Introducing myself/My trading history

Discussion in 'Professional Trading' started by Haylavshik, May 4, 2005.

  1. I started this on this thread if you want to read the my early history.

    So I was hired by Goldenberg, Hehmeyer to run their overnight desk and to trade CBOT treasuries on Globex. I was going to school at the Illinois Institute of Technology in their Financial Markets and Trading program and I thought I would get a chance to study while working the overnight shift which I figured to be pretty slow. The guy who I was replacing, Tony Abatangello (Sorry about the spelling Tony), had been doing the job since Globex had opened in 2002 and decided he had had enough of working nights. In that time he had built up a nice sized trading account for G&H and he wanted to head down to the 5 year pit.

    I did not think much of Globex or electronic trading so the first night I watched Tony working I was in for a shock. It was rollover and he legged a couple hundred bond spreads at great levels. I was shocked at how easy it was and I could not believe he would want to leave this. (Turns out I was right, electronic skills and pit skills do not translate and I paid a lot of money to learn that) I started at night in December of 2003 and I barely touched a book for the next 6 months. This is my favorite story and gives you a great idea of how easy the edges were. One night someone sent an RFQ for the front and back month 5 years. G&H hade a telerate screen in the lounge where the overnight desk was. I would make fairly wide markets in the bonds and sometimes the 10 years based on what I could lean against and what the cash market said. I put up three tick wide markets in both front and back 5 years and then some idiot legged into the spread. I could not believe it. I would have happily given him a much better market in the calender spread if they had asked. Just goes to show you that the best people were not working overnight.

    One of the greatest disappointments in my life is when I heard that the CBOT was removed/kicked off of Globex. I was beside myself and it was a long 6+ months waiting for Project A (PJA) to open up. Project A opened in the fall of '94 but only in the afternoons. Forgive me but I am forgetting some details but i think the opening was 2.30 in the afternoon and the close was 4.30. Eventually, PJA opened up at 2.15. PJA was far ahead of Globex. It was client/server vs. mainframe and the GUI was much easier to use than the clumsy keyboard entry system of Globex. The biggest problem I had with PJA was the fact that there was no way to save the desktop so you had to set it up each day. Besides that I was very happy. At this point, Tony had given up trading in the pit and came upstairs to trade PJA. I did not trade immediately when it opened because Chris Hehmeyer wanted me to do brokerage for the firm and until a replacement was trained. I was happy to help. I did ok but I do not have the temperment to deal with traders. We are a**holes. I had never done brokerage before. Also, I missed a trade for a trader for a SB and the trader was just an absolute a** about it. I tried to explain the market was moving very fast and by the time I quoted something and he made a decision the order was gone. in retrospect i should not have been giving him every signal market change. Anyway, his boss called back and asked what happened and I tried to explain that I could not react fast enough and that I would do better when the trader who had been listening in cut in and called me a liar. I slammed the phone down and the guy who was working with me just stared at me and said he hoped that wasn't who he thought it was. Chris came back and asked me what happened and the only thing that saved my job was that no one could do what I could.

    I was moved out of that role into trading next to Tony. I did that in the afternoon and worked the night shift. In their infinite brilliance the CBOT did not open PJA overnight until December 1995, a year after the afternoon. I was G&H's liaison with the Tech people at the CBOT. I got along with the tech guys but the bureaucrats were another story. I believe the CBOT had a great thing in PJA but incompetence and the fear of the stupid, old men who controlled the exchange kept them from capitalizing on their advantage. One person deserves a lot of credit for creating PJA and that is Burt Gutterman (SP?, again sorry) He helped the Board create it with great suggestions. PJA was years ahead of its time.

