I am not in the finance industry. I spent the last year or so developing a algorthmic trading strategy. For now I'm just investing my own money in it but if I wanted to legally manage others money as well - how do I best find the right way to do that? I assume I would need to pass a fiduciary exam from FINRA and register as an LLC or something but I really don't where to start and a lot of articles I read online about this were either light on details or smelled like bullshit. Does anyone know of a good resource for this? I'm looking for advice on necessary certifications, filings, corporate structure, compliance, etc.
Are you actually trading your own money with this strategy right now? Which broker do you use?
I use interactive brokers because it has the most comprehensive API for retail and the lowest margin rates. API is a nightmare though it needs a wrapper before you can be productive with it
Do a partnership. Fund can be done for about 200k. Doesn’t make sense if you can’t raise at least 10M. (I’ve actually got a lawyer to check that out)
But how good are your returns?
I’m not saying your algorithm can’t work, but there are more people who try this than you would probably expect. and most of them fail miserably because their algorithm is overfitted to outperform on historical data / backtests. In reality, unexpected shit happens in the markets all the time. Stuff no algo can “learn” from historical data...
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Setting up your own fund is kind of a nightmare from what I hear because you need enough money to pay the lawyers and accountants. If it's got capacity you can try to get funded via Quantopian I think. I met someone who got funding from Passport capital through something like that. Once it's got a good track record, if it has good capacity and low drawdown you can try going to a place like Millennium as a PM. To trade by yourself your biggest disadvantage is probably high cost of leverage and getting hit by taxes every year. I am not sure if there's an easy way to set up a corporation in a tax haven to get around that. The big funds all have their Bermuda whatever tricks.
Appreciate your the insight. Quantopian definitely wouldn't fund the strategy I'm running since it is missing several of their tick boxes (starting with the wrong asset classes) - maybe at some point I could try developing one they would be interested in though
Tbh I've thought of building my own strategy and going with it (maybe ask for some parents/friends money for better economies of scale), if you have a decent return rate your assets will multiply pretty quickly. One place to look for cheap leverage is going long on options. Usually a synthetic long/short is cheaper than borrowing money from the broker at 6% (or even 2% since institutions trade options with that implicit risk free rate), if you only get one leg you'll get burned on theta but the leverage can be pretty high. Only works on liquid stocks if you're just trading at home though.