Fair warning - this is a VERY long post. It’s been almost 15 years since I left the trading floor, and I still dream about it! I count the 20 years I spent on the trading floors of the Chicago Board of Trade and the Chicago Mercantile Exchange (the Merc) as among the best years and also the most miserable years of my life. They were the best years because I loved the trading floor. I loved putting on my trading coat and walking onto the trading floor early in the morning. I loved the sounds. I loved the sights. I loved the buzz in the air. I loved the action. I loved writing trades on my cards. I loved making winning trades. And the laughs! Oh, good Lord, the laughs! They were endless. I always said that being on the trading floor was like being in high school but with money. And yet those 20 years were also among the most miserable years of my life. Why? Two reasons. Inside the trading pit, the ugliness of human greed manifested itself. There were no friends in the pit. I am not being melodramatic. People who I believed were my friends (or at least close acquaintances) were willing to steal trades away from me, and anyone else for that matter, at every opportunity. In addition to having to beware of “friends”, there were two order-filling brokers who made every effort to trade around me. Their almost daily exercise of not including me on trades where I was actively providing them with bids and offers, with size, made for numerous conflicts between them and me. In one instance that I remember vividly, the two of them traded around me even though I was the only one giving them a bid and offer just after the release of an economic report. That trade would have been an immediate $10,000 dollar winner for me. Those two individuals made my life miserable. The second reason that my 20 years on the trading floor were among the most miserable years of my life was because I was always mad at a nickel for not being a quarter. What do I mean by that? All of you traders out there know exactly what I mean. No matter how much money you made on a trade, you focus on what you left behind rather than what you raked off the table. This feeling was especially true on one of the most memorable days of my life. On my best day as a trader on the trading floor I made almost $500,000…and I was pissed! It’s a story worth retelling. It was the first Friday of September, 2004; unemployment and non-farm payroll Friday. I traded in the front month Eurodollars (ED). I was a top-step trader and was probably among the top five traders in the front month Eurodollars in both trading size and profits. By August of 2004, electronic trading had gained a toe-hold at the Merc. Noticeable trading volume had migrated out of the pits and onto the trading screen. Because of this, monitors were installed inside of the ED trading pit displaying the bids and offers in the electronic market. The bids and offers were shown five deep on both sides of the market. There were enterprising brokers who stood in the ED pit with headsets on who could access the electronic market for a brokerage fee. If any of us in the trading pit wanted to put in an order to be executed on the electronic market, it could be done for a price. On this first Friday of September, 2004, we all took our spots in the trading pit. The opening bell rang at 7:20am and as usual there was little very trading ahead of the 7:30am release of the unemployment and non-farm payroll reports. Non-farm payroll came out bullish for the ED market, but only mildly so, at least according to my interpretation. Even so, the market immediately rallied hard from the 40s into the 60s. I quickly looked at the point and figure chart I always kept updated in my hand and saw that 68 was a good selling point. I raised both my arms and shouted, “AT 68!” The broker across the pit from me signal that he wanted to buy 1,000 contracts from me. I nodded yes. The broker next to him bought another 25 contracts from me. I was short 1,025 ED contracts at 68. That’s $25,625 per tick. Before my pen could hit my trading card to record these trades, the electronic market rallied up to 75…and then plummeted. I had not finished writing the third “0” on my card to record the 1,000-lot trade when the brokers behind me were leaning over screaming in my ear, “AT 55! AT 50! AT 45!” The ED market was in a free fall. The brokers behind me knew I was short and they were hoping I would buy from them. I could barely get my bearings. I quickly looked up at the monitors and saw that the offers in the electronic ED market were 10 ticks lower than the offers in the pit! The offers on the trading screen were in the 30s! I jumped down into the middle of the pit and grabbed the broker with the headset who had access to the electronic market. I shouted to him, “BUY ME 500 at 40!” “But the market is at 35!” he shouted. “JUST PUT IT IN!” I yelled. Even in my disoriented state, I knew that a buy order, if entered above the lowest offer, would gobble up the lowest offers first and work its way up the price chain until it was either filled or had bought all it could up to the entered buy price. Unfortunately, because the market was so volatile and thin, my 500 lot buy order was not completely filled as it gobbled up all the offers up to 40. In the chaotic minutes that followed, I bought what remained of my 1,025 ED shorts all the way up to 49 in both the pit and on the electronic market. Once I was certain that I was flat and that all my trades were checked and confirmed, I walked out of the ED pit and off the trading floor. With my trading cards and filled orders in hand, I mentally tried to calculate how many ticks I had just made. I was in a daze. I could not