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Comment by cortesoft | Hacker News Reader

Usually, the reason is you lack capital to trade on your signals yourself.

Seems like you could build the capital fairly quickly if your system works. And you should be able to have people invest in you if you show results.

Money now is better than money later. If you have a secret that is guaranteed to make money, but only over the course of several years, you could just sell it now and get that profit today instead of waiting.

The person buying the secret will pay less than the long term profit as a fee for them giving you the money upfront now.

But if you have rights to resell the secret multiple times you will earn money far quicker, perhaps more than the secret’s long term value.

200%/yr starting from $10,000 => still needs a day job for a number of years.

This is why Wall Street is able to hire talented young traders, some of whom will develop profitable systems. Over time, some of them are able to amass enough savings and the track record necessary to get investors. But at t=0, somebody has to pay the rent.

If you can reliably generate 200% a year after fees/taxes/etc, you could just get a bunch of credit cards and use broker margin on top of that. It wouldn't surprise me if you could easily start with 200k at that point. Sure the first year would be rough, like grad student living but you would quickly be in the six figures.

Yes, _but_ (and that is a huge but), I remember some summers ago Erdogan was giving a speech in a village and instead of saying "we have faith in the markets" he said "we have faith in Allah" (not judging, just observing)(it was a time that Turkish Lira was doing very bad, inflation was ruining the country, Erdogan hired his son-in-law to be central banker (or something like that) and that very day Euro took a big dive because of the exposure of Turkish debt, etc etc. Trump (again, not judging, just observing) said "tariffs all around" and markets and currencies crashed a couple of months ago, then recovered, then dropped again, etc.

So, "big bets", especially wig margin, require small movements (or small bets with big movements). And getting in debt is never a good idea, because a tweet by Jerom, Kristine, Vladimir, Xi, Putin, Macron, can send you packing and with an extra $200k debt at 20% interest rate, from which th average person will never recover.

A margin account would put you on fast track if you are sure about your strategy

Yes, but even with a margin account you still need money today and gains in the market take some time to accumulate from a small base.

If you returned 200%/yr, you'd be running a fund an multiple times more successful than Renaissance's Medallion fund and would be able to attract outside capital and become a billionaire many times over in maybe five years.

Obviously 200% is not realistic. But, entertaining the claim, even if you can do 200% annually, you still have to earn money in the near term unless you have a pot of cash so you can both invest and live.

If you have genuine reliable alpha, leverage exists. But you'd better make damn sure your edge is as good as you think it is.

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