"Michael is a gifted trading mentor. Over the course of several initial conversations he was able to assess my situation and recommend trading strategies that were harmonious with my personality; while at the same time attending to my family’s financial needs. I cannot stress enough how life changing this was for me." --JC, Kansas


Study with the best to become a successful trader. We have courses with renown instructors such as Peter Borish, Scott Kaminski, Victor Sperandeo, and Michael Martin. Enroll to the right to get started!

Book Reviews

"This is a great book for novice and experienced traders. Soaking up its wisdom distilled from experience and introspection will help you become more successful. And that's true even if it doesn't make you a penny." --Aaron Brown, AQR


Cornelius Luca is a forex expert and the author of Trading the Global Currency Markets. His most recent research report lists his 6 best forex trading ideas.

•Majors: Short euro/dollar…
•Commodity dollars: Short Australian dollar/dollar…
•Crosses: Short euro/yen…
•Asia: Long dollar/Korean won…
•FX LatAm: Short dollar/Mexican peso…
•FX Eastern Europe: Long dollar/Turkish lira…

Listen to my interview with Luca about how Brexit is effecting currency exchange rates.

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By Jason Pearce

The Basics

A moving average is exactly what it sounds like: It’s the average market price of the last “X” number of time intervals, whether that’s hours, day, weeks, months, etc. and it’s called a moving average because the average price is updated every time there is a new time interval recorded.  Therefore, the data set moves to always stay with the most current data set.

For example, let’s say that the 20-Year Bond ETF (TLT) closed at $131.58, $130.57, $131.74, $130.62, and $130.09.

The average closing price of these five days is $130.92.

Then the next day, TLT plunges and closes at a price of $124.57.

So we would take the prices of the most recent five days and calculate the average price all over again.  Since we now have a new data point ($124.57), we simply drop the oldest data point in our series ($131.58) and recalculate.

The new five-day moving average of the closing price is $129.52.

It’s important to establish right up front that a moving average is a lagging indicator.  It tells you where the market has been; it does not tell you where the market is going.  This isn’t some mystical map to lead you into a magical forest full of money trees.  It’s not even a fool-proof market indicator.  Moving averages are simply a guide.

Where the moving averages do prove their worth is by helping a trader identify when a market is in a trend.  After all, finding a market trend and getting positioned on the right side of it is the first step to making money!

Up or Down

A market is considered to be in an uptrend when it’s above the moving average price and it’s considered to be in a downtrend when it’s below the moving average price.  In other words, you want to buy a market that is performing above average and sell a market that is closing below average.

You can also compare two different moving averages to determine when to buy and when to sell.  This is known as a moving average crossover.  When a faster (shorter-term) moving average closes above a slower (longer-term) moving average, it’s a buy signal.  When the faster (shorter-term) moving average closes below a slower (longer-term) moving average, it’s a sell signal.

This is pretty simple stuff, right?

The Path of Righteousness

Years ago, I had a mentor who used to tell me, “Follow the path of righteousness.”  No, he wasn’t my guru or spiritual mentor.  He was a trading mentor.  The Path of Righteousness that he was referring to was the market’s moving average.

This mantra was his very simple way of telling me to follow the trend and patiently stay in the trade as long as the market continued to close above the moving average that I was using.

Likewise, if the market finally cracked the moving average that had been supporting the move higher, it was my cue to exit the position stage right.  “Take the money and run” as the song says.  In some cases, the break of the moving average was even my prompt to reverse and get positioned on the short side of the market.

Perhaps trading a system with the moving averages is a bit like Zen after all.  It’s deceptively simple to understand, yet it takes continuous practice and self-discipline to keep at it.

Pick Your Weapon

There are several types of moving averages out there.  The one we already discussed is called a Simple Moving Average as it gives equal weight to all of the data points in the series.

Another popular type of moving average is an Exponential Moving Average.  This one puts more weight on the more recent data points, which causes it to react faster than the Simple Moving Average does.  The belief is that the more recent data points are more important than the older ones; hence, they should carry more influence.  This is why a lot of the professional traders favor the Exponential Moving Average over the Simple Moving Average.