even grasp what had just happened. I found a desk where I could be all alone and tried to calculate the end number. I had to do it three or four times I was so shaky. In the end, I had made nearly half a million dollars. There is only one word I can find to describe how I felt - numb. And yet within five minutes of calculating that I had just made nearly $500,000 dollars, I started second guessing myself. “Why did I chase the market all the way back up to 49 to cover my remaining shorts?!” While 1,000 ED contacts was a huge position for me, I was only short 500 or so (all the way up at 68) when the market bounced from the mid 30s up to 49 before it headed back down again to 39. I was frequently long or short 200 to 300 ED contracts at any given time in the pit. But I definitely panicked by chasing the market up. Why was I in such a rush to close out this trade? Why did I chase the market all the way up to 49? That cost me at least 100k. This is what it means to be mad at a nickel for not being a quarter. Don’t tell me you haven’t been there. It turned out that that particular day was the beginning of the end of my trading career on the trading floor. Slowly but surely, the ED trading volume continued shifting away from the pit and was being transacted on the trading screen. If I wanted to stay in this business, I had to reinvent myself as a screen trader. I left the trading floor for good in 2008 after having hip replacement surgery. I then began the transition to trading on the screen full time. To be honest, I hated it. I was bored, I was impatient, I felt like I was wasting my life. But what else was I going to do? I had been on the trading floor since I was 19 years old. I was 40 years old and had no other experience. My resume could fit on the back of a business card. I had other interests and things I wanted to pursue, but I had a wife and two kids to support. Yes, I had 7 figures in the bank. But I had no cash flow. There is a big difference between cash on hand and monthly cash flow. It’s the difference between spending your savings every month and spending your earnings every month. One is sustainable as long as the earnings keep coming in. The other is sustainable as long as you don’t run out of money. At 40 years old with a comfortable lifestyle that I was in no hurry to drastically change, I was not ready to draw down our savings to pay our bills. I knew I wanted trading to continue to be a part of my professional life. But I needed a new paradigm. Then the housing market crashed. I had extended family that had been in the construction business and I dabbled in real estate with a rental property and a fixer upper over the years. But after the crash I saw an opportunity to put my money to work to create cash flow. My brother-in-law owned a dozen rental properties that he accumulated over the years. While the price of the properties in the suburb of Chicago where he owned his properties had dropped by more than 60%, the rents stayed virtually unchanged. I saw a great opportunity. I went on a buying spree and bought five properties in the area he owned. Then I bought six more front doors (a three flat, two single family homes and a town house). Because of how low I purchased these properties, they have amazing ROI and great positive cash flow. My new career away from the trading floor had begun. But before you think of me as a complete genius for buying all these properties on the cheap after the housing crash, I also bought into a commercial property in 2009 that cost me over $330k to get out of. That’s a story for another day. But I’ll just say that this loss turned into the beginning of my next business, a commercial and residential cleaning company. In the agreement to rid myself of this albatross of a commercial property and its nine other owners, I had to pay off my share of the build-out and mortgage. Even so, I was able to negotiate that I would keep the lifetime cleaning contract for the building. I didn’t let the fact that I did not own a cleaning company stop me from doing so. I just knew what they were paying for ongoing cleaning and saw this as a way to recoup my loss over time. A quick Illinois S-Corp filing later and I was the proud owner of A-Pro Cleaning Service, Inc. I’ve spent the past 12 years growing and managing the cleaning company and managing the multiple rental properties my wife and I own. But I have also been watching the futures markets on a weekly, and often daily basis. My heart still longs for trading futures. As such, I have uncovered what I believe is a very reliable high probability trade indicator that is a derivation of the traditional head and shoulders formation. This formation only transpires six to ten times per year in the futures markets that I pay attention to. And that’s just fine with me. I have no desire to sit in front of a computer screen day in and day out. While my businesses only require 10 to 15 hours per week for me to run them, I do not care to spend the rest of my hours of the week staring at my laptop. I just want to get back in the trading game with six to ten high probability trades per year. But I am more convinced than ever that accountability needs to be a part of my trading plan. Going from a floor trader with no employees to managing and growing a cleaning business with a team of employees has led me on a learning journey. Books, seminars, podcasts, mastermind groups and YouTube have been my business school. One of my favorite books is “The 4 Disciplines of Execution”. In this book I was reintroduced to the power of accountability. I say reintroduced because years ago, not long after leaving the trading floor, I wrote a book called, “The 10 Biblical