Where to go after writing a winning strategy

[Acumen]

Let’s say I wrote an algorithm that backtested, papertradeded and is livetrading with consistent results that are all in line with each other. I would want to capitalize on this while it lasts. I have done research and come up with the following options to move forward in order of difficulty, reward and start up costs.

1. Trade my own account.

2. Trade 5 or less personal accounts of individuals I know with a simple contract to specifying fees, conditions, ect.

3. Get an audit performed and find a fund who is interested in hiring a (possibly additional) manager.

4. Create my own fund to manage.

What is the sentiment about these options? Is starting an undercapitalized fund the wrong way to reach that ultimate goal? Does managing someone else’s fund turn over to much of my control and return? Are there to many risks involved with managing individual accounts? Are there other options which I overlooked? Do you have good or bad experience with any of the above?

 

[sellingrich]

In either situation, don't forget money management.

 

[rosy2]

every place is looking for people that have strategies that can be automated. obviously, you haven't been doing any research.

 

[Acumen]

SellingRich: The program takes care of my money management, but if you mean acting as a fund money manager that’s what I am implying with #3.

Rosy2: I don't understand how your reply is constructive, you also are referring to #3 and I am not asking for referrals I am asking if that’s even the right choice.

As I don’t have an extended track record, I know I don't have the bargaining leverage others might. With this is mind, I feel #3 might have a higher opportunity cost then the other actions. Even though they may take more time to reach the same capital contributions, they may be worth the time and trouble rather than hand over my hard work for capital up front.

 

[rosy2]

Quote from Acumen:


Rosy2: I don't understand how your reply is constructive, you also are referring to #3 and I am not asking for referrals I am asking if that’s even the right choice.

call up all the trading firms and tell them about your strategy and see if you can set up a deal. It's pretty simple. They will know if your full of sh*t immediatley; you dont even have to give an audit just an overview of your strategy.

 

[Acumen]

I understand that’s what I would do if I choose #3 and decide to go with a trading firm rather than a fund.

My question is ---- "Is #3 even the right choice?"

As a side note, if I did choose #3, I would rather market to funds so that I would not blow out on a temporary drawdown. I've had a bad experience regarding contracts at a prop, and with the trading industry as a whole. Funds seem to have a higher level of professionalism and moral standards.

 

[syswizard]

Quote from Acumen:

.... I've had a bad experience regarding contracts at a prop, and with the trading industry as a whole. Funds seem to have a higher level of professionalism and moral standards.

You would think some prop firms would be strong here...but WHAT A JOKE THEY ARE.
For example Assent has an API for Anvil with ONE GUY SUPPORTING IT, no developers forum, no blog, no formal documentation, just a bunch of sample code.
Note: if that ONE GUY gets hit by a train, then there would be NO SUPPORT for their API.
Now that's a joke, right ?

 

[CBuster]

Quote from Acumen:

I understand that’s what I would do if I choose #3 and decide to go with a trading firm rather than a fund.

My question is ---- "Is #3 even the right choice?"

As a side note, if I did choose #3, I would rather market to funds so that I would not blow out on a temporary drawdown. I've had a bad experience regarding contracts at a prop, and with the trading industry as a whole. Funds seem to have a higher level of professionalism and moral standards.

I agree with rosy, whether you are thinking #1, #3 or #4.

#1 - trade it yourself, but at least use the leverage, IT support, etc that a trading house can offer
#3 - offer it to a trading house fund - obviously involves talking to a trading house
#4 - start a hf - you will need the support of established people to do this unless you have very strong knowledge of the industry already. beside, unless (a) the strategy is VERY scalable (past $100m or so) AND (b) you have a long real trading record (not paper), it's just not worth taking this option.

#2 i would not personally do unless they are pure biz contacts (not friends / family). i would go #1 or #3.

FWIW - not all trading houses are scum bags and rosy is right, they are all looking for algos to automate. that's what I and others on our team do for a living (prop).

 

[regal_2012]

Quote from Acumen:

Let’s say I wrote an algorithm that backtested, papertradeded and is livetrading with consistent results that are all in line with each other. I would want to capitalize on this while it lasts. I have done research and come up with the following options to move forward in order of difficulty, reward and start up costs.

1. Trade my own account.

2. Trade 5 or less personal accounts of individuals I know with a simple contract to specifying fees, conditions, ect.

3. Get an audit performed and find a fund who is interested in hiring a (possibly additional) manager.

4. Create my own fund to manage.

What is the sentiment about these options? Is starting an undercapitalized fund the wrong way to reach that ultimate goal? Does managing someone else’s f

number 2und turn over to much of my control and return? Are there to many risks involved with managing individual accounts? Are there other options which I overlooked? Do you have good or bad experience with any of the above?

as for #1.... if you start small and have expectations for results in a short time frame, its not an option

number 2,dont manage your friends/famlily members money.You dont know what you are getting into if you do that.

number 3 is an excellent option

number 4 is good too.But its hard finding investors.

 

[John Paterson]

Quote from Acumen:

Let’s say I wrote an algorithm that backtested, papertradeded and is livetrading with consistent results that are all in line with each other.

How long have you traded with the algorithm?

What markets?

What is you success rate, avg. win, avg. loss and profit factor?

Is this an intraday, swing or trend following system?

John