Forex Factory (https://www.forexfactory.com/forum.php)
-   Trading Discussion (https://www.forexfactory.com/forumdisplay.php?f=11)
-   -   Is $100,000 A Decent Capital In Trading? (https://www.forexfactory.com/showthread.php?t=914790)

AmmaBoss May 15, 2019 2:54pm | Post# 61

{quote} there are hedge funds in smaller sizes as well so not everyone is running against the liquidity limits (if that is what you are referring too). Hedge funds don't have higher spreads -- they get one of the lowest spreads of all clients as they merge liquidity from multiple LPs. how does it matter who i subscribe too.. i have no time to maintain my subscription list and dont really care who is there or not.
Retailers use leverage and don't have issues filling their order.
Brokers even decrease leverage as an individuals account grow, at 500,000 most don't even give leverage unless you specifically ask for it.
A hedge fund is likely trading billions so, they surely don't have access to leverage which is why their percentage gain per month is so low, combine that with the inability to trade smaller time frames due to liquidity issues and things start to make sense.

stt May 15, 2019 6:31pm | Post# 62

you said "world's best hedge fund managers " . they DO face liquidity issues you know.... they don't trade a couple lots.
By best I meant returns and not by AUM..even highest returning hedge funds don't have more than 20pct CAGR over long term. And they have so many advantages over average Joe.. systems, analytical talent (in house and sell side brokers's research team), low trading costs etc.

And also the topic is trading for living so naturally one has to look at long term returns and not just streak of luck in few weeks/months.

stt May 15, 2019 6:36pm | Post# 63

{quote} Retailers use leverage and don't have issues filling their order. Brokers even decrease leverage as an individuals account grow, at 500,000 most don't even give leverage unless you specifically ask for it. A hedge fund is likely trading billions so, they surely don't have access to leverage which is why their percentage gain per month is so low, combine that with the inability to trade smaller time frames due to liquidity issues and things start to make sense.
I think u have a limited knowledge of hedge fund industry. There are funds of every shape and size including ones which day trade and high freq trade. They are happy to take money anywhere they can find. they are not going to say hey we need to trade large size only so let's leave this money in low capacity strategy on table.. there are people on hedge fund side who trade 1mm portfolio as well and they will take .5 lot trade as well..

And when large fund trades they usually do it in clips.. I see clips as small as 1lot..

So making this assumption imo is mistake.. if u don't believe me talk to any sell side broker and ask abt their hedge fund clients.. there are plenty 1man and 2 shops too - many times without investors money and trading with just partners capital.

AmmaBoss May 15, 2019 8:08pm | Post# 64

{quote} I think u have a limited knowledge of hedge fund industry. There are funds of every shape and size including ones which day trade and high freq trade. They are happy to take money anywhere they can find. they are not going to say hey we need to trade large size only so let's leave this money in low capacity strategy on table.. there are people on hedge fund side who trade 1mm portfolio as well and they will take .5 lot trade as well.. And when large fund trades they usually do it in clips.. I see clips as small as 1lot.. So making this assumption...
I do have limited knowledge of the industry, however.
I am aware that hedge funds, trade intra-day, and HFT however without leverage their growth would be minimal in terms of raw percentage.
If you take away leverage from retailer, no-one would even make 2% profit a month.
Due to 2 reason trading on the lower time frame would mean higher spreads and trading on the higher time frame would mean you must wait for large moves to occurs to get a profit of any significant
Without leverage, a retailer would need to have 1000 USD approx to place a MIRCO lot trade, in other words without leverage a retailer would need to make 100 pip for a 1% gain. a currency pair probably have a FEW 100 pips move a month of average.
Then take into consideration miss trades, losing trades and it very clear why the percentage of hedge funds are quite low in comparison to retailers despite their advantages. ( no leverage )
Before European brokers were forced to have max leverage at 30, many brokers had disclaimers up saying after 500,000 USD leverage would have to be requested on special conditions.
In essence, as long as a hedge fund bankroll is over a certain figure, their percentage gain per month would be extremely low unless they somehow acquired leverage, then this comes with another problem as leverage means issues getting fill as the size of your lot would increase significantly.
Also yes, certain individuals may be managing a small portfolio for the hedge fund and therefore they may not have this problem but say they have 1million out of a 50 million bankroll even if they made 100% the hedge fund still only make 2% profit as a whole.
Hedge fund
No leverage = mininal growth
Leverage( rarely given ) = large positions = trouble getting fill.