If you wish, you can continue to go even further down the rabbit hole and research Weighted Moving Averages (where each piece of the data set is assigned different weights), Displaced Moving Averages (a moving average that is pushed forward in time in order to filter out potential whipsaws), Triangular Moving Averages (where the heaviest weighting is assigned to the midpoint of the data set), and some other complex formulas.  You can even create your own proprietary moving averages if you don’t see one that suits your fancy.

Also, you can choose to calculate the moving average of the market highs…or lows…or even the openings.  A trader could even get really cute by calculating some average of the day’s range and making a moving average out of that!

Those most common metric for the calculation is the moving average of the closing price.  This makes sense as it focuses on what I believe to be is the most important price of the day.  The reason for this is because the market’s final settlement is where the traders with the most conviction -and also the bankroll to hold it- are willing to go home with the position.  The day traders and the HFT algos are cashed out by the time the closing price is established.

Looks like things are getting a little less simple now…

Popular Metrics

In addition to the different types of moving averages, you also have to determine the length of the moving average that you’re going to use.  The proper length of moving average for you is directly correlated to the type of move you’re playing for.  Are you more of a hit & run day trader?  Or are you a trend follower who starts to look like a Buy & Hold investor when the trend is moving favorably?

If you are trading the fast, strong momentum moves, the short-term moving averages are where you should concentrate your efforts.  This is because a smaller data set, say five days instead of one hundred days, will change at a much faster rate.  This is exactly what the doctor ordered for someone who’s only looking to scalp a fraction of the move out of a market.

However, if you are surfing a macro trend and playing for the long haul, you’d want to use a long-term moving average.  Since a long-term moving average has a lot more data points, each new data point has a much smaller impact on the change in the average price than the short-term moving averages will.  By making it slower to change, it is less likely to generate less false signals during a market hiccup and shake you out of a position prematurely.

Some of the popular parameters for the short-term trading crowd are the 5-, 10-, and 13-day moving averages, while swing traders will slow it down a notch and go for the 20-day moving average.  One of the pioneers of trend following, Richard Donchian, used a combo with a moving average crossover system that relied on the 5-day MA and 20-day MA.

Medium-term traders tend to gravitate toward the 50-day moving average and the long-term guys normally follow the 200-day moving average.  As a matter of fact, Paul Tudor Jones said that his metric for everything (stocks, commodities, currencies, etc.) is the 200-day moving average.  He has a standing rule to get out of anything that falls below the 200-day moving average.

The 50-day MA and the 200-day MA can also be combined to be used as a widely-followed crossover system to identify long-term market trends.  When the 50-day MA crosses above the 200-day MA, it’s referred to as a Golden Cross.  Time to go long because the bull market is roaring!  Conversely, when the 50-day MA crosses below the 200-day MA, it’s referred to as a Death Cross.  This ominous-sounding signal indicates further downside ahead.

The Best Pick

Some guitar players looking to emulate their hero may know that Stevie Ray Vaughn used unbelievably thick guitar string gauges that start at .013.  So they slap a set of heavy gauge strings on their Strat and expect to start playing just like him.  However, Al Di Meola uses a more reasonable 10-gauge set.  On the other end of the spectrum, Chuck Berry and Jimmy Page both favored 8-gauges (think “banjo strings”) that allowed them to play almost effortlessly.

So what’s a player to do?

The answer is simple: you need to find the gauge that suits your own playing style the best.  It’s safe to say that the string gauge was not the defining factor of success for any of these guys.  But they did find the gauge that best suited their needs.

In the same way, traders have to do a little bit of research and testing to determine which moving average type best fits their own style and personality.  Your goal is to find the moving average parameters that make the most sense to you, not blindly follow the same one that your trading hero uses.  Like Polonius said in Hamlet, “To thine own self be true.”

