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I am suprised by the consensus that seem to be that it is better to trade
your own money than to trade OPM money.
However, if you want to trade your own account for a living you need a
minimum initial capital of $1 Million. That may seem a lot but that is what
is needed. I know that first hand. My current assistant started trading his
own account in 1992 with $200,000 and I can tell you that he is pretty good.
And he proved it with some terrific annual returns. His second year he made
about 75% ie $150,000 profit minus about $10,000 expanses and he paid
$70,000 taxes (remember he was trading his OWN account and living in NY) .
He paid himself $70,000 for his year work (nothing to write home) and was
back where he started. But his third year was good to. Not exactly as good
so after taxes he had to dig a little bit in his capital to live. To make
you a long story short at some point he lost some money (whatever some can
tell you , to achieve this kind of returns you have to take chances and use
extensive leverage) and with all the previous gains gone in taxes and living
expenses, he just could not come back because he did not have enough capital
left (while losing money he was still eating everyday and had a family to
support which was not very cleaver in the first place). And in average his
performance is absolutely great. On the other hand, if you start with
$1,000,000 with a good system, you can make a decent living after taxes
without taking to much chances (using to much leverage) and if you have a
bad year (that happens) you can go on.
That was my first point, unless you have a big capital to start with, you
HAVE to trade OPM money. Furthemore, trading $1.000.000 OPM may be like
trading $200,000 of your own money but WITHOUT downside risk.
Second, there is an obvious reason to trade OPM money: there is a lot money
to be made if you are good. And when I say good, I don't mean making 100% a
year. As a matter of fact nobody serious that might allocate you money wants
you to aim at 100% a year. That implies that you take too much risks. At
the other hand of the spectrum I know a 37th year old rocket scientist that
raised 400 Millions dollars in about 18 months (during which he lost his
office at the WTC) with a performance of 24% (after fees) with a very low
volatility (not a single month down). His hedge fund is closed to new
investors and he is starting to return money to investors. If he keeps going
this way you can easily calculate how much money he will make next year:
about 100 Millions for his customers and 20 Millions for his company
(himself , an assistant, a secretary and a sales person paid 20% of the
fees). And when one can produce this kind of return with a low volatility,
one can raise this kind of money with a little bit organization.
As to where to start raising money, there is no other way than family and
friends. Anyway if the people who know you best don't trust you with their
money, who will? You don't have to register if you have only few customers
and if you don't present yourself as a CTA but it is better to do it as soon
as possible to start to have some exposure in the industry.
We are always looking at talented traders who can help provide great returns
to investors.
Hope this will help.
Good Luck.
Jean Jacques Chenier
Alternative Asset Management, Inc
www.alterama.com
----- Original Message -----
From: <jon88keys@xxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Monday, January 07, 2002 10:22 PM
Subject: Re: [RT] Capital For A Profitable System???
> In a message dated 1/7/2002 9:16:40 PM Eastern Standard Time,
> scassidy@xxxxxxxxx writes:
>
> << I was just wondering if anyone out there can think of a way for
> me to get more capital? Mine is very limited and it has gotten to the
> point where I need more because the system sems to be consistently
> doing very well. Any advice? I am currently not licensed....but
> studying for it. >>
>
> I'm echoing others, I'm sure, but it seems to me that if you like your
system
> and it's making money for you, why do you need to find clients? If you
> become a CTA the clients, I'm sure, will come soon enough. But you need
to
> clarify for yourself exactly what you want to accomplish--trader or CTA?
> (sure they are related but the focus is different; a CTA needs more sales
> ability) It seems to me that you need either 1) persistence until your
> trading account is large enough to satisfy your ambitions, or 2)the
ability
> to stick with and get your licensing and then hang your shingle just like
a
> professional in any other discipline. Patience, although a tragically
> undervalued commodity these days, is still a virtue.
>
> Good luck (and tell us your system)
>
> Jonathan
>
>
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>
>
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>
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