SethArb Have you considered going back? I've been clearing through a FCM. But the money these guys make is phenomenal. Obviously, it wouldn't be wise for me to jump right in. I've spent alot of time learning and speaking to guys on the floor. I actually would prefer starting out as a clerk before putting up a $50K bond, leasing out a seat (2 months needed) and putting up the capital to trade. I figure I need at least $100K before making one trade. Some of these guys started out at NYBOT. The initial costs are, of course, much less than the MYMEX. Knowing what you know would do it now?
So they take directional trades, not just quick scalps off order-flow? PS: NY futures markets have a reputation for having the worst slippage of all.
hey randolphfutures maybe you can get yourself on a waiting list for e miniNY crude oil futures permits to trade for yourself on the floor ... I would suspect that is easy money for anyone with the right discipline arbing the futures in pit against the screen but only if you are on the floor doing it next to the pit ! another choice could be to trade Brent on the floor in Dublin ?
TGM/Pabst Why does anyone who has the opportunity to trade on a floor, whether CME, NYMEX, etc, choose to trade electronically?
Nice post TGM. Like you said many traders I think get stuck in trading the market they know regardless if there is better and easier opportunity in other markets. So they slave away everyday in the same market and eventually start bitching how much the markets sucks. Then you go talk to an oil trader or whatever other market that has a lot activity going on and they can't stop talking about how great it is. I know because I have done the same thing and have been stuck in my small box of opportunity at times while other markets presented much more opportunity applying the same trading skills.
I just wrote you a long explanation. Unfortunately, I clicked something and screwed it up and lost it. In short, the US has the only floors left in the world. They are not as efficient. Although, I am a fan of side by side trading like with the Cbot. The floors are a different game. Had I been earlier. Like in the 80's, I would have been on the floor. Just the way it works. In 95, with the creation of the internet, it became obvious that the floors were doomed. I was lucky to trade for someone smarter than me and he saw it coming as well. The only reason there are floors left here is because our exchanges are member driven. The members do not like to lose the floors and that is understandable. When you become for profit ----the members loose control. All the US exchanges will follow the same route. The Cbot and the Cme did not have a choice with electronic trading. They put up protocols for size etc. But what happened in 98 when the LIffe floors got crushed by the Eurex machines. The writing was on the walls. On the CME, even Live Cattle and Hogs are electronic---the locals lost because it is Not a member firm but a public Corp. Nymex will go the same route. When the Cbot goes all electronic ---they will force the grains to go side by side. I am just putting this info here for you. I would not personally advise anyone (like my nephews) to learn floor trading. Unless, they were doing options. If I thought floor trading was going to be around 10 years from now on nymex ---fine---the future is the machine. Nymex and the other exchanges will go public or be bought by public exchanges. They will force it to bring down fees and up the profits. Also the idea you are going to charge tons of money for data is an anachronism. It is all the past ---not the future. Look that growth of the Nymex mini's and IPE and compare them to the floor.
They do all of the above. There are spreaders and scalpers. There are position traders that trade direction AND go home with positions (they are the ones that tend to make the transition to the screen---they are always directional traders that can put it out there). There are as many styles on the floor as off the floor. One thing that every trader goes through. Is that they think super successful traders are doing something magical. They are not. They do not know anymore than the newbie per se. The first thing you notice when you work or around an 8 figure or so trader is NOT that they know anymore than you. They just have the confidence to act consistently. Also, I would say, if you could see half the stuff these guys do, you would be shocked. The best traders I know ---pretty much break every rule in the book. They just know when to break the rules (most of the time )
I thought I knew all I needed to know about trading (screen trading equities) before coming to the floor. People advised over and over, "clerk first." I thought, "Clerk, schmerk. I know how to pick a trade. I know how to cut losses. I don't have time to clerk. I'll risk my money on myself." But one thing led to another and I wound up clerking and it has been a real eye opener. There's a great deal more to making it on the floor than hitting the "send order" button. I came because I was tired of having my orders pennied, stuffed, or ignored by the Big Board. I knew I'd be entering a much smaller market, but I thought the edge I'd gain by having control of my order, along with the reduction in clearing costs, would compensate. And I'd leverage my cash flow into other markets as I built up equity. It's been a long row to hoe, I'll say that. I've taken into consideration that the pits may eventually be doomed. But I figured that experience of seeing what goes through the mind of the biggest guy in the pit would be invaluable when I got back in front of a screen again. I've seen a few guys come and go, who thought that they were all ready to go in and trade. One young guy came in and started trading hundred lots. I haven't seen him in months now. Good luck to you.
As TGM alluded, the heaviest traded futures contracts in Chicago are no longer open outcry. Yea there's side by side trading in most all of them, but 90% of the volume in interest rate futures, currencies and the indices is now on the screen. Options volume is still primarily open outcry and guys in those pits are still thriving. Some CBOT bond/note guys went into the grains, but many like me thought the screen would be easy. We thought wrong.