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I have a question about the migration from the floor to the screen. Are there more quants and statisticians going into trading today? It would appear to me that the need for a "feel" on the floor is now gone, and that pure probabilities and statistics lead to success. Or perhaps that is an illusion as the feel on the floor provided a feel for the market? I ask as a quant / probability trader myself. In short, what is lost in the migration in your opinion?
Yes, I did note your description of how you were "market makers" rather than "traders" in the pits. But later in the thread I thought you said you were trading today? I am going on the thought that you personally went from "processing trades" to becoming a full trader. If so, I am simply curious if you could describe that transition? Or perhaps what you are saying is that these are two worlds, and they really have almost nothing in common. Therefore, probabilities and statistics mattered in the past just as they matter today. That really has not changed.
On the other hand, there are traders in the pits, at least they describe themselves as traders, who claim the "chatter" etc. gives them something. Some traders subscribe to the floor audio feed for this reason. I personally can't stand the pit audio, but to each his own...
They really are two worlds with very little in common, and yes; it was a numbers game, as far as trade/ risk management was concerned, but not so much, as far as trade selection was concerned. However, it was one of the skills that I brought from the floor, that were immediately applicable to screen based trading, along with discipline and a trader's attitude.
totally accurate description of the Chicago trading communities and their typical participants. I was backwards in that I learned the screen side as a nasdaq market maker first before going to the CBOE. When there was paper or customer orders to be counter-party to the nasdaq was similar to trading flow in the pit, easier too. However , when it was slow you started to learn the craft as you mention in your depiction. I remember being in the crowd and wondering how it could be so different. Now though I think even screen trading is changing so fast that you have to constantly evaluate to keep up.
If you would be interested in doing a NexusFi (formerly BMT) webinar to show us an overview of how you've adapted to electronic trading, I'd like to set that up.
The floor audio is not what it used to be. I think most of the volume is screen based now, leaving what happens in the crowd more of a reflection of what is going on with screen based trading.
In my crowd at CBOE I was right next to the S&P pit. I did train myself to listen to what was going on there...even for specific voices. I learned that as the intensity picked up in there I needed to check the "books" (limit orders left on our screens) and watch what was happening to the bids in our stocks. Then the next glance was through the pit , across the floor, to one of the key equity posts on the floor. You could tell what was happening and what to expect by the physiology of the floor broker.
When I was evaluating the S&P feed a few years ago to see if it was valuable, it seemed to me like the action hits the screen first now and then the fury starts in the pit.
The stories like the one posted here bring back great memories and really instill a feeling of gratitude but, when I think about the grind and the dynamics of the floor and that lifestyle I can say with certainty that I do not miss it, even a little.
Absolutly the right idea to respectfully ask for something like that from someone like tigertrader. I would be an excited and grateful beneficiary. A certain attendee. I would reccomend that to everyone who wants to gain understanding that might help them make money.
My magnum opus is far from being finished, and is still very much, a work in progress. In any case, my methodology is not a system in the sense that that Perry G’s or CJ’s methodology are, which are strict rule based trading systems. It would therefore, not lend itself to an explanation via webinar as coherently as either of theirs would, nor would it necessarily be appropriate for the majority of the members on nexusfi.com (formerly BMT).
As I mentioned on another thread, most aspiring traders want a strict rule based system which has a high degree of profitability, and where there is little to no risk incurred and minimal capitalization or knowledge of the markets required. This is certainly not the case with the way I approach trading.
My “system” is more of a heuristic methodology that is both intuitive and dynamic and could best be described as the Socratic method of trading. It's a common sense approach where one gains an understanding of what is actually transpiring in the markets and what is truly behind the price action. Along with objective technical/quantitative analysis, this allows one to formulate a forward looking view of the market. Then, like any other system, it ultimately boils down to the trader, for timely execution and prudent trade/money management.
I have tried to give an insight into my methodology and way of thinking on the POMO thread and will continue to do so, and if I ever get to the point where I feel a sense of “ substantial completion” with regard to my methodology, I will be more than happy to present a webinar.
Yes, the majority of people unfortunately do want something handed to them, or they are simply too young in their trading careers to know any better. I think it would be a fair statement to say most screen traders went through that learning process.
But there are many of us that don't fall into those categories who would appreciate a look at your methodologies or how you form opinions and trade decisions.
So let me know when your ready It doesn't need to be all formal, just a Q&A would be great.