Ultimately, if a market really is trending, all of these different types of moving averages should eventually generate similar buy and sell signals to get you on-board the move.  So it shouldn’t make too much of a difference which kind you are using.  There will be some variance, of course, such as one producing more false signals or one is getting in/out of the market earlier than another, but sooner or later they should all be participating in the same trend.

Moving Averages Work Great…

Except when they don’t.  Moving averages will only work their magic when the market in focus is trending.  Otherwise, they will get chopped to death.  A market with no trend will pop above the moving average for a few days, go back under it for a few days, jump back above if for a few more, etc.  A trader who keeps buying the closes above the moving average and selling the closes below the moving average in this type of environment could see their account bled dry…all while the market that is simply spinning its wheels and going nowhere.

Markets will cycle through both types of environments, trending and non-trending.  Therefore, no trading system works all the time.  To expect otherwise is unrealistic.

Unfortunately, markets tend to trade in choppy ranges a lot more than they make sustained trends.  Some statisticians say the markets only trend about one-third of the time.  Some say it’s even less.  That’s bad news if you’re a trend follower.  And if you’re trading with moving averages, regardless of the timeframe, a trend follower is exactly what you are.

There is some good news, though.  The markets don’t all have to trend together or get held hostage in a trading range at the same time.  When some of the markets are trending, others are choppy and vice versa.  With all the available investment vehicles we have nowadays, the candidates for a potential trade seem nearly unlimited.  Heck, you can even spread one market against another and create even more potential trading candidates!  Therefore, you can afford to be picky and ignore any market that’s not currently in an obvious trend.

Rule of Thumb

Here’s one simple, but effective, rule that a trader could implement to avoid getting suckered into some of the choppy trading environments: Don’t trade any market where the moving average has gone flat!

We’ve already established the fact that a moving average is a lagging indicator.  It’s useful to wait for these laggards to start moving north or south before committing to any trades.  At the very least, we will know that the move in the underlying market has been sustained long enough to start pulling the moving averages with it.  As we all learned in physics class 101, a body in motion tends to stay in motion.

If this lag is unacceptable to you because you’re looking to get in right at the bottom or sell out right at the top, then you are not interested in trend following, anyways.  You are looking for a leading indicator and something that has predictive power.  That’s fine.  Just don’t try to accomplish this with a lagging indicator like moving averages!

Using a tool improperly is hazardous to your wealth and sometimes even your health.  You need to learn how to use your tools safely and effectively like Bob Vila did on This Old House, not like Tim “the Tool Man” Taylor did on Home Improvement.

Adapt or Die

It is very important for traders to remember that the market price can never be wrong.  It is what it is.  The market is the dog and the trade indicators (moving averages, stochastics, MACD, etc.) are simply the tail.  The dog wags the tail, not the other way around.

So when a moving average starts giving failed signals, it could mean one of two things: either the market trend has finally come to an end or else the volatility of the trend has expanded.  Either way, something has changed.

Leon Megginson, a LSU professor of business management, said, “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”  This quote is perfectly fitting for a trader.  To survive the market’s behavior change, a trader must adapt to the new reality.  It can be accomplished by making trade parameter adjustments, relying on good risk management, using multiple non-correlated trading systems, practicing portfolio diversification, and any combination of all of these.

By the way, true diversification does not just mean that you are trading in several different markets, but that you are trading in non-correlated markets.  Having a position in the S&P 500, the NASDAQ, and the Russell 2000 is not very diversified, while having a position in copper, lean hogs, and some foreign currency (usually) is.

Coming Attractions

One thing that I have found success with in trading the moving averages is making parameter adjustments that adapt to changes in the market.  This allows me to recalibrate when a whipsaw or false reversal signal manifests during a trending market and throws everyone off the horse.

In an upcoming article, I will reveal my strategy for determining when and how to adjust the parameters to get back on the horse or, at the very least, continue to ride the bull or the bear.

More Articles by Jason Pearce:

Market Returns Do Not Equal Investment Returns with Leveraged ETFs

Is The Canadian Housing Market Bad for Canadian Banks?