Hutch May 16, 2019 1:54am | Post# 65

{quote} I do have limited knowledge of the industry, however. I am aware that hedge funds, trade intra-day, and HFT however without leverage their growth would be minimal in terms of raw percentage. If you take away leverage from retailer, no-one would even make 2% profit a month. Due to 2 reason trading on the lower time frame would mean higher spreads and trading on the higher time frame would mean you must wait for large moves to occurs to get a profit of any significant Without leverage, a retailer would need to have 1000 USD approx to place...
Big hedge funds don't deal with forex brokers they deal directly with banks that offer liquidity to forex brokers. The biggest problem if you have $500,000 invested with a forex broker is not leverage but account protection in case it goes bust. As seen in the link Interactive Brokers offers an account protection of $500,000 per account in case the firm goes bankrupt but with a total limit for all accounts of $30 million. Given the number of customers that Interactive Brokers has a trader with a $500,000 account would only get pennies per $. That account protection looks good but is useless. https://www.interactivebrokers.co.uk...t%2bprotection

If you want real account protection please look at this thread https://www.forexfactory.com/showthr...8#post12254648

HeyYou May 16, 2019 4:08am | Post# 66

{quote} By best I meant returns and not by AUM..even highest returning hedge funds don't have more than 20pct CAGR over long term. And they have so many advantages over average Joe.. systems, analytical talent (in house and sell side brokers's research team), low trading costs etc. And also the topic is trading for living so naturally one has to look at long term returns and not just streak of luck in few weeks/months.
Obviously, if you are a top performing hedge fund manager you would work in a top firm right ?

In any case, small hedge funds use strict risk managent too. last reply ...


P.s. trust your own analysis, ignore people on forums who just make assumptions.

Weyk May 16, 2019 4:37am | Post# 67

This thread is a joke. You would know the answer to how much capital you need once you know your strategy.

No offense. Have a nice day.

xtradex May 16, 2019 4:41am | Post# 68

{quote} I do have limited knowledge of the industry, however. I am aware that hedge funds, trade intra-day, and HFT however without leverage their growth would be minimal in terms of raw percentage. If you take away leverage from retailer, no-one would even make 2% profit a month. Due to 2 reason trading on the lower time frame would mean higher spreads and trading on the higher time frame would mean you must wait for large moves to occurs to get a profit of any significant Without leverage, a retailer would need to have 1000 USD approx to place...


What are you talking about? Hedge funds have no leverage??? I suggest you do some more research, what you are saying is factually incorrect.

PowerMoon May 16, 2019 6:09am | Post# 69

{quote} I do have limited knowledge of the industry, however. I am aware that hedge funds, trade intra-day, and HFT however without leverage their growth would be minimal in terms of raw percentage. If you take away leverage from retailer, no-one would even make 2% profit a month. Due to 2 reason trading on the lower time frame would mean higher spreads and trading on the higher time frame would mean you must wait for large moves to occurs to get a profit of any significant Without leverage, a retailer would need to have 1000 USD approx to place...
why you dont learn first something about forex, and then start trading?
at the moment you make so many mistakes, you even take a total fake or arbitrage account as your goal, and you did not know about and even with help from experienced traders you cant see it.

you really need some years without trading real money (or better mini cent accounts), that you are at a level to survive at least with breakeven... or your end is 100% sure. its only a question of time when you lost all your money when you trade with such a low experience level. you decide your future ... dont be a good example why a trader is failing.. you collecting so many mistakes....

try more listen and thinking about topics, read about the basics and dont guess so much in trading in about other people, judge what is reality.. dont dream. dreamers cant see fakes and scams, because they want believe its real.

AmmaBoss May 16, 2019 6:51am | Post# 70

{quote} why you dont learn first something about forex, and then start trading? at the moment you make so many mistakes, you even take a total fake or arbitrage account as your goal, and you did not know about and even with help from experienced traders you cant see it. you really need some years without trading real money (or better mini cent accounts), that you are at a level to survive at least with breakeven... or your end is 100% sure. its only a question of time when you lost all your money when you trade with such a low experience level....
lol, all I simply said was hedge fund does not have access to the type ( amount ) of leverage retailers does, hence the lower % percentage return,
and If they had access to it, they would face serious liquidity issues, yet somehow I am completely wrong, that's forex factory for you.

xtradex May 16, 2019 7:05am | Post# 71

{quote} lol, all I simply said was hedge fund does not have access to the type ( amount ) of leverage retailers does, hence the lower % percentage return, and If they had access to it, they would face serious liquidity issues, yet somehow I am completely wrong, that's forex factory for you.

Maybe that was what you meant but it is not what you wrote. But even in this case your conclusion as to why the profit % is lower is wrong.

Big funds dont need to make 10% monthly to make it worth while. They make most of their money off of volume commissions and account management fees. Account management fee is fixed yearly fee and volume commissions depend on trading frequency and trade sizes.

Liquidity is not an issue with these funds, they do their business in completely different spheres than retailers do. They also have scalable strategies that can handle the large amounts.

It seems like you are full of assumptions without any facts to back up your claims. You think you have more knowledge than you actually do. Not a good thing in this business.

AmmaBoss May 16, 2019 7:30am | Post# 72

{quote} Maybe that was what you meant but it is not what you wrote. But even in this case your conclusion as to why the profit % is lower is wrong. Big funds dont need to make 10% monthly to make it worth while. They make most of their money off of volume commissions and account management fees. Account management fee is fixed yearly fee and volume commissions depend on trading frequency and trade sizes. Liquidity is not an issue with these funds, they do their business in completely different spheres than retailers do. They also have scalable strategies...
My entire post was about why you can not measure a hedge fund percentage gain to a retailer percentage gain.
Retails are capable of making what we make because of the amount of leverage we have access to, to think that a hedge fund has access to the same amount of leverage as a retailer is, and is able to properly utilize it without liquidity issues as a retailer seem far fetched
I have no idea why this is even a discussion, A hedge fund can't make 10% per month because their bankroll is too large.
Think of it as the law of diminishing returns ...

