How to Start a Hedge Fund – Important Lessons You Should Know About

Starting a hedge fund might prove to be a sure shot way for you to achieve financial success. But trust me when I say that this is not a field that you should be venturing into lightly. Sure, the returns are great and the market can be considered to be quite safe as of now, but there are some aspects that everyone, especially the newbies should be aware of. Here are some lessons about how to start a hedge fund that every player in the market should accept and understand.

#Lesson 1

Everything takes much more time in the real corporate and business world as compared to the trading industry.

Successful trading is all about focus, discipline and concentration and you must accept that this market moves much faster than anything else you would have experienced in your time as an entrepreneur. Sure, the business world is fast paced and challenging but t is nothing compared to what the trading world has in store for you. The market moves at lightning fast speeds and delays of but a few seconds can cost you millions of dollars. No matter what happens, you simply cannot afford to divert your attention from the hardcore trading scene that will unfold in front of your eyes every day.

#Lesson 2

Investor meetings and market hours should never mix

This is another lesson that speaks of the attention challenge you will be facing when you start a hedge fund. Your only and ultimate focus should be on trading and trading alone. No matter who it is and no matter how much money they can give you, it can all wait till the time market closes.

# Lesson 3

The larger the 'nest egg' stake the manager has, with the initial start-up--the better.

As a hedge fund manager, you will be faced with various strategies to raise capital. There will be the old timers who will suggest that investors would be sceptical of such high returns and would want very low volatility. Then there will be the rebels who believe that it is only performance that matters and a high yielding fund will attract investors automatically. Think carefully and formulate your own capital strategy. This is one of the most crucial steps in starting a hedge fund. And remember, sometimes it simply makes sense to be flexible. You should focus on raising capital by changing my strategy around to suit potential investors.

#Lesson 4

Beware of scams

This industry is tough for the little guy because there are many promises and very little follow through. Not being able to advertise is very difficult and you must rely on contacts and networking for capital introductions. You have to be willing to give up your strategy and any chance at tiny yet consistent profits for a shot at the big time. Newbies learning about how to start a hedge fund should understand that the industry is fraught with con artists and fraudsters.

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About The Author

Leon McNiel is a financial expert who also likes to write many interesting articles and blogs, helping people understand the nuances and legal aspects of concepts like how to start a hedge fund, private equity funds and more. He recommends as the best name to trust or credible information and support on these issues.