Would you fund a trader with a proven record?

[Gringotts Bank]

Sounds like a good idea but have a look at the latest FX developments which are gaining rapidly in popularity..
Trade signals check out these links: http://www.zulutrade.com/performance
https://www.fxcopy.com/
http://www.mql5.com/en/signals and there are many others.

So basically you can trade the signals of these traders and pay a slight increase in spread.Obviously trading in the
retail FX space is not ideal. However why not set up something similar for futures if the relevant platforms support throughput of signals/copying signals.Then just pay a premium to the particular trader for signals used.Quite an elegant approach I would have thought.

One of Joe's major sponsors offers this same thing - eToro (social trading is the name for this style of piggy back trading). Most of the equity curves are rubbish unfortunately. You'd never subscribe. Are there any good traders on these sites?

Then there's managed futures funds.

 

[waza1960]

Most of the equity curves are rubbish unfortunately. You'd never subscribe. Are there any good traders on these sites?

Zulutrade seems to be the most popular I think there are a few reasonable traders there but agree re equity curves.
Most equity curves go to pieces after 6-12 months also stops/drawdowns are extreme in a lot of cases.
My thoughts on them were that you could trade signals from traders with proven track records while systems were new and continue cycling into new ones or use a combination of traders for a balanced approach but Off Topic here....
However I brought up the idea of using the concept to achieve what CanOz is proposing which means that regulatory and compliance issues are minimal and transparency and risk is controlled to an extent.
However setting up the interface maybe the best investment lol:

 

[ftw129]

75% or so now would....

CanOz

Hi CanOz,

Not sure what you mean by this but I just wanted to make myself very clear.

I was initially hesitant in selecting any of the options in your poll as none of the answers really fit for me.

In reality, my answer is more a combination of the 2nd, 3rd and 4th answers however I'm always open to looking into new ideas so I selected response number 2 "Yes, i would be interested in seeing a business plan on this."

This however does not mean I would be signing up for it. It ONLY means that I'd be interested in looking into it out of sheer curiosity.

The chances of me actually participating in something like this from it's onset without any history, are pretty close to ZERO.

 

[CanOz]

Hi CanOz,

Not sure what you mean by this but I just wanted to make myself very clear.

I was initially hesitant in selecting any of the options in your poll as none of the answers really fit for me.

In reality, my answer is more a combination of the 2nd, 3rd and 4th answers however I'm always open to looking into new ideas so I selected response number 2 "Yes, i would be interested in seeing a business plan on this."

This however does not mean I would be signing up for it. It ONLY means that I'd be interested in looking into it out of sheer curiosity.

The chances of me actually participating in something like this from it's onset without any history, are pretty close to ZERO.

That's ok, its only a poll. There is no obligation. If i actually needed capital right now i wouldn't really be looking on here....I live in China...there's a ton of funding just in my wife's classmates lol!

CanOz

 

[Trembling Hand]

Zulutrade seems to be the most popular I think there are a few reasonable traders there but agree re equity curves. Most equity curves go to pieces after 6-12 months also stops/drawdowns are extreme in a lot of cases.

However I brought up the idea of using the concept to achieve what CanOz is proposing which means that regulatory and compliance issues are minimal and transparency and risk is controlled to an extent.

Waza I'd imagine the idea is to create a business rather than just a system. Something that grows and helps traders rather than churn and burn.

 

[ftw129]

That's ok, its only a poll. There is no obligation.
CanOz

That's not really what I meant.

I just wanted to illustrate to you, that it's a mistake to assume that the voters answering "Yes, i would be interested in seeing a business plan on this" mean that they would actually be willing to "fund a trader with a proven record" so you shouldn't count them as you did "75% or so now would.... CanOz".

The answer "Yes, i would be interested in seeing a business plan on this" means exactly that and only that.

Therefore the way you are counting your result thus far, is inaccurate.

Get my drift?

 

[waza1960]

Waza I'd imagine the idea is to create a business rather than just a system. Something that grows and helps traders rather than churn and burn.

My thoughts are that the business uses this type of approach .
That is the business creates the interface, manages the traders /clients etc becomes the " middle man" doesn't have to be churn and burn IMO.This could involve a relatively exclusive client base as well.

 

[Trembling Hand]

Is risk the answer to what they look for? How it's managed etc, especially as they give you more and more of their money?

