Are there any traders here who have successfully daytraded before 1994? Prehaps from 1984-1994? If so, would you please share your experience of trading that interim? Did you have to grind out the entire day for small percentages of points? Anything that you have learned during this period that could be applied today would be helpful and interesting.
There were no electronic orders to speak of back then. The DOT was around probably going back to the late '80's but it was created and used primarily for retail orders. Only the large brokerage houses had the systems. Instinet came around in about 1989 and wasn't really used by traders until the early 90's. Therefore trading was pretty much all by phone pre-1994. A good NYSE clerk had the equivelant skills of todays block traders. As a matter of fact, it was a requirement back then to have 'worked the phones' on the floor before coming upstairs. Anyway, as far as daytrading, it was a much smaller world. Everything happened much slower. Since there weren't a million different places that an order could come from on the floor, specialists were much more chivalrous or gentlemenly (believe it or not!) Of course everything traded in 1/4's primarily. But if you missed a print and the Spec knew you were invlolved, if you called down afterward - there was a good chance he'd let you in on the print. Trading from home was primarily by ego driven or eccentric types. There just wasn't enough info you could get, plus your orders had to be placed through a broker by phone. Who in-turn would phone the order desk, who would call a clerk on the floor (after checking with the block trader in the stock). That clerk would yell or beep the broker in the crowd who would come to the booth or land-line (no cell phones) and then run into the crowd to the specialist to place the order. God forbid you wanted a market first! As far as NASDAQ there were a few big 'tech' stocks like Apple Computer, Ashton Tate, MSFT into the 90's. All the fast and hot action was in the biotechs back then. Their volatility rivaled that of some of the dotcoms believe it or not. Everything was in 1/4's also. You had to call another market maker to sell or buy stock so daytrading had to be done through a broker - which was as, if not more difficult, than NYSE stocks back then. I daytraded alot back then, but through a big Wall Street brokerage's proprietary desk. I don't know of many daytraders that weren't on desks or on the CME floor or NYSE floor - although I'm sure they existed away from there. I'm not sure if this is what you're looking for? Hope it helped! -Tide
I never even considered daytrading stocks back then. Spreads on a lot of smaller Nasdaq stocks were 1/2, and the MM's had a brutal cartel to enforce it. No improvements allowed. You would never get filled inside the spread. Most daytraders stuck to futures. They were cheaper, faster , more transparent, even though you had to phone the floor to trade. Hey, the more things change... The focus then was swing and position trading hot stocks. Newsletters were popular, and "hot" letter writers commanded a big following.
And the clerk taking your order on the phone usually sounded so impatient and irritable at you for taking 10 seconds of their precious time, that you'd hurriedly agree to orders you didn't really want, just so you could hang up the phone and get away from the tone of contempt in that stranger's voice. And that was the "discount" brokers. The traditional "full service" brokers used to get angry at anyone who dared to suggest that he should be able to decide for himself what his own money should be invested in. They felt they were the professional investors, and it was your job to give them your money and let them make all the decisions of what it would be invested in. How dare you presume to suggest you might be able to choose what stocks your money should go into!
I have traded since 1991 and it was a total grind! A good trader avg 500-1000(net) a day.Market was out of control last 5-6 years what we have now is what i went through years ago. You will always have some stocks that have 5 pt days (up or down) but we will be trading against very tough competition(makes it tougher).
I wasnt involved in the markets before 1997, but it is pretty funny that we talk about 9 years(which does seem like yesterday) as if it were the 1960's. That is how fast this industry, like alot of others, transformed...I don't really think the technology of autonomous and electronic trading really came into play until maybe 1998-99(as far as the mainstream goes)...I can still remember having to use a very primitive order entry system for futures trades in 1998(and often phoning in the order again since the system was so unreliable), then sitting on hold as they tried to get the report back from the filling broker, yada, yada, yada...I remember quote vendors back around mid-1997 were all very primitive, and alot of them were by satellite only...PC Quote's Real Tick was one of the first to have internet only...Commissions were pretty high all over the place, it was like a giant cartel...Everyone knew the other guys prices and would compete by chiseling just enough to get the business...When the e-minis launced in Oct, 1997, it still took more than a year for anyone to figure out that they should be charging a more reasonable commission...The same old stalwarts of the FCM's were all trying to rape the public with the same commission structure for the floor product with the electronic...Not until Interactive Brokers came in and undercut everyone with 9.90 R/T commissions sometime in 1998, did it get competitive...I then remember PMB, Reifler, etc, etc starting to price in that range...
You're bringing back memories. Remember the casino stocks and riverboat gambling? Remember the restaurant craze and the ridiculous valuations for theme restaurants? And medical devices, of all things. And RVs. These manias swept through all sorts of groups for no apparent reason and usually vanished as quickly as they came. And we may just go back to that, which would help feed the lusts of the dotcom traders. --Db
Anyone remember IDID, SYQT, AMTX, and the ever so popular IOMG.... Yesterday....all my troubles seemed so far away....
Thank you everyone for some detailed view into that era's trading. Personally, I have never traded then, but reading about your experiences help me to appreciate electronic trading for individuals I wanted a glimpse of that time to better understand what is happening now with less participants, less large swings, and more grinding out for fewer percentage points. At least, these are what I have experienced... Above, Fourcups said that a good daytrader could average (only) about $1,000 net a day. This was only a decade ago. But based on this downward trend we are experiencing now, could we come back to these levels, thus making day-trading more unattractive? If the theory about market-bottoms and capitulations is true, then prehaps this is where we are headed. When most daytraders turn into swing traders I think that may confirm this hunch
Don't forget that, even at these levels, we are more than twice as high as we were in '94 (the Naz was less than 500 in '90). --Db