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macrocephalopod's profile
macrocephalopod
macrocephalopod
macrocephalopod
@macrocephalopod

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macrocephalopod

@macrocephalopod

Paul Allen, Vice President M&A, Pierce & Pierce (Sie/Hir) | Vegan | Silence is Violence | Women’s Rights Are Human Rights | ACAB (Assigned Cephalopod At Birth)

Joined December 2020

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    1. macrocephalopod‏ @macrocephalopod 21 Mar 2021

      macrocephalopod Retweeted The Moron That Went Short Yet Again.

      This is a good question! Some possible answers - 1. Infrastructure that is too expensive or too hard to build yourself (eg colocation, low latency data feeds, compute clusters, fpgas) 2. Data that is too expensive or simply impossible to buy (eg historical tick data)https://twitter.com/mobile_mm/status/1373427747901542402 …

      macrocephalopod added,

      The Moron That Went Short Yet Again. @mobile_mm
      Replying to @nope_its_lily
      I have a different question - if you have a "quant" strategy or system that has a positive expectancy why would you trade it with other peoples money? Why give anyone else a cut? Eventually you will become very rich trading your own account. I dont get this.
      7 replies 12 retweets 128 likes
      Show this thread
    2. macrocephalopod‏ @macrocephalopod 21 Mar 2021

      3. Scale. Say you have $100k in your account. If you are willing to have 30% annual vol and Sharpe 2 you can make $60k in your first year, $96k in your second year, $150k in your third year (minus data and infrastructure costs of course).

      2 replies 0 retweets 20 likes
      Show this thread
    3. macrocephalopod‏ @macrocephalopod 21 Mar 2021

      If you trade for a hedge fund you maybe get a 15% cut and a $50m allocation with 5% annual vol so you make $750k ($50m x 5% x 2 x 15%) in your first year (minus data and infrastructure costs).

      1 reply 0 retweets 20 likes
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      macrocephalopod‏ @macrocephalopod 21 Mar 2021

      4. Downside risk. Say you have a 1x vol drawdown in a given year. In your personal account this is a loss of 30% of your capital, and you still need to eat and make rent. At a hedge fund you probably get fired but you still make your $150k salary and you can look for a new job.

      3:39 AM - 21 Mar 2021
      • 23 Likes
      • nostalgia, Ultra tanaka PJ Pierre tonyM_64 optictropic pete Luis  Colunga prince charming
      2 replies 0 retweets 23 likes
        1. New conversation
        2. macrocephalopod‏ @macrocephalopod 21 Mar 2021

          5. Track record. If you have ambitions to launch a fund, your current employer may help you with the set up, seed you and audit your track record for prospective investors. If you have been trading your PA all this is much harder.

          1 reply 0 retweets 18 likes
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        3. macrocephalopod‏ @macrocephalopod 21 Mar 2021

          6. Ops and back office. If you work for a fund they probably provide you with IT and hardware support, a risk system, pnl tracking, maybe trade execution and position management (rolling futures, handling dividends, stock splits, delistings etc) which you do yourself otherwise.

          2 replies 0 retweets 19 likes
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        4. macrocephalopod‏ @macrocephalopod 21 Mar 2021

          7. Market access. Some strategies require leverage and shorting, both of which are hard and expensive to access in a personal acct but easy and relatively cheap for a fund/prop shop with good broker relationships.

          3 replies 0 retweets 19 likes
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        5. End of conversation
        1. prince charming‏ @princeChar 21 Mar 2021
          Replying to @macrocephalopod

          I think this is the answer. Give up your risk to someone else (client, investor, etc), and your personal Sortino rises to the sky. No other strategy improvement could do it. (You don't even need to have a really good strategy actually. Just good enough to sell it to someone.)

          0 replies 0 retweets 1 like
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