Yeah its really of little concern about percentage return to some degree. I can turn over my allotted size 20 - 40 times a day. You can imagine the actually $ value of that each day! I'd probably be horrified to actual know the return on funds traded come to think of it.

But as with all trading it comes down to comparing, in a daytraders case, avg winning days to avg losing days. And then there is a huge difference between traders. Some have 80% wining days and the odd shocker some are 50/50 but with every 10 or so days huge winners. Its really about how you can build decent positions when its going your way and then mostly not lose your head when its not going your way (all of last month for me!).

You have a daily stop thats a rough end of the day "your not seeing it right come back tomorrow" kinda thing. (sometimes if you have been a good boy you still get to play if you blow it). The idea is you will do no more damage to your account than what you can fix tomorrow. Then you have a risk manager monitoring everything in real time to make sure no one has gone off tilt and blowing up agreed daily/weekly/total loses.

So if you can put on the size they give you, cover cost and grind your account higher you and they (the prop firm) will make money and everyone is happy. (though its no easy way to riches..... surprise!)


The big problem in this setup with having investors is the profit split. Are your investors going to be happy giving 50% to the trader, 20% to the firm and taking the remaining 30% while also taking risk? Clearly the investors will have to be the firm. CanOz?

 

[CanOz]

That's not really what I meant.

I just wanted to illustrate to you, that it's a mistake to assume that the voters answering "Yes, i would be interested in seeing a business plan on this" mean that they would actually be willing to "fund a trader with a proven record" so you shouldn't count them as you did "75% or so now would.... CanOz".

The answer "Yes, i would be interested in seeing a business plan on this" means exactly that and only that.

Therefore the way you are counting your result thus far, is inaccurate.

Get my drift?

Yup, i see your point....

thanks!

CanOz

 

[CanOz]

The big problem in this setup with having investors is the profit split. Are your investors going to be happy giving 50% to the trader, 20% to the firm and taking the remaining 30% while also taking risk? Clearly the investors will have to be the firm. CanOz?

Yup. I would think you'd need an active investor base. Perhaps a few could be silent to start with, then you could pay them back as the core group gets their feet.

I guess i keep thinking of guys like SMB capital, where they're actively involved in mentoring and trading alongside their teams but all have a stake in the business.... 'managing partners' in the firm. Its the ultimate in ownership really. You have a true interest in seeing traders do well.

CanOz

 

[CanOz]

The part that bugs me about taking online traders is that you might miss that random element of taking people off the street.

By sourcing traders online your going to get mainly traders that want to be traders....whilst looking at graduates, job ads, etc., you might find the odd diamond in the rough so to speak. A prodigy...totally untainted by past losses...

CanOz

 

[McLovin]

Yeah its really of little concern about percentage return to some degree. I can turn over my allotted size 20 - 40 times a day. You can imagine the actually $ value of that each day! I'd probably be horrified to actual know the return on funds traded come to think of it.

But as with all trading it comes down to comparing, in a daytraders case, avg winning days to avg losing days. And then there is a huge difference between traders. Some have 80% wining days and the odd shocker some are 50/50 but with every 10 or so days huge winners. Its really about how you can build decent positions when its going your way and then mostly not lose your head when its not going your way (all of last month for me!).

You have a daily stop thats a rough end of the day "your not seeing it right come back tomorrow" kinda thing. (sometimes if you have been a good boy you still get to play if you blow it). The idea is you will do no more damage to your account than what you can fix tomorrow. Then you have a risk manager monitoring everything in real time to make sure no one has gone off tilt and blowing up agreed daily/weekly/total loses.

So if you can put on the size they give you, cover cost and grind your account higher you and they (the prop firm) will make money and everyone is happy. (though its no easy way to riches..... surprise!)


The big problem in this setup with having investors is the profit split. Are your investors going to be happy giving 50% to the trader, 20% to the firm and taking the remaining 30% while also taking risk? Clearly the investors will have to be the firm. CanOz?

Thanks for the explanation, mate. Very helpful. As someone who is firmly in the FA camp, it's still interesting to see how you guys work.

 

[matty77]

1. What does "proven record" mean?
2. If they were that good, well why would they need my money?

 

[CanOz]

1. What does "proven record" mean?
2. If they were that good, well why would they need my money?

1.) a positive expectancy
2.) to increase position size

CanOz

 

[5oclock]

Good thread CANOZ , with some good posts by all concerned, not sure where i would stand though,initially it was no way, but i think i would be interested in seeing the business plan. Very interesting to hear everyones take on this though,good points by TH, and SKC (and others too).