2017: The Death Year for Stocks

Potential Bond Market Reversal Ahead










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Crude Oil Stocks

This week we saw roughly a 3.25% rally across the board in crude oil prices. The backwardation of the Dec7/Dec8 spread was relatively unchanged to wider for the most part, which continues to tell us the market is no longer willing to pay you to store oil.

Brynne’s 19 Page Analysis

Persistent ‘slight’ backwardation will gently keep max barrels going into storage without meaning the overall market is bullish. Keep an eye on this spread to see if that makes a larger move which would have a more significant bullish/bearish impact.

Read What Brynne thinks this week

Listen to my interview with Brynne at iTunes and please consider leaving a review.

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Michael Martin reads from a recent post on marketing for traders.

He ad libs around key points and discusses how he teaches marketing to traders.

Download the podcast:

Get it at iTunes

Get it at Stitcher

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Trading is a Small Part of It

Please take this post very seriously. The world needs you and your ability to manage money. We have had enough of the rogue managers and CEOs who put on hero trades, stole client funds, and blew up their companies all in the name of their own glory.

Once you’re comfortable with a trading strategy, you need to scale it. That means raising money so that you and your clients can benefit from the value you bring to the trading community. I believe this to be true whether your intention is to go pro or not. Investors need competent help in diversifying and growing their assets. You can be the answer to their question.

You should consider having an asset goal in mind. You can grow your own wealth faster with OPM (Other People’s Money) than just your own. Yes, I know you can start with $10,000 and double your money for 7 years in a row and end up with over $1 million, but that’s not practical to assume that you will grow your capital by 100% for 7 years in a row.

If that’s your goal though, don’t let me dissuade you. However, in my experience most who have tried to double their money in even one year have gone bust. You don’t know if or when the markets that are conducive to your trading style will show up. Consider that an act of randomness. You’ll either trade too big or too frequently and take a big hit or eventually erode your capital.

When I trade, I don’t expect anything to go in my favor. I also make the assumption that I will have bad timing and bad luck, and with that I trade small in establishing a position. If I survive all the things that can go wrong, and I accumulate unrealized gains, I’ll add more to the position. I also defer all judgment on my ability until after I’m out of the position and can do a post mortem on all my actions given what I knew at the time. It’s a very humbling process and I think you can grow from this process regardless of your trading style or methodology. That’s true for system traders, discretionary traders, or systematic chart readers.

Creating Rapport with Allocators

At this point in your career, you need allocators more than they need you…for the most part. Getting their attention is probably not unlike trying to get into a great college or anything you’re targeting for which there is great demand. It’s also not unlike dating…no one is going to give you funds to manage without there being a relationship.

Speaking of which, you’ll be courting allocators for years and years and it will seem like you are doing a great deal of work for no results. It will feel like you are shoveling sand against the tide. This can go on for years. That’s why the spoils most often go to those who can persist, not necessarily those who are the best.


There are thousands of people like you who have read Market Wizards, watched the Trader documentary, and know how to trade. As I mentioned in a previous post, everyone wants money (bullets) to shoot the gun. A trader without assets in a lot of ways is not a trader.

A trader is many ways is like a sniper – someone who is actively managing risk. A sniper is someone who has the rifle and the ammo. In the military, the taxpayers pay for the ammo. Who is going to get your ammo?

Why Allocators Need You

Allocators know that they are likely to get better growth and returns from emerging talent than from PTJ, in all due respect. This is like comparing GE to a new startup that just went public. You know what you’re getting with Tudor Investments. What you bring is capacity and nimbleness.

Asset managers with over $100 billion are beached whales in many ways. There are many instruments that they cannot trade because there isn’t enough market depth or they can not get enough inventory where a 30% move in such would make a difference to their bottom line. So they don’t bother in the first place.

You, the new talent, are a much larger risk. Your ability is unknown and untested. No one knows how you will perform in various market cycles. No one knows your financial staying power, ie, can your “firm” continue operations with a low asset base and low fees? How are you capitalized?

