How do the BIG BOYS trade?

Quote from saxon22:

After trying countless indicators and more methods than I care to remember, I was thinking, how do the big guys trade? I doubt, they use all those fancy tools we have at our disposal. However, if they do use them, then which ones and how? Any ideas?
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You might try contacting some of your favorite big guys and ask if you can visit them and talk trading. It works for me.

If you meet a big guy, please tell us everything.

Some clues exist: I recall reading that Global Alpha, Raptor and Renaissance all experienced equity draw downs about August 2007. I interpret the shared draw down to mean these funds use methods that share some common element(s).

A speech by Jim Simons of Renaissance Technologies is published here: http://www.elitetrader.com/vb/showthread.php?threadid=96757

These are some quotes from the Jim Simons speech that I find interesting:

"We decided that systematic trading was best. Fundamental trading gave me ulcers."

"I decided to just focus on making models."

"We understood the limitations of very high-speed trading techniques. We looked at other factors besides intraday fluctuations," he said.

"From high-frequency trading, Mr. Simons evolved to a system that focused on the long end of the frequency spectrum."

"The computer does its thing. It generates its trade, and the trade gets executed."

So Mr. Simons trades systematically, buy sell signals are generated by a computer program, and trading is long term.
 
Quote from Midas:

The reason for this is simple. You can't day trade with the size these fellows trade.

What I can do with 1-2k shares is not the same as moving 100,s of millions around. He speaks from his experience (moving large sums of money around), as with Buffet, Soros, and the like.


They have no interest in making 250k to 500k in a year day trading.

For many of us, that is a good living. In fact for most of the population that is a good income.

For the trader with less than a $1-2 million stake day trading is a very viable strategy.
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You seem to create the impression that these guys don't day trade only because you can't day trade enough size. You know, frankly, I don't think you know that.

But let's go a different direction. Perhaps these guys figured out that there is bigger money in not day trading because you can get a more favorable risk-reward on your trades when you lengthen them out.

Maybe it takes certain talents to hold positions. Patience for example. This may well be a trait that day traders don't have, and therefore, even if they are successful as day traders, may not be able to transition to hold positions.

Interesting to note that $1-$2mm was the amount that Richard Dennis started each of the turtles off with. Notice he didn't teach anyone to day trade. I submit there's a reason for that.

I keep read this term "making a living" on this site. This is what guys daytrade for......"making a good living" as you said. Perhaps you need to take a look around at how to trade to build significant wealth. One of the turtles for example is said to have made $31mm in profits.....started with a $1-2mm stake. At the rate of $500K per year as a daytrader, that would take 60 years. Something to think about.

OldTrader
 
Quote from OldTrader:

You seem to create the impression that these guys don't day trade only because you can't day trade enough size. You know, frankly, I don't think you know that.

But let's go a different direction. Perhaps these guys figured out that there is bigger money in not day trading because you can get a more favorable risk-reward on your trades when you lengthen them out.

Maybe it takes certain talents to hold positions. Patience for example. This may well be a trait that day traders don't have, and therefore, even if they are successful as day traders, may not be able to transition to hold positions.

Interesting to note that $1-$2mm was the amount that Richard Dennis started each of the turtles off with. Notice he didn't teach anyone to day trade. I submit there's a reason for that.

I keep read this term "making a living" on this site. This is what guys daytrade for......"making a good living" as you said. Perhaps you need to take a look around at how to trade to build significant wealth. One of the turtles for example is said to have made $31mm in profits.....started with a $1-2mm stake. At the rate of $500K per year as a daytrader, that would take 60 years. Something to think about.

OldTrader
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There is more than one way to skin a cat my friend. You did not get my point.

If you could take 30k out of your capital account and put it into an account that you consistently made (200k plus per year) wouldn't you do it? You can still invest the rest doing whatever mid to longer term strategies you want.

The problem with most daytrading (in equities) is that it is not scalable therefore you can not compound your returns. Until that "event horizon" (where your capital is so much that it is not significantly enhanced by daytrading) is reached why not include it.

Why not be integrative "integral" in trading. Why not do everything. Do it all. Integrate everything that produces superior returns.
 
Quote from Midas:

There is more than one way to skin a cat my friend. You did not get my point.

If you could take 30k out of your capital account and put it into an account that you consistently made (200k plus per year) wouldn't you do it? You can still invest the rest doing whatever mid to longer term strategies you want.

The problem with most daytrading (in equities) is that it is not scalable therefore you can not compound your returns. Until that "event horizon" (where your capital is so much that it is not significantly enhanced by daytrading) is reached why not include it.

Why not be integrative "integral" in trading. Why not do everything. Do it all. Integrate everything that produces superior returns.
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I believe I got your point. I think my point escaped you.

I think it takes certain talents to trade a bigger time frame. Those talenets are different than the talents it takes to day trade. So one of my points is that in all likelihood many of these so-called "big money guys" don't have the skills to day trade.

So not daytrading may not be so much a question of size...which I believe was your point. I mean after all, if we're talking the ES for instance (I wasn't talking stocks) you can trade huge size at virtually any point with no slippage. So size is probably not it. It may be a question of not having the particular skills to day trade. Or, perhaps it's a belief system that you can't get the appropriate types of risk/reward on an intraday basis.

Frankly, I don't think there are many traders who can consistently trade $30K and make $200K plus in a year. Unless perhaps you're not talking about a "real" $30K, and instead are talking about placing the $30K with a prop shop where they give you a $500K+ buying power. But $30K on a retail basis....I doubt it. If you're doing it, congratulations.

But I don't want to get off the topic regarding whether or not there are a few stray retail traders that can trade $30K and make $200K+ consistently. Rather, the point is that big money typically does not day trade, and the reason is that they believe there is a better opportunity on a bigger time scale. And frankly, there are no daytraders that I know of who have built major wealth.

OldTrader
 
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