Principles of Trading Success”. (To get a better understanding of how my Christian faith intersects with trading, please read my previous Trade 2 Win article, “Does the Bible Oppose Trading?”). In doing research for my book and the accompanying workshop that I developed and taught, I came across a study about accountability that fascinated me. And just recently, I read an even more powerful, peer-reviewed, in-depth scientific study which concluded that with proper accountability, you can increase the likelihood that you will reach a well-defined goal to 95%. That is insane! I am fully convinced that accountability is something I absolutely require if I am to wade back into the trading pool. Reflecting back on the months that I spent trading on the screen after leaving the trading floor, I am keenly aware of the importance of accountability. And truth be told, I have already placed a few trades with this new system of mine and have already lost several thousands of dollars for lack of discipline and not taking it seriously. If I am to get back in the game, accountability will be key. Having a small group of traders to whom I have to give a weekly account as to whether or not I stuck to my trading plan, despite the fact that my plan only has six to ten trades per year, will absolutely increase the likelihood of my trading success. Let me speak a moment about the history of “The 10 Biblical Principles of Trading Success”. When I started trading on the trading floor in 1989, the Internet as we now know it did not exist. There were probably less than a dozen books written about trading, none of them written from a Christian trader’s perspective. And if there were any Christians on the trading floor, they all did a good job of camouflaging themselves. It seemed easier to find a balloon in a porcupine farm than to find a fellow believer on the trading floor. If I wanted to find out how the principles of Scripture intersected with my desire to be a successful trader, I was going to have to find that out on my own. As I searched the pages of Scripture, I continued to find passage after passage that directed me both towards success in general and success in trading specifically. These passages became principles that shaped my attitudes and actions which led to my trading success and ultimately became the basis for the “10 Biblical Principles for Trading Success”. So here is what I am asking; are there any traders out there who feel the same way? Are there any traders out there who share my belief that there are Biblical principles for success? Are there others of you out there that see how accountability can be a powerful driver towards trading success? I am looking for five to ten traders who would be open to meeting virtually once per week. Our meetings will not be to reveal trade secrets or account values, but to encourage one another and to hold one another accountable to our respective trading plans in order to propel the likelihood of trading success to 95% through the power of accountability. I have nothing to sell you. I have no seminar, no workshop, no trading system for sale. Nothing. In fact, I have something to give you. In preparing to come back into the trading space after all these years, I have dusted off my book, “The 10 Biblical Principles of Trading Success”. I am in the process rereading it and revising it. I will gladly send a free copy to anyone one who emails me a request for it. I should have it re-edited by the middle of November and will likely self-publish it. I am not sure how long that process will take, but I will gladly send a copy along to those who ask. I am so excited to get back into the trading arena!
%% Good ''long' + short post LOL Dave Ramsey proves what you proved;[ radio REALTY, funds........] I'm more a reader, trader investor than a mixer or writer . My typing school teacher would most likely love your typing skills; she seemed worried about my ''turtle nickname'' Charge to much for grain[greed] + the people curse you ; sell it @ a fair price + you will be praised-King Solomon/ Proverbs 11;26 CEV[ERV]. Great Proverb + principle for any market...... Thanks Do you have any more links , could not get that link to work; + i like the 10 book gift
wow, ED chart looks retarded as hell. Nothing I ever seen in my life. It's like it just goes up flatlines then goes down. I bet you wished you traded it earlier this year lol
Hilmy, you posted the chart. Does his story about trading the ED futures in the range of 40to60 makes sense in light of the chart?
This post is way too short for me to read. If it was longer, I'd consider reading it. Maybe try putting a little more effort and time into your post next time.
Keep in mind that the front-month Eurodollars are the equivalent of the 30 day interest market. So when the short end of the yield curve was locked in at virtually 0.25% for all those many months, the EDs barely moved from April of 2020 to December of 2021. As soon as the fed started to indicate that it was going to raise rates on the short end of the curve, you see the steep sell off (inverse relationship between rates and ED price).
For clarity, 40 and 60 were not the "handle". In this post I am recalling the last two digits of the price that traded. The full price would have been something like 9640 and 9660. I honestly don't remember what the handle was. But I do clearly recall the last two digits of the price that I sold was 68. I recall the other prices as well. I clearly recall that the market sold off into the 30s before bouncing up to 49, and then selling back off to 39 after I covered all the remaining shorts up to 49. Some things you just don't forget on the day that you made $500k.