#007: BUILDING A HEDGE FUND #3: IMM (INTELLIGENT MONEY MANAGER)


starting a hedge fund

At the end of the year 2013, long before I decided to create a hedge fund, I made a list of tasks for the year 2014. I’ve decided to improve and make my trading more effective during next year. You shouldn’t forget I’m just a trader like most of you - a decade ago I was just an inexperienced trader with a 2.000USD trading account - and the only reason why I’m still trading is because I constantly innovate and improve my trading. Similar lists of tasks are therefore an essential part of my routine.

It isn’t so relevant what else was on the list (some of the tasks were solved, others weren’t). The important thing is that the following point was included:

  • Find a method to recognize a system which is starting to fail and automatically decrease its contracts and importance in the portfolio. Eventually, switch it off completely.

This looks like an easy point to sort out, but it turned into one of the most difficult challenges you can possibly imagine.

I began to do online research to see if someone had already solved this issue before me (and also for me). Pretty soon I found out that if they had, they wouldn’t have been willing to share that information. And I absolutely understand that (I have to point out that I wouldn’t share this information with you either - if you expect me to share with you all my secrets and know-how in the next parts of this series, keep on dreaming). I hadn’t even found any useful ideas or clues online. All I could do is to start exploring that area by myself.

I started with my favourite method of getting new ideas - meditation. I’m a big promoter of meditation: I train the creative part of the brain and solve abstract problems. Many many years ago, I participated in a Transcendental meditation training and since then, I’ve been meditating regularly. Every time I need to solve a problem, I start to meditate, create abstract images and make something useful out of it (new solutions always come from the abstract, as that’s the beginning of the new concreteness). After a couple of days, I spent meditating, a few ideas popped into my head, but their implementation wasn’t easy at all. Almost immediately, I started to face technology problems. The classic trading software, which you probably know and use, was inadequate for my needs as it couldn’t create the algorithms I needed the software to create and test.

Hence, I asked my friend, elite programer for help. I’ve worked with him many times and he’s always been discreet and loyal to me. I asked him to join this hedge fund project as one of the key persons for a profit share. I described him my idea about a special testing platform designed for searching and