question: big fish+small pond or small fish+big pond

[dr_trick]

hi all,

i'm interested in your opinions on this please.

take this scenario, you've come up with a solid idea/trading system. the idea is giving you consistent returns with low vol on the returns.

so you backtest, it's good. then you go live with some real cash and your thesis is validated.

now you are in a dilemma,your returns are consistent but they are small say 2-5% per trade. to make some real money you need lots of money - which you don't have. do you keep trading your small account or do you go out pitching your idea to bigger firms to get more capital and a slice of profits. i.e. keep your IP or risk losing IP?

any thoughts?

 

[Pento]

I would prefer to be backed by a fund and thereby expecting to make much more with their money than I could with my own. Would expect my compensation to be higher going down this route. Plus you have the benefit of their systems and support structure should you need it.

But in the pitch you will have to give away your strategy otherwise no one will invest on just promises of how much you can make. They will want to know the theory behind the system and how it works. Of course here you take the risk of giving your secrets away in the pitch and they decline to invest in you as they no longer need to pay you so much once they have your strategy.

Personally I would still take the risk and go down the searching for investors route. If you can get a medium to big fund on board I suspect your returns could grow much faster than you can do it on your own.

 

[Pento]

Btw, in what markets are you applying this system?

 

[Splitlink]

I would prefer to be backed by a fund and thereby expecting to make much more with their money than I could with my own. Would expect my compensation to be higher going down this route. Plus you have the benefit of their systems and support structure should you need it.

But in the pitch you will have to give away your strategy otherwise no one will invest on just promises of how much you can make. They will want to know the theory behind the system and how it works. Of course here you take the risk of giving your secrets away in the pitch and they decline to invest in you as they no longer need to pay you so much once they have your strategy.

Personally I would still take the risk and go down the searching for investors route. If you can get a medium to big fund on board I suspect your returns could grow much faster than you can do it on your own.

I suggest that you have answered his question perfectly- If it was me, you would have left me with no option. I would go ahead on my own, or try to get investors without strings attached.

I, myself, have been in partnership, although not in trading, It converted me into becoming a loner.

 

[Lord Flasheart]

There is another solution. Go on zulutrade,etoro or tradency. Once you've proved your methods work you will soon have backers behind you who will never know your methods.Top traders have $15m of cash following them and some use demo accounts for purpose of signals

 

[PrymeTyme]

be patient , and trade the small acc. ..

2-5% per trade is good ..

how many trades per day ?

small sums add up too...compound ...


example .. 50 dollar start account

10 trades per monthy @5%
50 % profit per month

in 2 years your up 800K+ .. nice huh ?

good luck

 

[dr_trick]

Hi all,

sorry for the late response I've been swamped at work lately. thanks for your replies.

My system is trading equities.

A big part of me wants to go it alone, the idea of working for myself is quite appealing. The vision I have of going it alone is one where as the system matures and the income grows, I can branch out into different things like venture capital and private equity. I would like to see trading as something that would provide capital to do more interesting things. I think I'm getting a bit carried away here - ah well, we are allowed to dream sometimes.

Partnering with a hedge fund or other investors gets me where I want to be (financially) quicker. The problem I have is that the system I built is based on some very obvious ideas that I'm really surprised nobody has done that - or at least in public. I just believe that the minute I pitch my idea a smart cookie can quickly suss things out, show me the door, and start doing it behind my back.

From your replies, I think being patient and growing slowly over 2 years might be the way forward.

thanks again.