Very difficult to get into the Chicago FO-pits. The metals and softs in NYC are an easier hook-up, but it's still tough. Forget about CL. The paper in the NY softs is one way most of the time, but still money to be made on the occasional spread order. The paper in metals is balanced [save for copper], but the markets are tight, and the pit is packed. One of my partners is a former PHLX and CBOE local who simply hung-around the NYMEX until he found a backer. Understand that he took the train from Philly to NYC daily until he got staked. You're competing with a lot of committed individuals. The only floor-edge is in floor-traded, single listed markets, hence the demand for a spot in these FO-pits. I don't know your situation, but you can avoid the hassles by starting the membership process and leasing a seat. I'd recommend a year's lease and $100k in the account. Not an easy sell to family, but who knows. Nobody will trade with you when you start-out, so be sure to have enough dosh to live on for at least 3 months + a year's lease and risk-capital [$125k].
I have heard what you are saying from other people so that must be the way it really is. Like I said I am only 16 now and have the rest of high school and college to get through before anything serious happens. What I am thinking about doing is getting a job as a clerk or some entry level job in minneapolis the summer of my senior year in high school that way I will get some experience of what it is like day to day in the pits. Then when I am in college try to get a clerking job down in chicago. Hopefully that would be enough after those guys in the pits seeing my face for 4 years that they would trade a little with me after I graduate from college. Does this sound like a good plan or should I go about it differently? I would still like to know what people think is going to be floor traded the most by the time that I get old enough to trade in the pits, the options or futures? Thanks Again
One of the reason options are still on the pits is they are difficult to replicate on screens with complicated strategies; but it's just a matter of time... CBOT Options % Electronic: 16.55% CME Options % Electronic: 20.21%
Any of the Chicago interest rate options flow that is done electronically is usually crossed (customer and local) by the same NYC/London broker that begins with an M and ends in Financial. I am sure anyone can guess that one. The complicated spreads are offered on the screen both in Euro$'s and in the Treasuries but they are not being used. Outright options trades have gained traction in Treasuries over the past year, especially trades executed before the 7:20am pit open, but those same trades have also been done during pit hours as well. Again, usually NYC/London desks doing those. Chicago execution brokers for the most part are putting options in the pit and will for some time, have to help their broker buddies make a living. As for option locals, not a whole lot making money right now with volatility so low in the rates market (and should be for quite some time going forward). I really wouldn't count on getting into any of the financial options pits. They are dominated by the big Chicago groups (DRW, Chicago Trading Company, Capstone, Mako, etc.) and long-time HUGE individual locals who grew up with the broker standing next to them. Your best shot at making it into the Financial options is getting hooked up with some of the aforementioned groups. If you are backing yourself you will never get a trade. Just my two cents. I watched the 5yr, 10yr, and 30yr options pits for the past 3.5 years or so and that is what I seemed to observe as electronic trade has increased.
making markets in options is a more difficult skill to learn than position trading. not many people have the skill because it takes more training.
some don't understand what trading is about at all. Pits provide so much information.. some would even pay to have people in remote pits to provide information. the screamings, atmostphere, all of it gives invaluable information for experienced eyes and ears.. an individual's skills and limits are set and shaped by his environment. electronic trading can be end the story for many cry-out traders.. and vice versa for those who sit behind screens in silence. pit members mostly are market makers or speacialists managing trades which is to general trading as navigating a ship is to riding a fast little boat. it requires far more though processing energy, math skills etc.. sometimes i really feel the only people that actually trully understand securities and how markets work are those at the pits.. all the rest care about is making bets and making money.. it's more like the odd maker at the horses vs the big gamblers..
i totally agree. as ive said many times if you look at the structure of a daily chart for the pit traded markets you will see good points of support and resistance levels. pit markets have structure. the markets actually have trading hours and trading sessions. with the electronic markets they are always open. no open, no close, no high no low and therefore no charts. how can you chart a market that has no structure. other than day trading i dont see how you can base trading decisions on electronic markets i do agree that electronic markets are the future, but they will always need a pit session. they are more stable and run by humans rather than a machine.