-2....

Without knowing what type of numbers you are putting up or how scalable your business is, its hard to guestimate what your chances are for getting backed. And there is no doubt knowing someone who can "make the phone call" goes a long way...

What are you trading and whats tour holding period??

Makes sense - and no counter-arguments on my end. However, I still think what I said is true. I've read some accounts of people who managed money and disliked the pressure and went back to trading their own money exclusively.

Curious. How easy would it be for a retail nobody to raise any external capital if he had a good track record?

I have at times wondered if a better path for me would have been to decrease my risk significantly and simply focus on building a good record and see if that would get me somewhere as opposed to trying to get somewhere on my own taking on a much higher risk profile.

 

[newwurldmn]

Makes sense - and no counter-arguments on my end. However, I still think what I said is true. I've read some accounts of people who managed money and disliked the pressure and went back to trading their own money exclusively.

Curious. How easy would it be for a retail nobody to raise any external capital if he had a good track record?

I have at times wondered if a better path for me would have been to decrease my risk significantly and simply focus on building a good record and see if that would get me somewhere as opposed to trying to get somewhere on my own taking on a much higher risk profile.

Having a track record is only one part of getting investors.

you can actually get investors with a mediocre track record if you understand what those investors want.

competing on track record is a fools game in my opinion. There’s always someone who has a better track record (even if it’s smoke and mirrors)

from what I know of you, OPM is a long shot and probably not worth pursuing.

instead build a long term successful trading model with moderate gains and compound them over the course of your earning career (your day job). You will be a multi millionaire by the end of a decade.

 

[Laissez Faire]

Ive traded at major IB's,Hedge funds and last but not least for myself...In that order..

Assuming you cant get a job at an IB,but have the opportunity to manage money/trade for a hedge fund,you have to be out of your ever loving mind to pass on that opportunity.Yeah,and I am pretty dam sure the guys who leave Hedge Funds on their own free will have already banked millons,and Im not talking 1-2....

Without knowing what type of numbers you are putting up or how scalable your business is, its hard to guestimate what your chances are for getting backed. And there is no doubt knowing someone who can "make the phone call" goes a long way...

Oh, I would most definitely have taken the opportunity if I got it, but I don’t think it’s realistic given my age, background and location. While I have a degree, it’s in engineering and not in finance/computer science which seems to be the preference for these type of jobs these days. Further, I’m based in Norway and proprietary trading is virtually non-existent here. To my awareness, the only trader jobs here are at power and energy trading desks and they typically require that computer science background and I would guess they are mostly looking for younger graduates.

Without a track record (and even with one) I’m probably perceived as just another retail gambler (which may very well be true).

What are you trading and whats tour holding period??

Directional trading of US index futures – primarily focused on ES. Holding period is minutes to hours focusing on the larger swings intraday and always flat by EOD.

 

[Laissez Faire]

Having a track record is only one part of getting investors.

you can actually get investors with a mediocre track record if you understand what those investors want.

competing on track record is a fools game in my opinion. There’s always someone who has a better track record (even if it’s smoke and mirrors)

Right. Can you elaborate on your statement, “If you understand what those investors want…”?

There was a guy here in Norway who launched a hedge fund two years ago with no track record as far as I know, but he had 20 years of experience as a broker (salesman) and talked the talk. 2 years later he has a track record (publicly posted) with pretty much net losses month after month.

from what I know of you, OPM is a long shot and probably not worth pursuing.

instead build a long term successful trading model with moderate gains and compound them over the course of your earning career (your day job). You will be a multi millionaire by the end of a decade.

Right. First of all, can we define OPM? If OPM means a hedge fund or similar, it sure is not something I’m pursuing anyway. Now, on the other hand, there are countless examples in Market Wizards and elsewhere of traders who have received ‘backing’ from private individuals to help them start out their career – most of these without any track record as they were just starting out.

The latter would be more interesting and realistic, but still not something I’m pursuing actively.

The path of moderate and slower gains that you’re proposing is probably the most realistic one for me. I’ve no doubt that if I risked down and traded more conservatively my results would be more consistent. Sure, I won’t be bringing home big bacon anytime soon, but with a longer term perspective it could amount to something eventually.

There's no doubt on my end that the lack of my success so far is partially attributed to trying to make too much with too little and too fast.

 

[trismes]

We are not prop. just a simple backer. First and foremost we look at results as opposed to plan. We look at the product(s) you trade and conflicts. Talk Sharpe and you'll be shown the door. We look at plays well with others for fit in issues. Complexity of risk management and how you fit into the existing risk management technology. CRD issues if there are any. Initial capital deployment and a barrier cap charge. Time zones for what you trade and geography.
Numbers are the easy part - we look at you. Right now converts are shy of good people and worldwide volatility trading have room to grow.

Interesting — whats your beef with Sharpe?

 

[whygodwhy]

If up early on futures, you bounce. Done for the day.

I was in a fuck-the-world mentality the other day. Not usually like that.

If any of you really want to trade, you need to get off the forums. Trading is a skill-based discipline, and you can't learn how to trade, you must experience how to trade. Very hard to explain. Think grandmaster at chess, professional sports player, professional musician, professional software developer/engineer. Knowledge + skill, not just knowledge.

1% good information here, the rest is nonsense. Don't let others poison you. Come back to these places only to troll or because you're bored; not to learn anything of value.

My 2c. I'm off permanently. Better things to do. GL everyone.