How to Deal with Large Sums of Money?

[Trader J 10]

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)

[Obsidian 10]

...

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?

....

 

I dont think I would try to scalp with that much money

[TheDude 10]

Generally yes - go to higher time frames which is where the real money is to be made anyway.

 

Also diversification. I dont mean stocks, bonds, cash, gold, etc, I mean if you want to go long oil, you buy futures, you buy forwards, you buy swaps, you buy calls, you sell puts, you buy shares in BP, Shell, Total, you trade anything that will give you exposure to rising oil prices with a good correlation. Of course it's a bit more planned out than slamming any market you can think of - you need to think of correlations, volatility, liquidity, open interest, average daily volumes, etc.

 

Its surprising how much extra alpha you can generate over the course of a year with careful execution.

[steve46 12]

Well I was going to ignore this, but I have to say something

 

I thinks it wonderful to assist folks asking for help...good job...

 

Now to put things in perspective...while its POTENTIALLY profitable to place a number of positions in related financial instruments...when you do this, you incur risks....and unfortunately those risks are "non-linear" (especially if are talking about options)

 

Once again not interested in putting on a seminar...but the short version is as follows

 

If you learn enough to know that you can profit handsomely by placing a series of related positions....then you are a danger to yourself....what you need to know IN ADDITION is how to characterize the risk (all the risks that you are exposed to) and "what to do" in case things go south.....are we clear....? (probably not)....

 

OK so let me make it "crystal" clear....when you put on a series of correlated investments that include options, (especially if you sell options) you have put yourself in a position whereby you can lose not only your entire position, but much more than that.....are we clear now....?

 

No personal criticism intended Dude....one hears the same recommendation all the time from others....and why not...risk is how we make money....for the orignal poster, just be clear on what your risks really are, and learn how to manage them first....otherwise at some point you will find out what the word "surprise" really means.....

Edited October 23, 2012 by steve46

[wrbtrader 10]

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)

 

Reality check...an individual with $100 million dollars would not be trading with it. In contrast, he/she would retire and take it easy for the rest of their life. Further, if they do decide to try to use "a little" of that $100 million...they would most likely hire someone and that someone would recommend art collections and such.

 

I think the ceiling for an individual trader is $10 million or less. That's the amount where the trader would still consider trading. Thus, anything more than that...the individual is thinking of other opportunities that's not trading related, early retirement and pleasures.

 

With that said, with a trading accounts LESS than $10 million, most would only use a small portion (e.g. 250,000 or less) for trading purposes.

 

The rest of the money, some smart person will sniff out the trader...get married...then divorce and take whatever the trader had left that hadn't already been spent on love. That's reality. :rofl:

[Colonel B 10]

This whole concept is putting the cart before the horse. After you are successful in trading you realize that you don't need 10 million or 1 million or 100 thousand in a trading account to make a damn good living. In a futures account anyway.

[TheNegotiator 13]

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)

 

It depends. There are people or companies who chose like you suggest to 'spread' their risk by backing multiple traders/strategies. The trouble with this is trying to get a level of independence between them. I remember a big prop firm in London who had a lot of different traders but were they really doing drastically different things in the market? Apart from anything, from what I knew many of them were trading the same or similar products with size.

 

If you're just a really big trader or even otf (other time frame - the guys trading as pointed out already, over weeks and months) then I guess your major concern is your ability to enter and exit the markets. Size moves markets and traders look to piggy-back on that size. So getting involved at price levels where there is likely to be enough support or resistance to get in or out without moving the market greatly or where there's likely to be greater trading activity is likely to be beneficial.

 

Either this or you pay some quants and programmers to design some shit hot HFT and hope it doesn't do a Knight.:doh:

[MightyMouse 12]

This isn't advice you can attain from individuals who not have a large sum of money.

[BlueHorseshoe 10]

This whole concept is putting the cart before the horse. After you are successful in trading you realize that you don't need 10 million or 1 million or 100 thousand in a trading account to make a damn good living. In a futures account anyway.

 

What would you suggest as a minimum to make a living trading futures with normal retail leverage?

 

BlueHorseshoe

[Obsidian 10]

This isn't advice you can attain from individuals who not have a large sum of money.

 

:rofl: that is absolutely right in deed

[Qiman 10]

This whole concept is putting the cart before the horse. After you are successful in trading you realize that you don't need 10 million or 1 million or 100 thousand in a trading account to make a damn good living. In a futures account anyway.

 

Not to steer the thread away from its original thrust, but I am curious as to how much you think a skilled future's trader needs in account to make a damn good living, based upon your background in prop trading, etc.

[TheDude 10]

Well I was going to ignore this, but I have to say something

 

I thinks it wonderful to assist folks asking for help...good job...

