Thursday
Oct282010
How We Secured Institutional Fresh Money
Thursday, October 28, 2010 at 11:15AMWritten by Michael Bigger. Follow me on Twitter and StockTwits.
1. Insight, late 2008
2. Experimentation, early 2009
We began experimenting with the following two goals in mind: (1) we wanted the strategy’s target volatility to be 6 percent, and (2) we wanted the strategy’s Sharpe ratio to be greater than 2.
3. Trading in the sandbox, mid-2009.
We tested the strategy before we put money into it. This was the time to correct any major problems.
4. Trading our own capital, summer 2009 to present.
During this stage, we've been ironing out any remaining kinks and developing a track record before approaching institutions.
5. Raising capital, summer 2010.
We began approaching institutions with one year of trading results.
6. Received first investment allocation from an institution, with more in the pipeline, September 2010.We will be closing a second allocation on November 10. We will use this track record to raise more funds.
Does that process make sense to you?
This flowchart illustrates the steps we took to build one of our algorithmic trading businesses. You can learn more about how we got the insight for the business by reading the section titled The Coolest Financial Tools on biggercapital.com.
1. Insight, late 2008
2. Experimentation, early 2009
We began experimenting with the following two goals in mind: (1) we wanted the strategy’s target volatility to be 6 percent, and (2) we wanted the strategy’s Sharpe ratio to be greater than 2.
3. Trading in the sandbox, mid-2009.
We tested the strategy before we put money into it. This was the time to correct any major problems.
4. Trading our own capital, summer 2009 to present.
During this stage, we've been ironing out any remaining kinks and developing a track record before approaching institutions.
5. Raising capital, summer 2010.
We began approaching institutions with one year of trading results.
6. Received first investment allocation from an institution, with more in the pipeline, September 2010.We will be closing a second allocation on November 10. We will use this track record to raise more funds.
Does that process make sense to you?
Reader Comments (1)
Wow! Excellent post. Very inspiring. Thanks for your entire blog.