4 Lessons I Learned From Starting Your Own Hedge Fund

In the first article of 2017, I would like to share a summary of what I have learned (and confirm the knowledge I had) when I was To build its own International Defense Fund.

1. You Need To Succeed With Technical Challenges

One of the annoying things I've experienced when creating my own hedge fund is the fact that something is constantly broken. The technology comes with new challenges and even though I work with a group of excellent computer users, it's not a single day without being misleading. The technology used for our fund's hedge is very complex and challenging, and my surprise is the optimization process as time-consuming (or even more) as programming of all applications and algorithms. This is something I was not ready for, and I hope that when Elon Musk can repeat landscaping, it will not be so difficult to make some programs together and make sure everyone does what they are supposed to. Well, I've learned a lesson 🙂

Now I mention this item because sometimes I get "anxious" emails from one of my students that somewhere somehow unexpected issues have just come up and something that should have Barley did not happen

There is only one thing I can say about it – you need to accept it as part of ATS business. Just as there are several features on brand new (and expensive) cars that sometimes do not work, there are also technical challenges and weak moments in automated business. In the past, I've lost money because of these issues. Sometimes I've "won" by missing a transaction that would have ended at a loss. But overall, because of these technical issues, I lost money. Still, I'm here and business. We live in the world where even a symbolic iPhone is not flawless – so do not expect ATS business to be without technical issues. We have chosen a company as this happens sometimes.

To me, the biggest lesson I've learned is to: allocate 2-3 times more time for each step to test and configure the technology, as these are all real, important, challenges.

2. It's possible to build interesting ATS for each future market.

This item is positive – thanks to fully automated workflow, it is possible to create a potentially strong, strong and strong future strategy. In some markets (like FESX) we are struggling with too little fun. Asset value and in other (like US T-bonds) by even even a purse (worth 32 USD) can really affect business activity – and therefore in some markets you need to be very patient. There is one market that, due to business costs, continues to fail – and it's Nikkei (NK). But even here, we do not give up 🙂 On the whole, we are doing quite well in metals (GC, SI, HG) and also in power (CL, NG, …). Even grain is suitable, but you should be careful here. Due to recent general fundamentals, you need to build a system that works both long and short. It's actually becoming. Furthermore, you should look for systems with symmetric results (ie the long side has similar results on the short side).

3. You really need swinging skills in your possession

That's a fact. You can build an interesting and high quality strategy for almost any future market, but you can not do it without using a swing policy. For some markets it is impossible to build an interesting strategy today. To achieve more diversity, the swap plan should be part of the portfolio. There is one thing to consider for each defense fund. There will be very big positions in business, which means that the average price will be higher (position will be filled gradually at different prices) and you should have very large and adequate) avg. Business Value. For this reason only, it is necessary to hide the ATS swing. But this also applies to smaller accounts (not just hedges), when you want to be very diverse.

Good news is that it's not so hard to build swing methods and when you already have workflow, the process is not too much different from building ATS within the day. Workflow is the same, you only need to change some detail and experiment with different methods.

4. Unable to build up a raise fund and launch by one person

You need a real team. Our fund consists of a 5-member group and I think it's a pure minimum. The fund is such a challenging and complex entity, which actually needs a team of professionals with specialization in different areas and you should provide information about them. Otherwise it will drive you crazy. In our case, I have two highly talented programmers (one C #, JAVA, C ++, great database skills, etc.) And, on the other hand, JAVA, great database, both with a very deep insight into business, both live ATS traders and both. Of course Of course, top EasyLanguage and TradeStation knowledge), one person who focuses on customer and law acquisition, one person for customer service, implementation and overall CTA management and myself – the author of all ideas and algorithms, who is also the "chief executive". The workload is constantly massive and the first steps are not really simple, especially to get it all running (especially when experiencing endless technical challenges). You really need to be enthusiastic about it, be passionate about it and have the will to complete this challenge as you really need a lot of energy to complete such a challenging task. The good news is that it's possible – everything is possible when you follow your goals. Yes, in our case, it has taken longer than I have expected, much longer, but on the other side we will not miss anything. The opportunities have always been here and they will always be – every day. It's important to have a really strong and solid foundation (which is also something I teach in online courses).

These were suggestions and observations today. I've learned, of course, much more than that – some I share with you in this series .

Have a great start in 2017 and a happy business!

Source by Tomas Nesnidal

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