    I thirved on PJA. I went from trading 10 lots to 100 in 94. The trade was very different from Globex in that you did not sit for hours waiting to pick off some idiot. You actually had to trade in a market that was moving and I started getting into spreading which was a natural segue. During this time Chris Hehmeyer gave me a Prop trading contract to sign. I showed it to my lawyer and he said to sign it because it was useless but if I could get away without signing, do it. So the contract went into my desk and I held Chris at bay for most of the year saying my lawyer was really slow. Finally I said I did not like the terms and that we should just keep the percentages we had agreed upon without the non-compete and other BS. Towards the end of 95 I started to train someone to takeover the nightshift because I wanted to trade at night when it opened. At about the same time I mentioned to Chris that I was close to reaching the goal which would allow me to keep 70% of what i made. That is when he informed me that the agreement reset at the beginning of the new year. B***s*** was what I thought and I decided to inform them that my employement was nearing an end and I would go out on my own. I had enough to trade so I thought why not keep the money. I had made them a couple of hundred grand and, although Chris was not happy, Ralph wished me luck.

    This is when I had one of the most difficult experiences in my life. I am proud to say I came through it with my pride and mostly unscathed but I learned a great deal about how far loyalty goes for some people. My replacement decided to quit about three weeks after PJA opened at night. I was supposed to leave but I felt loyalty to G&H and I really wanted to stay on and clear there so I agree to train someone else but I said that they should pay up and get one of the day PJA clerks to take the nighshift. I did not want to stay for 3 months training someone while there were perfectly capable people available. The mistake I made was continuing to trade during this time. PJA at night was fairly busy and we were getting calls all of the time. We had one particularly active trader who did a lot of size and he was always my responsibility. You can probably guess what happened. I was watching the markets and I could see what was a good trade. I would take part of something and this guy would call and take out the rest. This happened more than a few times and I had learned in an ethics class that there was no way to avoid a conflict of interest when you are dual trading. I knew this but I did not stop. I just pressed Chris to hire a replacement. All this time he kept offering more money and a piece of the brokerage to stay. I kept saying no. I am really glad I did. It all feel apart when a small trader called one night to put in an order at a level in which I had an order. Long story short was I got the trade and he found out about it and complained. I am immensely proud that I came clean and told G&H ever time I thought that I had a conflict of interest and even had gone through weeks of files to show them. So, 5 or so weeks after PJA opened at night G&H suspended me and called the Office of Investigations and Audits (OIA) to report the incidents. I don't blame them one bit, they had to protect the firm and it would have gotten them in trouble if they did not report this. But what really hit me is the way Chris Hehmeyer turned on me. He went from trying his best to entice me to stay to my continued refusal to saying that I should not be allowed to trade at the CBOT. I asked him if he would back me up and say that I was trying to leave, that I had no plan to steal from the customers and that I would have been stopped doing brokerage if not for their need for me. I had talked to Chris every morning for 2 and a half years and that did not mean SH** to him. Unbelievably, Ralph told me he thought I was innocent of malicious intent but they firm had to hire a lawyer and he suggested I do the same.

    I gave a deposition, I spoke to OIA and I told the truth even if it made me look bad. I think that is what saved me. Like I said, loyalty is not worth taking the chance of doing anything unethical and I should have not traded and set a date that I was leaving. They could deal with it. In the end it was dropped and I did stay at G&H. The fact that they would agree to clear me made me feel that they did not consider me guilty. Of course, Chris took about a week to make that decision. Excuse me, M***********! Leaving me twisting in the wind. I was buried in a bottle that entire time. But in the end I came out ok and I started trading nights and afternoons fulltime in the spring of '95.

    More later...
  2. Interesting story. Please continue...please tell us more.
  3. Truff


  4. FT79


    Dear Haylavshik,

    Love the story but why this post?

  5. great story - more more more please!

    I love hearing about the early days of things - in this case, electronic trading...
  6. ^bump^
  7. First a few corrections. I started on Globex in December 1993, not 2003. I thrived on PJA going from 10 to 100 lots in 95 and I started trading for myself in the spring of 96.

    FT79, I am posting because for a few reasons. I think it is an interesting story. I am new to this board and I want to share information that will be useful so that I can ask for info in return. The most important reason is that I want people to know I am not full of s*** because I want to start a union of traders. Since we are divided and we are being taken advantage of by the exchanges and the big banks eventhough we provide a large amount of the liquidity at the exchanges.

