In defense of floor traders moving to screen, it is totally different. Floor is all about execution edge and turning over size in a hurry. A floor trader may trade 100 contracts at a time looking to take a tick or two out of it. A similarly sized screen trader may trade only 5 or 10 contracts looking to take 10-20 ticks out of it. Its also much harder to operate with that tight stop mentality you can on the floor because the screen gyrations are too large. On the screen you have to be right. On the floor you only assess the order flow and get the according edge which can't be done on the screen.

I clear ADM for my futures and New Edge for my stock stuff. At my firm which is mainly futures, I am the only guy who does anything at all with the stock market and those are mainly some arbitrage spreads.

Bah! Too choppy and no real range (less than a buck since open). Time for me to sit out until last hour and hope close is good. Actually caught a few good ones here at the european close but its been pretty uneventful so far.

glad you caught some going into euro close! I'm a small lot trader so globex is where I normally find the right price action.

I'm going to shut down and not try to trade the last hour....good luck!!!

When I retire I will continue to trade in some form or another. Probably won't be in there slugging out futures every day but will ocassionally on big new events. In my non-work accounts I do a lot of swing type trading in the equity options markets and will continue to do that probably forever.

As a new hire, do what they tell you to do Hopefully you will get training/mentoring that will guide you.

Small guy is at obvious disadvantage but if you play your game and not thiers it isn't so bad. Being small and flexible can be a great advantage. Certain swing trading and trend following approaches will work nicely for small players.

I clear ADM as well. Was just in town a couple weeks ago meeting the whole crew.

I moved over from an RJO office at the beginning of the year.

Awesome thread, ty very much for this

When you were pit trading, did you get involved in mind games with other traders?

Say another pit trader is very long, and needs to sell out his position. He might try to quote a high bid/ask for a low total amount, to try to trick everyone into thinking the price should be higher (getting a high "print" or something?). Then he'll sell out at this higher price if he convinced everyone else this new bid and ask is reasonable

But you might notice what he's doing, and keep selling to him knowing he'll probably have to sell back to you quite soon.

But he might have been pretending to be doing this, and in reality he has no long position to get out of, so you are stuck with a short position and the price won't be going back down

but you know he knows you know etc.

Any mind games going on like this or in some other way?

I never really got involved in any of that kind of thing and it didn't really happen in the options pits where I spent most of my time in the pits. In options there are too many ways to relieve the heat by hedging off in the futures or other options.

I do understand it was more likely to happen in futures pits. If people saw a weak hand they would try and squeeze it. Some of the real big players would also sometimes try to spoof the pit by trying to bid it up and then start selling. From what I understand these kinds of ploys weren't often successful.

Interesting. If people tried to spoof the market in electronic trading, could it be considered illegal, market manipulation? It seems market manipulation is a very grey area, and hence only the most overt cases are punished, would you agree with that?

I'm about to start a job as a market maker, and I'm a bit paranoid about doing something that is 'generally accepted' by the company, but I could be busted for if regulators start cracking down.

In the early days of electronic trading big locals tried to "spoof" the market all of the time. It worked for a while too. Then the algos came in and cleaned their clocks. Now algos try to spoof the market all of the time and for some of them it is their main strategy trying to turn a market and then jam it. As far as I can tell this is all perfectly legal.

In electronic trading it has become very difficult to "read the book". Most real orders of size are masked and most big orders that show are fake. Fake meaning they are designed to never be filled and be cancelled before they can be hit. It's almost a contrary indicator when you see a very big bid or offer just off of the market as they are typically designed to show strength or weakness when there really is none and just attempting to influence the market rather than to trade.

what's your opinion on the proposed(mentioned) minimal time for bid/offer before cancellation and penalties?

What are you going to be trading? Market making is pretty much dominatated by algos these days. Options still have a lot of human market makers though. This is due to the nature of options and the fact that a lot of the big players want to do more complex style spreads which are still priced better by humans than computers. Something like a futures contract or a stock have much more efficient markets made via computer these days.

I haven't really followed the discussion on it much. But I think they will do something since there are so many orders that just autocancel because the algos are just trying to influence rather than trade the market. I'm a dinosaur and not a computer guy though so I'm not really sure how some of this stuff works from the computers angle. I do know they jerk the market around though which probably isn't real good for the marketplace as a whole. I'm just not sure what can be done about it? And I am sure the programmers will have "plan B" to get around whatever countermeasures are put in to combat them.

We have started developing a piece of software (well Ph.d in Physics son in law is doing all the coding) that is going to compare Time and Sale to DOM (depth of market) and we hope to use that algo in conjunction with Market Profile to automate entries and exits for our trades. right now we are only thinking about using this for CL and GC.

Any thoughts?

thanks, and thanks for responding to all of the questions. very interesting stuff.

I'll be trading options. It will be mostly automated as far as I can tell, but quite a lot of room for human (me) input. Pretty much just making adjustments to the proposed true value the algo suggests etc

All electronic, vanilla options, I don't think I will be trading in complex stuff

Thanks again for your answers

Also, in regards to legality, do you think Optiver was doing something illegal here?

http://www.huffingtonpost.com/2012/0...n_1439259.html

cliffs:

They developed an algo to, I think, drive prices in oil futures up or down in the seconds before close, then exit their positions for a profit. "Banging the close".

They decided to just settle, admitting no guilt, for 14 million

That's not really in my area of expertise but I wish you luck on it. Anything to streamline and automate can be effective. Good luck!