Has anyone here owned or leased a seat on the CBOT or CME? I would be interested in hearing about your experiences and maybe any tips you could offer regarding finding a lease and establishing a relationship with a clearing firm. Thanks.
Lease a seat on the Minneapolis Grain Exchange. www.mgex.com Volume is at record levels are there are plently of mid six figure traders on the floor. Leasing is like $50 a month. Call the office to get the latest info on that. Do not be misled by the low seat prices. That is because they have 420 memberships which is too many for today. The exchange decided not to buy back the memberships, instead they are investing in technology. Wheat is in a bull market. Of course this entails moving to Minneapolis as this is a floor traded product.
I was on the floor briefly and know some floor traders there. Because they have too many memberships for an exchange of that size in the computerized, consolidated world of 2003, you can obtain floor trading privileges very cheaply. People learn how to trade in exchanges like that. Its a real exchange with real commerical and hedging participation and real order flow. It is not like the Mid-Am exchange, trading mini versions of other exchanges' products.
You have sparked my interest. How much capital do you need? Are there new/young traders on the floor? Can you get decent order flow if you are a new trader? or is one of those pits where brokers only trade with certain locals most of the time? $50 a month is damn cheap. LOL. However, I'm sure some of those crusty old grain traders could take my electronic tradin @#$ to school for a few months! thanks cheeks
$25K would be considered a well capitalized local. Most clearing firms want you to have $1K on deposit per contract you trade. Naturally you should have more on the side to back that up. The critical measure is the burn rate. How long can you last before your trading turns positive? There are new traders there. Some right out of school. Others are second career types. Ex-lawyers, ex-programmers. There is a kind of pecking order, based on your ability to handle trades without making manual errors. (You are writing stuff down on a trading card and the other guy wants to be sure you don't mess up). The traders who get the paper flow are the ones who do volume and who are actively making the market at the time the order comes in. That skill comes with time. After you've been there a month or so, you'll be able to snag more and more orders. Its not like in the movie Limit Up where some traders will refuse to trade with others and freeze them out. Its more of a matter of competence.
Out of curiousity, why did you leave the floor? And are these guys making most of their money by scalping, arbing or spec?
Stage fright. Imagine 50 people standing in a space the size of your living room, yelling. Anyway I couldn't trade full time at that time. A fair amount of scalping. There are some calendar spread traders and others make markets in the options. A surprising number just take directional speculative positions. Yes they call it scalping. But what they really do is lean on support/resistance and extend their trade target beyond what you'd expect out of a scalp. They swing trade from turn to turn.
Puffy: Are still there on the floors some of those old foxes everybody is looking at to see what their next move will be? Or does nowadays competitive trading not spare anybody? OPC