Each market intraday have different amount of moves, ES normally have min. of two moves, hoping to capture that half. It is one thing to do a forty lot in first 1.5 hours and get all the same price as opposed to mid morning and sometimes get three different prices as this increases risk and lessons profits. Another example is Crude Oil, a markets that has several moves of $700 plus, doing a two lot has 1-4 tics slippage which isn't too bad, but when I do a ten lot as much as ten tics of slippage each. What I am getting at, a billionaire is not wanting to do a ten lot in Crude or forty in ES, he totally understands slippage is additional risk. I am thinking a 500 lot in Crude Oil might end up being over 100k plus of slippage for a day trade, not much profit left if one is already deep in the hole. I just don't think a billionaire can swing the contracts or shares of an instrument as someone with much less and make it worth while.
I read a bunch of poker books before ever playing a hand and have always been good with statistics. In the mid limits statistics is all you need. In the higher stakes it isn't enough since everyone knows them. I think a billionaire would need to use programed trading or hire a team to execute many small orders to fill his trade. e.g. if you wanted 100K shares he have have 100 guys responsible for buying 1000 each or have 100 guys responsible for buying 5 stocks each out of the SP500 if even the SPY doesn't provide enough liquidity. It would probably be a nightmare to coordinate. Seems to me that once you hit about $100K the advantage of lower relative commisions turns into a liquidity disadvantage. Anyone know how much trading teams working for brokerages typically trade for? I would assume it would need to be around 500K for stocks or less comparable for more volatile instruments to make enough to cover their salary.
lack of liquidity is the answer to your original question really. With a billion dollars even beyond finding multiple(hundreds?) edges to spread things out and get some liquidity, you would also quickly run into the problem of your own size making alot of those edges vanish. At some point too there is just diminishing returns on the risk your taking, just safer things to do with your money than trade. Just like if someone gave you 50 million dollars and you could get in on a 5/10 million dollar blind game...no matter how good at poker you are, the possibility walking away with only 5 million is just not worth the risk of possibly gaining 100 million when there is already so much you could do with 50.
Seems like the bottom like is it really is lack of liquidity and not lack of opportunity for consisent earnings. I remember a few years back after buying Michael Parness' Trend Trading book one of his telemarkers tried to enroll me in his course. PArness is famous for turning $30K into 7 million in one year. To me, with the millions of traders out there it could've been attributed to luck and if his system was really so effective he would be a billionaire today. The reality is the lack of liquidity wont allow him to make the amazing returns he was making when he had only $30K. Those kinds of returned obviously can't be acheived by trading the SP500 unless you're making hundreds of trades a day.