    I traded my account on PJA from 96 until it was closed in September of 2000. The rest of this story is my growth as a trader on PJA. At this time I am trading Euribor using TT's Protrader. Protrader, especially the market depth trader feature, is a much better graphical user interface than Project A but most of the ideas about how to build a computerized trading system were pioneered with PJA. I still think it would stand up today.

    After the bad experience I had leaving G&H's employ I was very cautious trading. I would come into G&H's lounge at 2 pm and trade the afternoon session and then trade the night session which opened at 10.30 pm, if I remember correctly. Tony Abatangello sat on the right side of the desk and I on the left and we shared a CQG and a Telerate feed between us. I was cautious about increasing my size. Chris Hehmeyer was always pushing me and Tony to trade more. I wanted to maintain a ratio between my account and the size I traded. In my previous trading for G&H as a prop trader the best I had hoped to do was make $150k including my $25k salary. I started. I could not imagine making more. 1996 blew away my expectations.

    Let me tell you about the features of PJA which made it a superior trading platform. First was the pro-rata matching algorithm. Ironically, when I first learned about this feature from Chris I was not happy. I had gotten used to FIFO on Globex and I am a creature of habit. The pro-rata matching algorithm on PJA had a feature which meant that if you made the market you would be filled before anyone who put an order in behind you got a piece of any trade. The way this worked in practice is if bonds were 13 bid for 200 and someone came into to sell 500 at 13, that person would have time priority on 300 at 13. If you had time priority at a price you had a small letter T next to that order. I think this was a way to be fair to whomever turned a market allowing them to be filled before the rest of the market piled on to lean on their order. You could not enter orders before the open to get T (time priority). I was MR. T. Nobody messes with T. I put a whopping on your a**. Another feature was the trade ticker. You could see who initiated a trade and who was the largest counter party on the other side of the trade. The big houses/banks hated this because we could see if paper was buying or selling and get an idea if we were about to make a move in either direction. Both of these features were targeted by the big boys during the Eurex debacle. Any new system the CBOT used would not give advantage to locals (small traders). Again, I want to acknowledge the good work that Burt Gutterman put into the creation of PJA. IMHO, because the powers that be at the CBOT did not take PJA seriously, Burt and the other traders involved in its creation were able to get these trader friendly features included.

    1996 was a great year. I was spreading and scalping bonds, tens and fives. 5 years opened when I was working on the floor in 1990 and I took happened to know an options trader from AMI who was in the ten year options who would make markets in 5 years. He was one of the good guys who took time to teach me. Thanks Jeff! But I learned a whole lot more from two other people, Yosi Morik and Scott Suma. Yosi in particular was one of the few people making markets in NOBs, FITs and FOBs from the start. It is funny when you think about it because it is simple math to figure out the market. From them I learned how to look at the spreads and to be wary of going against them when they were trending. Spreads trend very well and any edge you get against the trend is illusory; especially at night! I ended 1996 with a lot of confidence. I was making $30k a month consistently. And 1997 was more of the same, only more so. In 1997 I began to exibit a bad habit which has continued to haunt me. I recognize the problem and am able to fight it. But it is always something I have guard against. I began to lose my fear of the market.

    More later...

    A couple things I want to say. Someone has already contacted me who recognized me. If you think you recognize me, please contact me. Also, I recognize that I might step on some toes with what I post. I have not Idea who runs this site so I don't know to whom they owe their loyalties. (No offense Mods) If I get kicked off you can contact me through my blog: (Even paranoid people have enemies) I am very serious about the need for traders to organize. Given our independent nature, let alone being oriented to distrust collectivism, I think this will be difficult. (Maybe I am projecting my views on the rest of you, if I remember correctly a lot of the traders I knew where Democrats) Anyway, there are a lot of different ways for us to act in concert to improve the electronic trading systems (ETS) available to us. I am still think about this. But there is no doubt that we need to present a united front so that we can demand things like lower/capped fees or small trader friendly features on ETSs. There is a lot of talent among us, we only need to start thinking of us as an us.
  8. FT79


    Sounds interesting, could you tell me more about a "union of traders"? It's very abstract.