Interesting. Were any of the big money traders outright directional futures traders (even if only intraday)?
Sure, there were some, but the majority were not.The spread traders seem to have more longevity. There are many traders who have made absolute fortunes that almost nobody has ever heard about. The guy I knew of who did the best wore action slacks and carried a backpack on the floor.He seriously looked like a Wallgreens manager. If you mentioned his name nobody but a few knew who he was. He traded mostly illiquid contracts with options.That is all he would tell me. The guy who owns DRW, option trader.Cahnman, spreader. The most successful Eurodollar traders were all spreaders. The best most consistent traders I knew were just about all spreaders.
What type of spreaders and option traders were they (i.e. iron condor and backspread traders and naked put or strangle option sellers)? Walt
"spread traders seem to have more longevity" The reason for my question is that years ago a very experienced institutional trader gave me an explanation as to why he did not trade his own money in the FX market. His point was that to have the ability to trade the position size to replace his salary and bonus would mean having to leverage up his life savings and remortgage his house, but things happen in markets and happen very quickly and that is what takes you out. It only has to happen once, and it might not happen for twenty years but if it does and you are caught in it (no liquidity) that's it, your savings and your house gone. People I knew who scalped in size tell me of losing $300,000 in a morning or losing months of profits because they could not get out. Think how your account would look if you culd eliminate just five losses from mistakes, let alone losses from rabbit in the headlights in a big move against you. In theory if you are [even] scalping you are risking a little to make a lot ie risk one tick + comm to make 5 ticks. In the reality of the markets you are risking a lot to make a little. I have noticed that I find the best risk: reward and probability profiles in stocks using a trading equivelent of value investing. Perhaps Buffet is rich because his market drawdowns are surviveble due to buying below long run average and not using leverage i.e. he has not taken a big loss over all the years. Now, time to change into a flame prooof suit.
I've never been on an exchange floor. Are there alot of spread oppertunities on the exchange floor? is there a way to do the same thing from the computer?