You will be doing all the paperwork instead of going out on date night. It will suck but there is no one else to do it and if you don’t do it, no one will. In a lot of ways, it’s you against the world. How badly do you want it? The best of the best have discipline that you might not have encountered and are currently making sacrifices that can have a huge impact on their professional trajectory.

The payoff of those sacrifices are also unknown in terms of “when” and “how big”, but one thing is for sure: persistence and determination play a huge role in one’s success. We also know that “no sacrifice” on your end means “zero payoff” in the future. You just don’t know when it will pay off or to what magnitude.

Tudor and Caxton probably have 10 people that focus exclusively on RFPs, can speak to Investment Policy Statements, and know all about the appropriateness of managed futures in 501c accounts.

They know how to “hear money” on the phone and all score a 10 out of 10 as far as making in-person presentations. Even worse for you, they show up to pitch in tailored made Loro Piana suits, bespoke Berluti shoes, and the expense accounts to boot. You’ll be ordering water and going dutch to split the bill. Get used to this feeling for a while. It’s ok – I’ve been there. Everyone starts at the bottom.

When you seek money from allocators, you will be going up against the best managers in the world, all with very deep benches, with several decades of track records, and names / brands that instill trust. They have traders who can delineate when bond yields are out of whack and what each basis point in yield represents in terms of risk to the firm, while you’ll be all excited about your trend following breakout system. You’ll need to go a bit more sophisticated than that.

Despite the odds being against you, there are times when the door is left ajar and you can sneak in. You have to be prepared to win though. This is the business where the old expression “Luck is where opportunity meets preparedness” came from. Many of the guys you admire or have read about started out as clerks, runners, or chalk boys.

I’m certain that no one put “chalk boy” on his business card, so don’t feel emasculated by where you are right now. The thing is – these guys had a clear vision of where they wanted to go career-wise and didn’t blink. When you’re in this type of place, you’ll be more than acutely aware of when there is an opportunity for you and you’ll speak up.

I don’t have an elevator pitch. I never did. My approach was always a 2-step process. If I met someone on an elevator, I’d exchange cards and follow up the next day and try to get a low-key meeting on the books. At that meeting I’d only meet for coffee or a breakfast and keep it topical.

Know Who You are Talking to

Pitching someone too soon seemed out of place in the natural order of things from my point of view. Plus, many of my largest accounts when I started out were in Chinatown in Manhattan. If you know anything about the Chinese culture, they spend a great deal of time making a strong base of a relationship with you before they give you any business.

You have to be delicate and extremely patient. If you come on too strong, you come across as unpolished and inexperienced. Even if you’re 40 years old. This flies in the face of ABC “always be closing” type of aggressiveness or were taught the cold calling was the only way to build a business.

I believe the smartest thing Peter Borish and Paul Tudor Jones did when launching Tudor Investments was partner up with Arpad Busson – a private banker who had lots of relationships with wealthy investors. I think they eventually hired him to work at Tudor. If you don’t know where the money is, partner up with someone who does and make sure you overpay them. You’ll need incoming capital for the rest of your trading life. Clients will leave and clients will die. There is churn…and losing your one big client can put you out of business. You need to diversify your book.

An example of this could be you pay them 50% of the annual management fee and incentive fee (as earned). You can also incent them with equity that they earn over a 3-5 year period of time. You both have to feel the burn. It has to hurt both of you. If it’s not enough of a percentage, the fundraiser won’t stay. If the time frame is too short, you’ll only have them for a short period of time before they split.

Align your collective interests for the best potential outcome. And by the way, the equity you offer is cliff-vested. That means 100% of it is earned after the last year of the term of the deal. If they leave beforehand, you retain ownership. The last thing you want is a bunch of equity shareholders who have no further interest in your company. All the shareholders should be committing sweat equity in an ongoing basis. Don’t give the farm away unless they are delivering the city of Manhattan.

Let me give you an example. Would you rather own 70% of a firm that has $200MM in Assets after 10 years or 100% of a firm that manages $20MM in 10 years? It’s a trick question – you might be fine with the latter. It’s as unique to everyone as their fingerprint, but this is what I mean when I say begin with the end in mind.

