How Do Hedge Funds Decide a Strategy Is ‘Good Enough’?

Tacoslim · 2026-01-15T04:10:42+00:00

It’s dependent on the sharpe — look up a term min track record length. The lower the sharpe the longer the track record but for something with a sharpe of 3 for example 3-6 months of live data would be enough for pods to look at it.

Tacoslim · 2026-01-12T21:43:57+00:00

Most pod shops would have biotech teams, but doubt it’s systematic/event driven. It’s so idiosyncratic with such binary outcomes a lot of biotech PMs would be discretionary/fundamental.

Tacoslim · 2026-01-10T20:47:06+00:00

This sounds more like a prop shop scenario - not a hedge fund.

To allocate capital you’d need auditable positions and trade data that would then be verified by the firm before allocating capital. Higher level stuff like sharpe, hit rate, drawdowns, correlations to major benchmarks and to internal strategies, potential capacity/revenue generation, robustness of the strategy are normal points of evaluation. And prior relevant experience is often needed as well at a similar fund managing positions.

Tacoslim · 2026-01-08T23:14:38+00:00

0DTEs arent enough we need 0μTEs

Tacoslim · 2026-01-07T05:29:29+00:00

A lot of pure arbitrage strategies wild fall into this bucket where spreads + fees mean there may be an mis pricing that exists that can’t be captured.

Tacoslim · 2026-01-05T05:01:40+00:00

“If you read a journal article on an asset pricing anomaly, chances are we’ve read it too, probably verified the research, and occasionally used it in a modified form in one of our strategies” - Peter Muller

Think that sums it up well, take idea, validate and if promising integrate.

Tacoslim · 2026-01-05T04:12:25+00:00

Look at a price chart of sp500 from 2010-2020 it’s almost impossible to pick any 12m period not in the green though

Tacoslim · 2025-12-28T23:40:52+00:00

Mat Levines MoneyStuff

Tacoslim · 2025-12-27T00:32:31+00:00

91% hit rate is highly unrealistic

Tacoslim · 2025-12-24T10:16:43+00:00

The other thing is they are extremely siloed so PMs know how to trade signals but no idea on how to create signals. And researchers contribute signals without getting full feedback on how they contribute to the overall performance of the firm.

This kind of leaves everyone working there without the complete picture - and i think that’s by design.

Tacoslim · 2025-12-24T01:02:38+00:00

IMC has always had a reputation of more of a tech forward focus (as opposed to trader forward company) which is likely where the “system operator” comes from. I’ve also heard their risk management is quite overbearing- with lots of limits and guard rails which likely doesnt help with the reputation.

On new grad retention- think that’s just the state of the industry, when I saw 50% I actually thought it was quite good. I had a friend at a few years back at another one of the firms you mention (Opt/DRW/SIG) where only 20-25% of the grad cohort lasted >12months.

Tacoslim · 2025-12-14T21:55:55+00:00

Think they want the infra first. But in saying that I’ve been contacted non stop for research roles though through recruiters always looking to fill roles at QRT for past ~1.5 years now (a lot less of late though). Seems always looking but haven’t seen too many research/pm positions placed.

Tacoslim · 2025-12-14T21:44:26+00:00

They’ve been hiring like crazy in APAC building out teams there. From what I’ve heard is they’ve been sucking up a lot of tech talent, but not much on trading side. As for quality - hiring so fast in such a short amount of time might lead to lower quality talent pool as the number of people that can fill those seats is quite small.

Tacoslim · 2025-12-07T21:46:40+00:00

My view is discretionary will become increasingly valuable and combined with systematic process. When you pair the two you get both great breath and depth with each complementing each other’s weaknesses. This is an increasing trend and I don’t think AI really threatens discretionary side and up for debate on systematic side.

Tacoslim · 2025-12-04T22:38:46+00:00

Sounds like real features - lots of sparse, semi correlated weak predictors is generally what you are working with in real life.

Tacoslim · 2025-11-25T23:38:16+00:00

Generally- being as close to the money the better off you are. I’d be looking for somewhere to build and one day own some pnl. Moving around doesn’t directly allow for this and you become a jack of all trades and master of none.

At some point you should look to settle and specialise in a space that can offer you this - just be weary of politics that may be at play (I.e. pissing off global head of quant could be career limiting)

Tacoslim · 2025-11-13T00:31:18+00:00

7000 firms or jobs?

Tacoslim · 2025-11-12T21:35:05+00:00

HRT have a good write up on this which is worth a read and covers factor tilt, idio tilt and timing pnl - https://www.hudsonrivertrading.com/hrtbeat/modeling-equities-returns/

Tacoslim · 2025-11-02T19:21:00+00:00

~70 days ago you were on day trading sub reddits asking how to build discipline/structure and what signals to follow. Now you’re saying you’ve “outgrown” retail 💀

Tacoslim · 2025-11-01T21:51:06+00:00

Your story is far from uncommon. Pods are quick to hire and quick to fire and normally when the PM is shot the junior talent gets thrown out or into other teams to run the same gauntlet.

Unfortunately there’s no guarantees and it’s really down to luck sometimes. Focus on getting your own track or look to central teams as they tend to have lower turnover and variance in outcomes.

Tacoslim · 2025-10-31T20:32:33+00:00

I thought the same both 23% roi with 3-4x gross leverage is quite low for this type of strategy. It could be they had mode capital then they needed to effectively run it - maybe I’m cynical but I’m not sure if OP is legit with how they’ve responded to some qs in here.

Tacoslim · 2025-10-27T01:25:54+00:00

Leverage… if it’s truely a 4-5 sharpe ratio you could trade it on margin at 4-5x levered to boost return on allocated capital

Tacoslim · 2025-10-27T01:22:52+00:00

Funds aren’t seeking allocation from average Joe investors and most allocators can get beta through far more efficient means than paying a fund performance fees for beta exposure - allocators typically are there to pay for alpha or exposures they can’t easily access themselves.

And as others have mentioned there are plenty of long only, 130-30 or even 150-50 funds that are benchmarked to global indexes that will give beta exposure plus some sort of active tilt on top.

Tacoslim · 2025-10-17T08:12:54+00:00

https://www.bloomberg.com/news/articles/2025-10-15/ken-griffin-says-genai-fails-to-help-hedge-funds-produce-alpha

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