There are issues with execution since liquidity is low these days. You have to find a broker with good execution algos and dark pool penetration. Diversification is a must to reduce equity variability. Trading simultaneous long and short positions in market neutral mode reduces exposure to market risks. Most large AUM funds trade long and short with fundamental or technical signals. There is a good introduction in this article of an expert I follow.
Changing techniques when going from $100k to $100M
- Thread starter kongkalikong
- Start date
Darks pools is where the heavy action takes place with lots of liquidity available at agreed prices.
However, not sure but entry into dark pools starts at $25M account size.
I am very spotty now on abilities to program, one too many brain procedures messed that up. So through the years been hiring very bright college students who care more about how to pay rent than whatever they doing for me, and besides none get the full systems, just parts and I can fully understand the programming after done. So past 8 years, been able to a number of ways to get orders filled without showing my hand-not that I am pulling that size that anyone would ever notice. But trading for me always been about the game, how to become more secretive of just plain hiding, it has become very fun to then automate my concepts. I been this way all though my life, I really don't know why nor know why I must never quit no matter how many failures within a project and always keep working till it is solved. I do know "trying" to accomplish, much more is gained throughout life than sitting on the couch, and failures are opportunities to try again differently, and a few times failures are very very rewarding. I often wonder if our brain senses patterns within patterns when we are trying to discover an area we are not expert level as yet. I often think we do not think before backtesting of enough questions to ask of the data.
I use to think I knew years ago that diversification was a way to reduce overall risk, but we all have to come down to reality. I don't think it is possible of remaining a one man team and attaining one billion dollar account trading. For me it is all about hedging, if I can't hedge it, I am not buying it, same goes with selling short. I don't understand why so few people do not hedge or perhaps they are secretive about it, and that is fine. I have never done the math on "how much" in theory one could buy of perhaps GE or Apple and be able to hedge without wide spreads. Hedge funds certainly don't advertise how many stocks they have in portfolios, but often wondered, by trading less number of different companies be able to continue hedging principles, and hedging does not have to be done only by options, but biggest problem always is liquidation.
Doing couple hundred options on most heavier stocks is eaten away, just wonder how 10,000 options are exited without giving up mucho.
From 100K to 100M, the ratio is 1000 times.
1) If you find(invent) a trading logic of annual 20% compounded, then it will take
38 years by 1.2^38 = 1020.675
2) With annual 15% compounded, it takes roughly 50 years by 1.15^50 = 1083.657.
Please recall that traders such as Buffets kept annual 20% for 50 years to show 9100 times by
1.2^50 = 9100.438
Which annual rate in percent did you find so far in your logic?
If you find annual 15% IN THE LAST FIVE OR TEN TEARS, then you may be able to do that. (30 to 80)
1) If you find(invent) a trading logic of annual 20% compounded, then it will take
38 years by 1.2^38 = 1020.675
2) With annual 15% compounded, it takes roughly 50 years by 1.15^50 = 1083.657.
Please recall that traders such as Buffets kept annual 20% for 50 years to show 9100 times by
1.2^50 = 9100.438
Which annual rate in percent did you find so far in your logic?
If you find annual 15% IN THE LAST FIVE OR TEN TEARS, then you may be able to do that. (30 to 80)
It's been 400 years since stock market is open in Netherlands.
If there was a SINGLE logic which kept > 20% for THE 400 YEARS, then the trader takes ALL THE ASSET IN THE WORLD. Try 1.2^400 which is > than current world population. Buffet and Gates should be broke now.
Therefore there was no such logic >20% for 400 years so far and MOST LIKELY there should not be forever.
PS) If you run a credit card company with 20% APR and with no customer's default, then you (your family) will be the best in 400 years.
Likewise, if you (and your family) borrow money from credit card with 20% APR forever, then your family will be broke definitely.
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Please note that
1.12^6=1.973823=2 and 1.2^4=2.0736=2
If someone tell me that "My asset increase 16=2^4 times in the last 24 years" and "Mine is 32=2^6 times now in the last 24 years" respectively, then I can tell you "You spent 24 years with annual 12% compounded" and "You spent 24 years with annual 20%"
For example, you started with 100K to make 1600K with 12% and you with 100K to make 3200K with 20%, respectively.
Correct me if there is calculation error.
1.12^6=1.973823=2 and 1.2^4=2.0736=2
If someone tell me that "My asset increase 16=2^4 times in the last 24 years" and "Mine is 32=2^6 times now in the last 24 years" respectively, then I can tell you "You spent 24 years with annual 12% compounded" and "You spent 24 years with annual 20%"
For example, you started with 100K to make 1600K with 12% and you with 100K to make 3200K with 20%, respectively.
Correct me if there is calculation error.