Years in financial sector allowed us to meet interesting people and build a database of various entities from asset management sector. We work with individual traders, strategy developers, funds or quants. No matter what background one has, we are opened to partnership with anyone who meets our requirements. Our approach is performance and quality oriented. It doesn’t neccessarily mean that only big asset management companies with sound names are worth the investment. Sometimes it is just result of marketing that does the magic, but name isn’t always guarantee of performance.
Anyone who tried trading knows it is not easy job to do. One has to watch the market, perform all kind of analysis, handle risk, execute trades and much more. This first experience usually leads to total loss of capital. Anyone trading live account surely appreciates long-term, consistent profits and is aware that it is not coincidence. One can be lucky, but luck doesn’t last that long. If we see stable returns for period of more than 2 years, it is not called luck, but skill and virtue.
On the other hand, the results may be misleading and may contain hidden traps waiting to trigger and launch disaster on investors account. We have implemented strict procedures and rules we follow while screening for new traders. This includes, but is not limited to the following:
- Trader needs to provide us at least two years of live account performance
- We require description of trading strategy and reasoning behind trading activity
- We need to be certain we understand how traders enters the market and also what mechanism is used to exit opened positions.
- Strategy needs to be profitable and results need to be consistent – there can’t be strike of loosing months and then sudden jump in equity
- Drawdown on the account can’t exceed certain amount and we pay special attention to equity drawdown
- One of the most important parameters we watch is ratio between returns and drawdown
Combination of above rules allows us to choose the best traders and trading strategies. Each of the above requirements is not as easy to meet as it may look. Most of the traders fail right at first step and have problem with proving their track record. To prove two years of trading from their real money account is for some simply impassable barrier. Even if traders prove their trading, many fail screening process beacuse of insatisfactory parameters computed from trading activity. We avoid large drawdowns and return to drawdown ratio needs to be at least the same or better than 1:1.
Some complain about rules and are dissapointed when we turn them down because of some rule. Even if we would like to work with trader, often it is not possible because our main objective is to protect client and since we are trading our own funds – to protect our money as well.