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I have developed systems for years and manage a fund trading primarily SPY and other liquid ETFs. I can't keep away from the e-minis because of their leverage, and my models work so well on them.

 

Hedge funds and futures trading are a different animal, politically. They are regulated by different bodies and have different requirements for money management.

 

I would very much value hearing from other developers who have considered becoming a CTA to manage money trading futures markets.

 

Thanks - -

 

ws

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tell me, if you start with US$10,000,

how much (conservatively) would you have by the end of the week?

 

:roll eyes:

 

End of the week? You really want to judge him based on a guess of what you would have in a week?

 

That's too funny Tams. Great joke, I appreciate it.

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Brownsfan is right, weekly is not the best metric, and this is all off topic.

 

To manage a fund you don't need certifications, series 7, etc. until you are up over 30 mil. or 100 partners I believe.

 

They are changing these requirements as the SEC looks dumb after the Madoffs and Petters walked all over them.

 

My systems trade about 8 times a month, are in the market an average of 3 days. The futures trading is up about 10% this month and historically returns about 87% annually (not compounding).

 

I guess I posted this question in the wrong forum...

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waveslider,

 

I did it a couple times back in the late 80's. Simply didn't enjoy it. The 'business' responsibilities and etc of OPM just wasn't my cup of tea. But you may be fine with it. A friend of mine got his CTA about the same time, did it through '03 and retired and never seemed to have any of the issues I had with it.

 

Have you done any OPM at all? Testing the waters with a small GP type arrangement would be the route I would have taken had I known then what I know now about myself :)

 

Hope this helps.

 

zdo

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To manage a fund you don't need certifications, series 7, etc. until you are up over 30 mil. or 100 partners I believe.

 

They are changing these requirements as the SEC looks dumb after the Madoffs and Petters walked all over them.

 

Waveslider,

 

What you mentioned above, regarding certification and license, I assume you are refering to the US regulations correct?

Also you mentioned that there is no need for any type of certification etc.. I, for some reason, thought that in the US one needed to be licensed to manage a fund and solicite money i.e. raise money.

It may be that one needs a license to solicit money only...Im just goign on some things I remeber hearing or reading therfore not 100% sure.

I am curious as it is something I would be interested in getting more informaiton about.

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ZDO, that is very helpful hearing your experience. Being a CTA does seem like a lot of potential paperwork/bureaucracy, not to mention fees.

By OPM do you mean some type of portfolio management? I don't know what an OPM is.

 

Currently I am structured in the standard way, a LP managed by an LLC.

 

Sep34-

You can't hold yourself out to the public as an advisor. There are strict regs. about marketing material, etc. The way I raised money was via friends and family. If you do well, the money finds you - to a certain extent. It's hard to get to $10 million, but once you do - it goes really quickly.

(this is for the US)

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OKNIFD= ok now I feel dumb...!

 

Thanks again for your experience zdo.

 

For anyone who is in the same boat as me here, it looks like what I am trying to do would be considered a "QEP EXEMPT POOL"

 

QEP= Qualified Eligible person"

 

You have to submit a letter to the NFA saying that's what you are doing and the # of the exemption you are filing.

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The 'friends and family" concept is accomplished by a CPO - commodities pool operator - who has requested exemption status from the NFA. The vehicle is a LLC and no further reporting is required (except to the LLC members). Not even the broker need be involved. The trading account is set up in the name of the CP LLC with all members listed. The limit is 14 and under $2mil.

Beyond that is the full CPO with accounting to regulatory agencies.

However, and you may want to be careful right now about using this forum in public to discuss this. Solitciting is a fine line. You cannot solicit money from anyone for the purpose of managing money or for trading for someone else. You may have crossed the line already and the CBOT and NFA are getting paranoid and are starting to clamp down. So, I recommend you take this entire string off the forum and pursue this privately. It would be a shame of TL got tagged as a solicitor or associated with non-authorized persons soliciting monies.

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edabreu - you beat me to it.

I am not 100% sure about the US regulations, but in the UK and other parts of the world there are big differences in retail v wholesale or professional money.

If you are not licensed you can say virtually anything and get away with it, but once you start taking peoples money then you have to be very careful about what you say, who you say it to and what you do.

This is not the forum for it as this would be considered retail - and thats largely who the SEC, FSA and other regulators want to protect - the big guys are supposed to know what they are doing.

For anyone soliciting advice it becomes an interesting slope, and all the disclaimers in the world don't help if you are not authorised, or putting yourself out to offer expert advice.

On saying that you can find out plenty of information from other websites about setting up a fund.

Doing it professionally and properly costs money for accounts, audits, marketing, compliance (very intense), legal - dont forget once you take public money you will need contracts - handshakes might not do it. etc; and you have to deal with clients, and run the business as a business over and above the business of trading. Not for everyone.

I read somewhere that 50% of hedge funds (including ctas) go out of business due to operational business related issues rather than trading losses. You can have the best idea in the world but if you cant raise money for that idea then too bad.

You might want to team up with someone who has that experience but not the programming/trading skills.

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When I think of trading, I think of trading…

 

When I think of managing money

I think of

Compliance with a bunch of nit picky BS

Marketing, promotion, selling

Trading

Handholding ( / talking accts that really shouldn’t leave into staying and wishing accounts that should leave would, etc

Trying to attract talent and then delegate (what is essentially) trust

 

When I think of trading, I think of trading…

 

hmmm

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Exemptions from Registration

 

A person is not required to register as a CPO if:

 

He does not receive any compensation (direct or indirect) for operating the pool (other than reimbursement for ordinary expenses); and,

he operates only one pool at any time; and,

he is not otherwise required to register, or is affiliated with someone who is; and,

he does not do any advertising in connection with the pool.

 

OR

 

Total gross capital of all pools operated by the CPO does not exceed $400,000; and,

none of the pools has more than 15 participants at any one time (excluding the operator, CTA, or principal or related parties of the participants).

____________________________________________________________________

 

Any person exempt from registration as a CPO must disclose this fact in a written statement to all pool participants, along with the business name, address, and telephone number. This statement must be signed by a principal of the business. Two copies must be filed with the CFTC and one copy with the NFA within seven days after its first use or commencment of trading by the Pool.

 

Furthermore, CPOs which are exempt are required to:

 

1. Furnish each pool participant with monthly statements for the pool received from the FCM.

2. On each statement, clearly show the net profit or loss on all completed transactions since the previous statement.

3. Maintain all books and records relative to trading activities for 5 years, and keep such records readily accessible for review by the CFTC or the Department of Justice for the first 2 years.

 

If a person is exempt from registration as a CPO, but registers as such, he is subject to all rules governing CPOs.

 

Prohibited Activities

 

CPOs are required to operate the pool as a legally separate entity from that of the pool operator. Exceptions exist when:

 

1. the CPO informs the CFTC in writing that the pool participants will be issued stock in the pool (corporation) for all funds that the participant contributes to the pool;

2. the CPO proves to the CFTC that it has established adequate procedures to assure that pool funds are segregated from the pool operator’s funds;

3. if the CFTC, in all its wisdom, decides the CPO is exempt.

 

All funds received from pool participants must be received in the pool’s name, not the pool operator’s name.

 

No CPO may commingle funds from any pool he operates with funds from any other person or pool.

 

SO I GUESS I AM SAYING -WATCH OUT

The Pip Thief

Edited by The Pip Thief

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