This is, perhaps, the only place where yuo can be a market maker vs a market taker. In other words, buy at the bid and sell atthe offer. If yuo lease or own an exchange seat, transaction costs are, or at least used tro be the lowest. Been off the floor for several years, now so things have probably changed a bit (or more than a bit!) now.
Used to work at the NYMEX in the options pit for options in metals as a clerk. they dont use charts or anything of the sort. they just give what the markets and the brokers give them. some crazy things happen down there. i saw two new young guys try and come in and make a living there. one guy they all hated, and he never was given any trades or anything. if he was trying to buy something, theyd either give it to someone else or just wouldnt sell it.
the only pits where there is action now is ag options, all financial product pits have been made useless with electronic trading, the days of front running and easy money is over. Sad to see that since I wish I would have been in the pits here in chicago when the orderflow was moving. Futures pits and the NYSE pit are two different animals don't get confused about that. I know a lot guys who made a lot of money before my time trading order flow in the pits.
hi, i know this is a pit party, but i am very glad the pits are history or rapidly becoming so. as a retail trader there was a terrible delay in fill reports. energies were end of the day. made a pit pork belly trade yesterday, that took 2 hours to report. i know the pits were good for institutional investors, but for me its "good riddance". svr
As a former pit-trader in NY, I can honestly say that Pabst hit the nail on the head with his summary above. There is nothing like seeing the pit get loaded up on the "short-side" while strong fund buying comes in via floor brokers, only for cash to surge a few moments later and "locals" go screaming bloody murder trying to take back their "shorts" from lower prices. Been there many times before. Done that. Not fun.
Yes, but let's be clear about the NYMEX . . . it is mainly a "spread" market and locals trading "outright" long/short is extremely rare.
In order to be a "pit" trader otherwise known as a "local" you have to have a certain personality for it, in order to survive day in, and day out. It requires a tremendous amount of mental, as well as physical stamina.
Very true. The pit is FULL of information. You just need to be able to have a super quick brain ( and somewhat hyper ) personality in order to constantly "scan" what is going on. You must be able to PROCESS a lot of data and behavior very quickly . . . to that point where you simply REACT to what is happening, rather than being caught like a "deer in headlights" and spending far too much time "thinking" things through. Either your reactions in the pit become second "nature" to you, or they don't. I once stood next to a guy that was a total "rug-rat" . . . meaning that he was a pure scalper that was only in a trade for ONE SINGLE TICK. If he got an "edge" and a broker sold him 5 lots on the bid, he would immediately offer them at the current offer, NO HESITATION or questions whatsoever. He made a decent living keeping it simple, and just trying to "chisel" one tick out of a trade many times a day . . . Not bad for a former Irish accountant from Long Island that did my taxes back in '87. He eventually moved over to the NYMEX in 1989 and became a "legend" in the Natural Gas pit. The guy would go home with 200 lot positions, which is absolutely insane because anyone that knows about the futures markets knows that Nat-Gas is without a doubt the most volatile Gorilla on the board. A multi-millionaire several times over.