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With a $ 10.000 account, it seems almost everybody “knows” what to do with it. With a $100.000 account most people again know how to deal with it. A $100.000 nowadays does not seems that much money.
How does one trade a larger account for example 10 million $ or 100 million $, or even more?
Does one just shift to a higher time frame, for example to a weekly time frame? Does one split it up in for example 10 parts and have each part traded by a different trader and strategy?
Is there anybody with experience that would like to share his/her knowledge? (private or public)
Can you help answer these questions from other members on NexusFi?
I can only speak for futures trading - but i think that you can invest/parking huge amounts of money in the stock market. It's hard to place the full amount in futures trading accounts, because you can't scale up unlimited due to leak of counterparties and market impact. As you say you should extend your number of instruments and use ALL timeframes. Spread Spread Spread! My solution was from going from minute based trading to range bars based trading.
But you really don't have a problem! You could ask any big financial adviser and he would show you all the worlwide possibilities to invest your money. You can only trade a little fraction of the whole amount.
Diversify to the max, stocks, bonds, currencies, and futures to say the least. but also real-estate, metals, and so on...
Such amount of money should not in my opinion be traded in its totality in the markets, rather just a small part.
With such amounts you can also negotiate interest rates on saving accounts with banks, and it doesn't harm either to block some for a guaranteed annual return even though it is much lower than you would get with trading.
Of course you can move to higher time frames, but for me the same logic holds on any amount and any chart and time frame.
Max 10% of capital on any position, and max 1% of capital risked on any instrument.
I determine my position sizes as such. And if talking of margin instead as in futures, then margin requirement shall not exceed 10% of capital per position.
Finally, I would be dedicating a fair large part of the portfolio to dividend plays and long term blue ships ownership "à la Warren Buffet" if you want. This guy really knows how to make money ;-)
Just my 0.02
Cheers
Successful people will do what unsuccessful people won't or can't do!
With large trade sizes it usually takes a team of people to keep the money fully employed.
Different strategies - a variety of strategies and timeframes so funds are employed at different price levels
Different markets - funds can be utilized around the clock, for example, on the DAX, FTSE, ASX - different exchanges at different times of the day (there is usually some market open)
Different people - with so much going on it's usually too much for one single person to trade the whole amount, so a team of people will be required otherwise performance may drop off
With that level of funds you can afford to employ Quantitative Analysts to thoroughly test the strategies. However, with testing comes a whole stream of limitations. However, with large trade sizes it's good to know you're starting with the expectation of a good system edge.
With the forex market there is no central exchange. Theoretically you can trade with different brokers accessing different liquidity pools and not compete with yourself. Because the prices slightly differ by broker the same strategy may yield slightly different price levels when strictly applied.
With that amount of capital it's a good idea to diversify yourself with more than one broker so that should something bad happen on a trade, the broker goes bust, or some other poor broker performance issue, you are not left at a moments notice moving that size of money to another broker. Time out of the markets can be costly.
As most everyone noted, diversification is the key, and we already know that (so, talking in general). But then it depends on who owns the money and what the objectives are. If it is Romney's Company, they would go into venture capital and buy and salvage rundown companies. Statistics of car junk yards are amazing; they make huge money buying a car $100 or tow it for free and sell hundreds and thousands in parts. A person I know sold his ten pizza shops and bought a car junk yard operation.
On a not so adventurous side, an Apple employee with million$ of AAPL shares is more likely looking for capital preservation with a reasonable return to beat the inflation. He may diversify into a few retirement funds that will mature on his retirement and beyond, invest in prime waterfront real estate properties (yes, they can wash away, but somehow they retain better than relative value) and use a safe chunk to trade if he has a big ego. In real estate these days, cash is king.
There is no safer place to invest money anywhere but in USA for long term, just due to the sheer size, might, and resources. Despite all the current problems, USA would be the Last survivor of any global financial collapse (provided we learn to be frugal). Europe's past colonial powers are now consuming wealth gained from their colonial era and as we see are falling one after another as their carrying capacity tips down. So, I will only invest in mighty $.
If one has that much money and wants to play it safe, one has to invest in basic things that people need. These are food, energy, basic minerals, materials, or collectively put - Commodities. That is how Jim Rogers is adding to his millions, by trading for long term, and not day trading. He spends his time spanning the world with fancy toys.
A local Fidelity or Schwab shop in neighborhood shopping center would be more than glad to draw a free plan for any one with a big chunk on money.
Hedge funds. They have a lot smarter people who can, like someone else said, engage in different investment strategies that are a lot more complicated than most people can understand or even know how to implement. They can also pretty easily swap large lots of stock with other investment houses which makes volume on stock charts look high, but if you are in the "know," it is inconsequential.
One extremely opinionated fund manager I read from time to time appears to manage accounts of that magnitude by treating currency and commodity markets like a massive range trade, presumably because in theory currencies and commodities are unlikely to "go out of business" and tend not to stray too far from some median except over very long time frames (decades). It looks like e.g. he begins acquiring inventory on some basis (i.e., via a system that may have a relatively blunt edge) in a series of 10's if not 100's of purchases when prices are seriously (historically) oversold and starts unloading what may amount to 10's or 100's of 1000's of contracts when prices inevitably begin to reverse, selling all the way up (and vice versa for short trades).
I suppose his heartfelt opinions and predilection to share them about politics, the markets and the economy stem from self confidence that in turn comes from making money