 

Now to put things in perspective...while its POTENTIALLY profitable to place a number of positions in related financial instruments...when you do this, you incur risks....and unfortunately those risks are "non-linear" (especially if are talking about options)

 

Once again not interested in putting on a seminar...but the short version is as follows

 

If you learn enough to know that you can profit handsomely by placing a series of related positions....then you are a danger to yourself....what you need to know IN ADDITION is how to characterize the risk (all the risks that you are exposed to) and "what to do" in case things go south.....are we clear....? (probably not)....

 

OK so let me make it "crystal" clear....when you put on a series of correlated investments that include options, (especially if you sell options) you have put yourself in a position whereby you can lose not only your entire position, but much more than that.....are we clear now....?

 

No personal criticism intended Dude....one hears the same recommendation all the time from others....and why not...risk is how we make money....for the orignal poster, just be clear on what your risks really are, and learn how to manage them first....otherwise at some point you will find out what the word "surprise" really means.....

 

Sorry Steve, I dont quite get what your driving at - youre saying you've got to understand the risks right? I would have thought that was gratis. I mean you're unlikely to have $100m if you dont have a pretty good awareness of risk right?

[TheDude 10]

Not to steer the thread away from its original thrust, but I am curious as to how much you think a skilled future's trader needs in account to make a damn good living, based upon your background in prop trading, etc.

 

Define a 'damn good living' please?

 

a nice house, 4 houses round the globe.

2 cars, 20 cars?

 

You may have read the story in the papers about a trader who retired recently at 41 with 420 million. Apparently, despite his wealth, mansions around the world etc, he still wasnt happy.

[Qiman 10]

Define a 'damn good living' please?

 

a nice house, 4 houses round the globe.

2 cars, 20 cars?

 

You may have read the story in the papers about a trader who retired recently at 41 with 420 million. Apparently, despite his wealth, mansions around the world etc, he still wasnt happy.

 

Yes, that phrase can mean just about anything! If you noticed, I was repeating the phrase "damn good living" from Colonel B's post, I was leaving it up to him to define, since he was the one that used it.

 

I suspect that my definition would be less money than many posters, I don't need some huge amount of money to be happy, much more important is having control over my life and my time! I've known many very wealthy people who are miserable, including one half-sister.

 

I look forward to Colonel B's reply regarding capital, for I hear figures all over the map regarding how much capital is realistically needed in the future's market. I have my own opinion, but want to hear some additional corroborating evidence, based on actual trading returns with a certain amount of capital over a sustained period of time.

[edgararakelyan 10]

If I had 100 million I'd probably put my capital not high dividend stocks and collect funds and have fun or attempt to become a billionaire, I don't know lol I'm trading a bit less than 8k.

[Cory2679 11]

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?

 

I met a guy once who manages almost $5 billion (and has well over $100 million himself), the majority of which is in a futures program. They trade a lot of markets (indices, interest rates, currencies, metals, energies, and agriculturals). Their average hold time for a trade is about a week.

[pushpacares007 10]

Hi Trader J,

 

You can do following things.

 

1) Divide your capital into 5 parts of $2 lac

2) Diversify your investment among different asset classes like Equity, Commodity, Real Estate, Fixed Income Plans and Retirement Plan

3) Breakdown your Equity Capital into three categories as Low risk, Medium risk and High risk

4) You should use your High risk capital for Intraday or scalping, Use your Medium risk capital for Short term trades ranging from 5 days to 10 days and use your low risk capital to invest for medium term period of 3-6 months by following Warren Buffet style.

5) Invest your Commodity capital in parts i.e make a rule that you would buy Gold whenever it dips 5%-10%. Remember being disciplined is very important.

6) Invest your Real Estate capital in buying a peace of land or invest in some business which can give you regular returns.

 

Do let me know if you need any other help.

 

Have a nice day..

Pushpa

[Predictor 11]

First, you have to determine your goal. Growth or preservation or realization? From this you can start to make some decisions....

 

In general, traders with large sums of money are rightfully more concerned with preservation and as such they'll be more risk averse. Strategies generally involve diversification and risk reduction. In order to understand this, look up the utility value of money... if you have 100 million then gaining an additional 100 million isn't going to be worth as much as the first 100 million. As such, most people will be more inclined to protect the first 100 million then to gain the next 100 million.

 

In actuality you'd need a lot of money before you couldn't day trade in the futures markets.

--

Curtis

Home - OrderFlowDashPro

 

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)

[Ammeo 10]

If i had a million $ ,i would have invested it in multiple investments ..20% in real estate ,20% in hedge fund or mutual fund, 20% in stocks ,20% in options and 20% in forex/commodities...