Dear fellow system developers, traders and investors,
I hope you are well and the markets are treating you kindly. I am a system developer that has 2 systems currently tracked on Collective2. If you have read any of my prior postings, you may be aware that I originally posted my system QQQQubert on C2 with the intention of developing a track record by a non-biased third party with the intention of using that statistically tracked performance as a basis to raise capital for a hedge fund. (I couldn’t/can’t afford a professional audit).
After nearly 2.5 years of trading this system (~15 months on C2) I am now in negotiations with two hedge funds who have shown a strong interest in investing, to some degree, in my start up fund. One of these funds is a large, established hedge fund and the other is a start up fund of funds with an inception date scheduled within the next several months. These negotiations may fizzle out, but so far things are going well.
I thought it might be prudent to ask anyone out there if they have had a similar experience and wouldn’t mind sharing it with the C2 community? Perhaps you might have some pointers to offer regarding this kind of a transition? I have heard of some systems being offered for sale, but never anyone transitioning to a hedge fund based on a posted system, so any constructive guidance would be welcome! For those hesitant to post, you are welcome to PM me.
Thank you.
Sincerely,
Daryl
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I have a local asset management firm here locally that has been purchasing my signal Conservative Growth for the last 4 months. They called me into their office 4 weeks ago asking me if I would be interested in being a trader for a Hedge Fund they are in the process of starting. When they asked me what I would expect to get paid I undercut my worth by about 95%. I told them I would put together a trading system that would do double digits easy. I asked for $8,000 yearly for the first 6 months. I figured after 6 months of great performance I could up the stakes. At that time they advised me that was too much and I could expect around $200 to $400 a month. As you can imagine I about fell out of my chair.
If you want to find serious money for backing the method I found was this. You have to trade your signal in a dedicated account. Trade nothing but the signal and no other trades. After 12 months but really the time period is 36 months. Go to Theta Research and Timer Trac and have them audit your real money account. With an audit of a real money account you then have something to show. Go to MarketSci.com and talk to Michael. He is looking for timers. He has been in the market timing business for several years. What I learned from him was priceless. He will coach you and help you develop as a signal developer.
Right now I am trading Conservative Growth, the IWM signal in SMA and Ultimate Trader each in an individual account. After 36 months or less hopefully my signals will hold up and serious money will be interested in my service.
Also most hedge funds or asset management firms will make you take your signal off of C2. They will want you exclusively.
If you find yourself in a position to do some serious business with an outside firm please keep me in mind. I am doing everything I know of to advance myself in this business. Just today I sent my credentials to a Hedge Fund inquiring about a job trading for them. I have pounded the pavement here in the Houston area trying to find some big money to work for. I believe it is not tell I can produce actual account statements showing big returns with real money will anybody be interested.
Let me know. I would love to know how you are doing and if there is any way I can be involved in a hedge fund they would have my undivided services.
Rick Haines
Daryl & Richard,
I would like to take the time to personally congratulate the both of you on your work and all of your fine efforts. I hope you realize your dreams and provide not only for yourself, but for others monetary increase.
Oh, and keep me in the loop with all your efforts and contact leads if you deem some use for me. Thanks for some fine vendors at C2!
Regards,
Gilbert
Daryl & Rick, that is good news and well deserved. I know from our previous discussions the dedication and work you have put in to your systems.
I have been talking to several potential employers of similar standing in the last year or so, I can’t go into too much detail but Corporate Investments was developed specifically for one of them and they have since put me in touch with another manager who I will be starting with later this year. What was interesting to me especially with the bigger banks is that even if they don’t intend to specifically trade the signal, a system with a proven track record can still be a very useful tool for them to help with timing entry/exits to existing positions or hedging exposure in their strategic investments. The most likely scenario in such cases is that they will buy YOU not the system, since as an employee you will hopefully be able to develop further models designed more specifically to their needs which will also change and evolve over time (as should your systems), but beware that would mean any system used in your employ then becomes theirs.
For me the biggest point not mentioned so far is scalability. Most money managers will want to know that your results are achievable in real life, and I’m not talking 50k of your own money, rather their real life of millions, so having to provide a real money trading record wasn’t necessary as the C2 record (with 100k) although still small actually served better. They are well aware that great looking equity curve systems that do well on paper or with 10k personal accounts often do not work once you try to trade them with serious money, for me it was the other way round, my long-term trend following models trading in global futures (Macro) were hard to trade with a small account (margins, having to cherry pick signals, inability to position size) but could easily be scaled higher, so it was kind of a nice problem to have that a system works better traded with millions rather than thousands. (I suspect this is where a lot of systems on here would come undone, especially the equity scalpers as slippage would become overwhelming).
Rick,
Thanks for taking the time to post your experiences. You appear to be a smart, talented guy and I was curious why you had undercut your worth by about 95% (in your words) when negotiating with this company you mentioned? Were there extenuating circumstances? Also, just to be clear, when you wrote “I asked for $8,000 yearly for the first 6 months” do you mean you asked for a annual salary of only $8,000 to be paid 6 months in advance, or did you mean to write $8,000 per month? I am asking because I (and I am sure many others reading this) would like to get a better sense of rates being paid out in the real world for this sort of thing. Why do you think they were only willing to offer so little?
Rick, I’ll definitely keep you in mind for something in the future. To be honest, I try and run very lean organizations and don’t anticipate bringing anyone on for a number of years, and then it would most likely be compliance related. However, we never know what life may throw at us so I will keep it in mind!
I wish you success in finding what you are seeking.
Sincerely,
Daryl
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Thanks, Gilbert. You have always been very encouraging! Keep at it!
Sincerely,
Daryl
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