BBC2. 9pm. Million Dollar Traders

tradetime

!!!!!!? wrote: »

I was thinking more in terms of the rise of the all-powerful hedge fund.

The hype is that they were a win-win proposition with clever, fiendishly complex strategies that meant you were covered whichever way the market went. Thus people were willing to pay silly amounts just to have their cash managed plus forfeit large parts of their gains as bonuses.

In actual fact, I reckon they just took advantage of fantastically favourable credit conditions to leverage and buy (with the same credit conditions fueling market growth). Nothing clever or scientific about it and as long as the markets only went up, a lucrative strategy.

Not so easy now, though. From the sounds of things, if the programme was made a year earlier all the participants would have come out smelling of roses. A bit like the way all those numpties on property !!!!!! programmes always seemed to do well - a rising tide floats all boats and all that.......

(Plus, I wonder how many other Madoff type funds are out there....)

Hedge funds are neither "all powerful" nor do many make use of "fiendishly complex strategies" they were simply originally contrived to take advantage of using techniques to mitigate downside risk by "hedging" positions. They are private funds and thus are not subject to the same rules as other types of fund. Since their original incarnation, many funds have entered the market and been classified as hedge funds, who do not hedge positions, thus in essence one could say they are not true hedge funds. The only thing that has everybody talking about hedge funds and giving them some delusionary label of "special" or "all powerful" is their ability to short sell, more recently a number of mutual funds have adopted similar strategies.

tradetime

kennyboy66 wrote: »

The point about leverage is fair though - most hedge funds will find that borrowing are both more expensive and they won't be able to gear up as much in the future.
.

That's no bad thing, if I had to pick one thing that has made this crisis, the major problem that it is, I'd have to "leverage" or the over use of it.

tradetime

!!!!!!? wrote: »

Traders always have the advantage of being able to buy/sell instantly but ordinary punters can gain from falling prices.

The real secret of hedge funds was their ability to leverage. Take a hundred mil of your investors money, leverage up tenfold using cheap credit and the gains are potentially massive as long as your bets pay off.

Of course, the average punter was never able to borrow 10x their stake to gamble, unless of course it was to speculate on house prices......

Anyone can buy and sell instantly, or short sell or pretty much whatever, you just have to be willing to put up the cash to open a decent account.
Whilst I'd say it is hardly a "secret" that is correct, one of the big advantages "hedge funds" have had is their access to leverage, hopefully the current debacle will lead to some regulation of that.

Dooooooooooooooonut

Just watching it now on iplayer... I was hoping they'd have them doing something more interesting (yet understandable to the man on the street), punting bund intraday prop shop stylee or something.

Piddling around with unleveraged equities is going to be extermely boring - although at least this way they can't lose much

barrooo

We know about spread betting but it`s not the same as having an instant trade and price available as when buying.

If your not get a representative market price with a spread betting broker you need to change.
There are any number of spread betting brokers who will give live market feeds.

P.S Purch how are those GBP/USD and EUR/GBP trades going you mentioned on another post? Hope you took some profit on the first one.

tradetime

If your not get a representative market price with a spread betting broker you need to change.
There are any number of spread betting brokers who will give live market feeds.

I'm only aware of one spreadbetting firm who may give a "live market feed" though I think I know what you mean all the same, you should be getting a "representative market price".
Spreadbetting firms, generally as, I understand it, feed a live market feed through their computers to add the spread and adjust, possibly relative to their book and then feed the client. This is what causes a lot of complaints on discussion boards about clients not being allowed to "scalp" as they are taking advantage of a live feed against the spreadbet feed. Spreadbetting firms as I understand it will block this activity.

PasturesNew

The iPlayer link, for those too lazy or unsure where that is:
http://www.bbc.co.uk/iplayer/episode/b00gthhq/Million_Dollar_Traders_Make_Me_a_Trader/

I'm way too good to you people.

purch

Hope you took some profit on the first one

I got meself a 'clever' little options trade going :j

P.S. It'll no doubt go 'pear shaped'..........it usually does :eek:

barrooo

This is what causes a lot of complaints on discussion boards about clients not being allowed to "scalp" as they are taking advantage of a live feed against the spreadbet feed. Spreadbetting firms as I understand it will block this activity.

I'd agree if you're looking to scalp or news trade and ECN broker is better.

I took the spread for granted when talking about a live feed, as obviously the broker will add that on, but even so it should still be based on the underlying market.
I usually use 2/3 feeds apart from my trading broker to be assured of a respresentative price

tradetime

barrooo wrote: »

I'd agree if you're looking to scalp or news trade and ECN broker is better.

I took the spread for granted when talking about a live feed, as obviously the broker will add that on, but even so it should still be based on the underlying market.
I usually use 2/3 feeds apart from my trading broker to be assured of a respresentative price

I'd agree with that, I recently opened a spread bet account to see what they are all about, but have not had time to use it yet. I have looked at the price against a real feed, and it looks close enough for the most part.