PowerMoon May 16, 2019 7:48am | Post# 73

{quote} lol, all I simply said was hedge fund does not have access to the type ( amount ) of leverage retailers does, hence the lower % percentage return, and If they had access to it, they would face serious liquidity issues, yet somehow I am completely wrong, that's forex factory for you.
i was speaking about all your postings in general..... the many big mistakes.... the global big mistakes... like your goal is a arbitrage fake account (and you cant see it and dont understand even with help) and so on....

learning before earning, you cant do step 2 before step 1.

HeyYou May 16, 2019 8:11am | Post# 74

Liquidity is not an issue with these funds, they do their business in completely different spheres than retailers do. .

what spheres ? don't make it too complicated lol

"In a large sample of hedge funds, 71% of the funds trade derivatives"

https://www.jstor.org/stable/23018429


of course liquidity IS an issue when you place big orders in the market.

HeyYou May 16, 2019 8:19am | Post# 75

{quote} My entire post was about why you can not measure a hedge fund percentage gain to a retailer percentage gain. Retails are capable of making what we make because of the amount of leverage we have access to, to think that a hedge fund has access to the same amount of leverage as a retailer is, and is able to properly utilize it without liquidity issues as a retailer seem far fetched I have no idea why this is even a discussion, A hedge fund can't make 10% per month because their bankroll is too large. Think of it as the law of diminishing returns...

even if you were wrong, don't worry.. I could not care less.

Hutch May 16, 2019 8:38am | Post# 76

This thread is a joke. You would know the answer to how much capital you need once you know your strategy. No offense. Have a nice day.
Capital has nothing to do with the strategy used since you can trade from 0.01 lot to 40 lots with most brokers.
As far as capital is concerned the most important aspect is money management.

stt May 16, 2019 12:21pm | Post# 77

{quote} ....
In any case, small hedge funds use strict risk managent too. ....
Think about it. there must be a reason they use strict risk management. Hint: chance of long term survival. so if you are trading for living.. you want that too.

I just want to highlight the huge change in mindset needed when you are trading for living and when it is just a side thing. you can't just multiply the return you got in your small (i.e. not drastically life changing amount) account and think you should do that in your "trading for living" account. Most people do not comprehend this fully.

stt May 16, 2019 12:23pm | Post# 78

{quote} What are you talking about? Hedge funds have no leverage??? I suggest you do some more research, what you are saying is factually incorrect.
Exactly. Hedge funds have very high leverage available. They choose not to use it recklessly because they know better (but most hedge funds are are using leverage - no doubt abt that). Read up about LTCM -- they had infinite leverage really..

In fact wall street banks create products just for this - i.e. to allow hedge funds more leverage.. for e.g. CDOs were created so hedge funds can bet on bonds with even more leverage than was possible before.

profitfarmer May 16, 2019 12:57pm | Post# 79

{quote} Think about it. there must be a reason they use strict risk management. Hint: chance of long term survival. so if you are trading for living.. you want that too. I just want to highlight the huge change in mindset needed when you are trading for living and when it is just a side thing. you can't just multiply the return you got in your small (i.e. not drastically life changing amount) account and think you should do that in your "trading for living" account. Most people do not comprehend this fully.
The needed mindset change us the most painful...facing reality...so much easier to believe ( bcos the mind want to) the fairy tale marketing that one can become a millionaire starting with very little.

Bellow a 6 digit equity, the pressure is constant to perform, as a retail, full time trader, if depending solely on the trading profit.
Easy to sweep this aspect on the side, until someone try making it full time; then it will be clear.

One can't base full time trading on 2-3 months good result, and can't easily take 30-50-70% DD anymore on equity marked for trading for a living, for many reasons, a major being that if that 20-50% DD suddenly can mean end of full time trading bcos unable to meet the monthly expenses anymore...vs lose half if a 200$ account, is really not a life altering issue.
Survival become a priority.
For funds, even more so, cos their existence highly depend on the investors, most being a lot more risk averse than a 200$ retail trader gambler will ever be.

A final note.
Funds do use leverage. But dont really have to. Their goal isn't the highest % return, but a good return that attract capital. Unlike retail traders, funds earn very well based on AUM ( assets under management).
A luxury that no retail trader enjoys, not even prop traders.
A fundamental difference, what should not be dismissed.

HeyYou May 16, 2019 2:48pm | Post# 80

Hedge funds use strict rm to keep the client's happy.. hedge funds make money mostly on management fees so why scaring their clients with a 50% drawdown lol
nobody would invest in a fund with 50% dd

to them it's all about keeping the dd low.. and clients are happy.

100k is just not enough to trade with strict rm and make a living.

this year I'm up around 5% and I risk 5%/trade.. imagine if I was risking 1% . no big deal if I was a hedge fund, I would still make money on fees. but as a retailer,it's almost impossible to make a living trading..some years are just break-even years and IMO things get only worse.


© Forex Factory