 

[pixel]

1.) a positive expectancy
2.) to increase position size

CanOz

How often have we seen a strategy tested, backtested, and proven beyond doubt for position sizes of $xxx, but when we tried to up-scale five-, ten-, or 100-fold, it has influenced the Market to the point of becoming counter-productive.
Hence my continuing to say "no way!"

 

[CanOz]

How often have we seen a strategy tested, backtested, and proven beyond doubt for position sizes of $xxx, but when we tried to up-scale five-, ten-, or 100-fold, it has influenced the Market to the point of becoming counter-productive.
Hence my continuing to say "no way!"

If there is one e-arena where size is an advantage pixel, it's futures. Google 'Paul Rotter'...

I understand where you're coming from, but this is one case of bigger equals better. You need more liquidity to trade size though.

CanOz

 

[Trembling Hand]

If they were that good, well why would they need my money?

Funny that all the good traders I know are trading prop or hedge funds all the strugglers are trading retail.

If you have traded for a living there is absolutely nothing that comes close to trading prop. Have covered it many a time before but very much worth repeating here,

https://www.aussiestockforums.com/f...t=11988&page=2&p=401340&viewfull=1#post401340

A quick post on the why trade for a prop. To counter the "if ya a good trader why would you need to question".

First and most obvious SIZE. With props willing to let you go nuts with size you would need a huge personal account to match that. HUGE. Almost impossible to get there if you don't start there .

Second COST. Try moving size with retail brokerage. Forget it. You will be cut to bits. This alone could save an active trader $50,000 to $100,000 a year!

Third. IT support straight away.

Fourth. Having a risk manager helping and looking after you. Their interest is aligned with yours. Lot easier falling into a pit when your sitting in a room by yourself and no one looking out for you.

Fifth In spite of the "best job in the world" spiel it gets friggin boring sitting in your own house. Especially when you are youngish.

Sixth Better execution into the market.

Seven Experience in development of real traders not all the BS out on the web/books/ etc.

Eight With size and cheap brokerage and a experienced risk manager you can take a small expectancy and make a bucket load.

Ninth And this is the winner for me. You can take profits and still trade the same size. Think about it. If you are trading your own capital every time you take money out its like a loss. You are effecting your future earnings because you are reducing your size. Every time you pay your tax bill you reduce your size. There is no way around it when you trade your own capital.


Probably some props could add to this. But the "if you can trade for yourself why" question is because most have a dream that has nothin' to do with the reality of living off trading.

I made that post 3 years ago but should also have added this one.

TEN As a trader I can make more and risk nothing!!

My question to all you guys is.......... Why are you so silly risking your own money! I mean really??

How often have we seen a strategy tested, backtested, and proven beyond doubt for position sizes of $xxx, but when we tried to up-scale five-, ten-, or 100-fold, it has influenced the Market to the point of becoming counter-productive.
Hence my continuing to say "no way!"

We are talking futures market here (well I am) and most probably discretionary traders. Its just not a concern.

 

[tech/a]

Why are you so silly risking your own money! I mean really??

Thats a great point if your trading for a living.

Some of us dont and dont want to trade for a living.
We have different lifestyles and commitments.
Different goals and capital bases.

All I and a few others here I know of want is to generate a low risk
passive income and at times it is very generous.--Its all I/we need.

My peanuts trade on the FTSE last night took 23 mins and secured 12 ticks x 3 contracts.
Around $500 from the time I got home to tea.I only trade the first hr or 2

 

[CanOz]

Thats a great point if your trading for a living.

Some of us dont and dont want to trade for a living.
We have different lifestyles and commitments.
Different goals and capital bases.

All I and a few others here I know of want is to generate a low risk
passive income and at times it is very generous.--Its all I/we need.

My peanuts trade on the FTSE last night took 23 mins and secured 12 ticks x 3 contracts.
Around $500 from the time I got home to tea.I only trade the first hr or 2

Fair enough Tech, actually I'm not sure i would want to be a full-time prop trader either, but i would love to have experience.

Many young people would be well served by a stint in a prop firm for education.

Actually, I'm just really passionate for the markets. I just want to be involved as much as possible and be able to share that passion and anything I've learned along the way with others.

Maybe one day i can do that with an online prop firm...

CanOz