March 19th, 2011 
kk Question by VH: Does anyone know where I can find some some investors to contribute start up capital for a forex hedge fund?
I have developed a proprietary expert advisor (trading robot) that has a 78% win ratio and a less than 20% drawdown. My monthly average is 38% compounded monthly. I’ll be a millionaire in two years, with or without investors, but since no one is promised tomorrow…I would like to accelerate this process. Advice?
Best answer:
Answer by Houyhnhnm
Put 50% of your winnings into the bank. If you’re married, put it in a trust in your wife’s name. That advice is actually from Jesse Livermore, the legendary trader who made and lost fortunes in stocks and commodities and killed himself.
I don’t know much about hedge funds, but every star I’ve read about who started a hedge fund had several years of success, not several months, so I doubt that serious money would look at you now. They’d probably expect you to have made several million, not a paltry one.
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If you were earning a 38% monthly return, you’d have no problem raising more capital. Unless, of course, you don’t have a long enough history of successful returns or perhaps your “trading robot” doesn’t really work.
38% monthly return on even $ 1,000 makes you a millionaire in less than two years. So… go to your bank and borrow moeny at whatever rate they’ll give you.
Use your trading robot, and send me a portion of the $ 1 trillion you have in a few years.
nice twisting of the language there!
“38% compounded monthly” = 38% if you assume 12 compounding periods per year.
but anyway -
if you want to start a hedge fund, i hope you have one heck of a pedigree, and a bunch of seed capital yourself. you’ll probably spend (minimum) $ 250k just on lawyers, and it will take nearly a year to get the proper approvals. then you can start trying to collect ~$ 10m (minimum) to get decent rates and execution from your prime. the first year, just to break even (assuming a 50% annual return) you’ll probably need to get 3/30 in fees.
oh, and by the way – if there was any part of that you didn’t understand, figure on at least another $ 100k to the lawyers.
I can talk to you, I too have created an FX program and its in testing stages with real capital. It “only” generates 20% a month but I have access to lots of a seed capital. How long have you traded real money (you will need a years worth of auditied results minimum)? I will email you so if you are interested in discussing this you can have the opportunity.
You might be interested to try out the automated forex robots. You can read more about them on http://ww.automatedforex.info