What kind of firm do you want to run? What do you want your trading to fulfill in your life? What do you want to do with the 6, 7, or 8 figures of annual compensation that you will be garnering.

You have a business plan already, right?

You need to have unbridled passion for what you do and how you do it. You need to understand your place in the world and know what you can do and what you can’t. What you’re willing to do and what you are not. Then, you need to have your ducks in a row. I’m going to help you put your house in order b/c in this stage of your career, like in a lot of things in life, what you don’t know might be putting or keeping you out of business.

“To be loved, be lovable.” – Ovid

Make yourself a lower risk than your peers. Show them that you have your house in order and think ahead of all the things that can go wrong, and have answers for them. Allocators will ask you “What if…” scenarios all day long. I view those questions as “buy signals” so don’t get cute here.

Marketing Plans Are Systematic

Email the TPM / Allocator and let them know what you do. Be bold and brief. If you have more than 4 sentences (that will most likely be read on a smartphone), you will be shot at first sight. Albeit a good read, this is not the time for War & Peace. Your goal here is to get get on the allocator’s radar.

An example of such an email could go like this:

Hi Mr/s. _____,

My name is George and I’m the PM at [firm name]. My talent is in [trading style]. We have [$ Amount] in Assets under management and we’ve been trading for [# years].

Do you invest with emerging managers and how do you evaluate them? I’d like to send you my monthly trade ledger if you do.

**You might be able to find the person on their website. If so, add the next line to the email:

“Who is the best person to send this information to if not you – is it _________?”

Thank you,

Your Name
Email address
Cell #

That’s it.

Do not send a DDOC, marketing material, or an invitation to review your website. Don’t send intro videos.

Don’t send this to 10 people at the same firm at the same time. Send one email, wait 1 week, send to another person. Rinse and repeat. You always want to maintain your dignity and look like a pro.

If they write back and say “Sorry, but No Thank You…”

If they reply “Thanks for your email, but we don’t invest with managers with less than 5 years of track record and less than $50MM in assets,” you can write a two sentence reply:

“Thank you for getting back to me. Most people don’t. Do you know any firms that might make a better fit for where we are? Thank you in advance.” – [Your Name]

Keep track of firms & people, dates, and follow up in a spreadsheet. You don’t need a $200/month CRM to do this.

If “Yes…”

If they say “Sure, you can send them to me,” you now have the first of 500 new relationships that you’ll be on your way to making. Keep moving forward and reach out to 20 new such entities each day. Again, don’t send email attachments and other things they did not ask for.

This will be tempting but you don’t want to become a “Chatty Cathy” after your first beer. Don’t be casual and don’t count on them ever caring or even opening your monthly emails.

Your goal at this point is to spend the better part of the YEAR building your relationships and how to speak with allocators.

Money is Made in How You Follow-up

If they are really interested, they might ask for daily percent changes in your equity for the entire month. This is a good thing. That means, they are asking for the change in your equity in percentage terms from day to day trading your model account. Calculate this each day and have it ready.

The lower the dail vol, the better. In today’s day and age, they are not looking for you to trade some modified Turtle Rule / breakout system that trades 2% risk units and adds up to 8% exposure for one instrument.

That’s basically madness in their eyes. Those days are over and they can get an HFT or algo trader to do that for the pure system style of management. Two, you shouldn’t be risking more that .25% on a trade anyway, but that’s another conversation.

Or they can hire someone with 20-30 years of experience – a sure bet.

I WOULD connect with that person on LinkedIn asap. Why? “Labor migrates,” as it’s said and the person who you just spent 7 months wooing is now at another firm doing the same thing or perhaps enjoying a promotion. Reach out to them and congratulate them and offer to send them a complete summary of your previous dialog.

Be Careful on Twitter and Facebook

You may have very strong political opinions. You may have keen insight on the opposite sex or whatever gender you’re attracted to. Be extremely judicious in what you publish on social media. The people you are going to pitch have strong feelings too and you might end up turning off your intended audience by thinking that you are the White House Chief of Staff or that you are smarter than James Carville. Keep your thoughts to yourself.

