Hedge Funds: Understand Who You're Trading Against

💰Hedge funds manage $3.2 Trillion💰

They are the smartest and most secretive group of investors and hire world-class talent to move around and grow huge amounts of money every year.

Out of these $3.2 Trillion, 10% belongs to hedge funds that run purely systematic trading strategies.

Realistically, closer to 30% of all of these assets are solely managed by automated computer programs.

Hordes of mathematicians, physicians, engineers, and computer scientists work tirelessly to innovate with new algorithms and faster computers to stay ahead of the curve.

The remaining 70% of assets are managed by the most experienced and well-connected discretionary traders in the world.

They have access to the CEOs of the biggest companies as well as the most important decision-makers in the world.

Hedge fund managers top the list of highest-paid people on Earth every year, some of them with annual compensations in excess of $1 Billion.

They are the Masters of the Universe.🏆

And every time you place a trade on your brokerage account, one of them is likely on the other side of your trade.

And all of this completely under the radar. Go to any hedge fund’s website. You’ll be lucky if you find an address and a phone number.

How do you expect to succeed in trading if you don’t fully understand the money-making machines you may be trading against?

📉80% of Day Traders quit within the first two years.

📉40% of Day Traders trade for less than a month.

📉Only 1% of Day Traders are able to predictably profit, net of fees.

📉Brokerage firm IG reveals that 78% of retail investors lose money on their platform.

📈 Meanwhile, Hedge Fund assets under management have skyrocketed from $1.4 Trillion in 2011 to $3.2 Trillion in 2020.

📈Hedge Funds rake in billions of dollars in fees because they know how to trade and make money consistently.

Do yourself a favor and study the greatest at this game.

Day trading is like jumping in an ocean infested with the smartest and most blood-thirsty sharks.

Sure, you may survive by chance for a while but unless you know how sharks think and how you can avoid being their prey, you WILL get eaten up at some point.

Well, I’m Chris Louis, I've worked in hedge funds all my career and this book is your primer on how these sharks think.

This book comes with a great number of resources to expand your knowledge past the boundaries of this format.

Here is what’s covered in this book:

✅🔑The financial markets traded by hedge funds

You may know stocks and bonds but there are countless other markets for investors to make money. Hedge funds, being the most sophisticated of all investors, often use all of them at the same time.

✅📊What makes markets move

Your stocks are up 3% today, down 4% tomorrow. In the meantime, the price of a barrel of crude oil remained flat at $52.

Understand what drives markets and creates the movements that every investor wishes he could profit from.

✅🏢IPOs, Mergers & Acquisitions, Spin-offs

Companies go public, private, get acquired, break off parts of themselves.

These corporate events have a big impact on single stocks and markets as a whole. Not understanding the mechanisms behind these concepts prevents you from getting an accurate picture of the market. A certain type of trading strategy makes consistent money looking at these events.

✅💰The different market players and how they get paid

Every type of player has its role in the market and not every other player succeeds when you fail. Understanding what each player does and how they get paid is a serious clue as to how they will behave in different conditions.

✅💰Why bankers and hedge funds make so much money

This question is at the heart of the glamorous myths around investment bankers and hedge funds. They make billions per year but most people have no idea why. They only see the yachts, the houses, the lavish parties. Get in on the compensation secrets of these players.

✅🙁Why retail traders lose so much money

That’s really the million-dollar question. Why does the average trader lose money constantly while the average hedge fund mints new millionaires every year? If you don’t understand the huge disadvantage that you have as a retail trader, you have no hope of ever overcoming it.

✅🔫The multiple weapons of hedge funds

Hedge funds are money-making machines but they’re also money-spending machines. They spend tens of millions of dollars every year to acquire new weapons to tame and predict the markets. While you may not have access to the same scale of weapons, you can get an edge by at least looking in the same directions as they do.

✅📝The different trading strategies used by hedge funds

All hedge funds will claim they’re doing something completely different from their competitors. The truth is, most of their strategies are very common among hedge funds and some of them are very well documented if you know where to look.

Find out about many different types of strategies and how you can implement them for yourself

✅⚡The different frequencies of trading

Some market players hold positions for less than 1 millisecond, others hold one stock for decades. Understand the different speeds at which this game is played and what could be accessible or appropriate for yourself. The highest speeds are way out of reach of retail investors but understanding how the game is played at speed of light is important.

✅🖥️Systematic vs Discretionary Trading

What if you had a computer that made automated trades for you and made money consistently? This is the goal of systematic trading. Around 30% of all hedge fund assets are run systematically. You don’t want to be oblivious to such a growing threat.

✅👀How to find out about the current bets of any hedge fund

Hedge funds are among the most secretive companies in the world. But they do let some information out. You can find out about the current bets of almost any hedge fund. You just need to know where to look.

✅💵How to get a job at a hedge fund

Hedge funds tend to offer amazing compensation packages, which is why it’s so difficult to join. Learn about how you will be interviewed in a hedge fund and what kind of questions they will likely ask you. Many non-trading positions in hedge funds offer in excess of $500,000 per year. You don’t need to be a star trader to cash in at a fund.

And much more...

This is my first ever e-book so, as you can tell, I packed it with everything I’ve learned from years of working in the hedge fund industry.

In all these sections, I have taken the time to add small anecdotes and stories that will give you more color as to what life is when working for a hedge fund.

I have also included many book references (Amazon Affiliates) so you can dig deeper into the parts that you’re most interested in.

All these books are found on the desks of many hedge fund traders and are true sources of knowledge and techniques for practitioners.

My team and I own most of these books in our bookshelf and often go back to them when we need clarifications.

You can find out more about my background in the About Me section!

If you have any questions about the book, hedge funds or anything relating to investments, feel free to drop me a line on Twitter @HedgeKid.

If your question covers an aspect I have omitted, I will update the ebook and you will be credited.

Also, sign up for my weekly newsletter!

Every week I choose one or two of the most important financial news of the week and break it down to explain how this may affect your life, your investments or simply to spread knowledge.

I also include a few of the big news about how hedge funds are doing, their latest bets, etc.

I hope you enjoy it!

Get in touch if you have any questions or comments and I’ll sort you out!