Why can't many professional floor traders make money in electronic trading markets?

Discussion in 'Professional Trading' started by helpme_please, Dec 5, 2017.

  1. From the documentary "Floored", it seems many floor traders have problems transiting profitably to electronic trading.

    Anyone who used to be a floor trader or know of people who were floor traders?

    One guess I make is that these human floor traders used to be the kings of short-term trading. With the coming of the machines, they lost the edge permanently.

    Still, it puzzles me why so many can't make the transition. With decades of experience in floor trading, these floor traders not only survive but prospered. The basic rules of trading should be ingrained in them by then. It should not be too hard for these battle-hardened floor traders to make the transit to electronic trading. Yet, many of them failed. It will be interesting to know why because this is what happens to profitable traders who lost their edge and cannot regain it. It can happen to any of us.

    samiotis likes this.
  2. Simple. The edges they had on the floor, and they were many , can't be duplicated off the floor.

    Hairy forearms and a loud voice, dont' cut it .
    MoneyMatthew, Xela and DTB2 like this.
  3. FSU


    As a floor trader, the customer came to you and gave up edge to you. When the floor trader went upstairs, he became the customer. That's why most did not transition to profitable upstairs traders.
    VPhantom likes this.
  4. sle


    I had a guy work for me who was a former floor trader, was a total waste of a seat. The floor was an ultimate client rape-fest and most of the skill these guys had was how to rip off the custys. In the opaque world of electronic market makers they can't see flow and there is no other informational advantage they have.
  5. truetype


    Their key edge was the ability to step in front of customer orders. On an electronic market with price/time priority, that's gone. Of course, a lot of the baboons on the floor fancied themselves "traders" and gave up on the business only reluctantly, after a few years of losses trading onscreen. But they had no marketable skills, so what else could they do?
  6. Thanks. That is interesting to know. I'm a retail trader and have no practical experience on the floor. From what I read, isn't front-running illegal? How can it be so widespread that front-running is actually an edge of the floor traders?
  7. sle


    Even though I am sure it was not intended to be funny, I just sprayed seltzer through my nose :D
  8. Simple, you buy a tic above their limit buy order. On the floor you know it's a big buyer so price isn't likely to go through the level without a couple tests.
  9. In post #2 I said it all. Why you wasting valuable real estate here just repeating what I said?
  10. In options, a lot of it was technology costs to stay on the NBBO and no violate trade-through requirements.
    #10     Dec 6, 2017