What you publish on social media is part of your application process to get an allocation to manage funds.

If you have existing assets, and you are looking to add, you’re going to have a tough time proving to them that taking more than .10 to .25% risk per trade is a good thing. Allocators are looking for low vol from newer managers. Otherwise, there is added risk to your proposition: The risk is that you will fail as a new manager. The risk that you will fail as a new manager taking 100-200 bps risk units per trade is almost guaranteed. Allocators are not looking for managers who can generate 40% drawdowns. They are looking for single-digit, to low teen drawdowns with the potential for 15%+ CAGR.

Allocators already know that if you are a trend follower, for example, and the markets begin to trend you will likely have better returns. However, they also know that when you are a trend follower and such happens, you’ll have greater vol in your returns and in your drawdowns and give-backs. If you want to stand out, you’ll have to find a way to minimize the gains you make that you will give back in reversals. It’s one thing to be in the trade, it’s another to walk away with 75-90% of the move.

Your Trading Style is an Asset Class

Allocators think of you as a potential part of an asset class in a larger asset allocation model that they’re running to diversity their client funds / investments. The allocator will be running hypothetical daily equity runs / tests to see how you fit in with their existing stable of horses if you were to have been hired as a manager.

Does your equity zig when others zag? If you are a swing trader, how does your methodology compare with other swing traders looking at the daily equity changes given your actual trades? Same for any other type of manager or trading style. They may have several managers trading a certain style and if you’re lucky, you might end up as one of them.

It all depends on the risk that the allocator is willing to take and what their mandate is. You see, these allocators might be running pension and defined benefit plans – large retirement plans that are looking for specific exposure to certain asset classes, and/or specific reward to risk ratios given the choice of manager (maybe you). What they’re looking at internally is “can we get another 5 basis points of return by hiring ______ without adding additional risk?” It’s a custom investment frontier.

How to Follow Up with Interested Parties

Do not add this person’s name and email alias to an Email Service Provider or autoresponder such as MailChimp, Constant Contact, or Aweber. You’ll have to email each one manually if you want to come across as professional. You’re not Zappos.

Second, those firms must have an “Unsubscribe” link in the footer section of the email per CANSPAM requirements. Why would you willingly send someone an unsubscribe link when s/he is hard enough to get to a “yes” in the first place?

Although I don’t think anyone has gotten an allocation directly from such, I do think that if you can get some of your original research published in a major publication that will help your reputation.

Speaking at a conference or being on a panel also helps. Admittedly, sometimes you have to “pay to play” and become a sponsor for such speaking engagements and I would do so very judiciously. You can go talk to the Kiwanis or Lion’s Club for free, but that might be good for gathering assets. It’s not likely to move the needle in the eye of an allocator.

On the other end of the spectrum would be SALT, The Milken Institute’s Global Conference, or the Sohn Conference. The obvious catch-22 is that by the time you can afford to sponsor one of these events, the need for your first several allocations has passed and there is less urgency.

However, you can compete for a spot at Sohn for $100 and if you win, get a chance to make a 10-minute presentation at the Conference.

Idea Contest

Know this: the fight for assets in the trading and asset management game is a no-rules street brawl and I’ve seen amazing things happen for the traders that never quit. Hint: They were not always the most talented guys…not by a long shot.

Your success in trading (and in life) will come down to your level of persistence and determination. How badly do you want it? To what extent are you willing to hit your goals?

You have asset gathering goals, right?

Put together a plan and do a little bit each week. Face rejection. You will learn by doing and hearing what the objections are. But if you don’t put a plan together, assets will not walk in the front door…you have to actively go get them.

Furthermore, you don’t have to get registered or take any exams to get started. I know guys who have spent a small fortune getting licensed, renting an office, and building a website and they can’t raise $10,000. Don’t spend money you don’t have.

Do the basics and make it a process that you can replicate week after week.

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