Hi guys, from lurking I've always thought you guys had a good forum in the past. I'm hoping you will find this thread interesting as my career path is relevant to people here. I would like to preface my story by saying that I am aware of how lucky I am in life. All I can do is attempt to use this fact and further continue the course.

I was a history major in college, and hated school. I was never a good student in high school either, but got into a decent because of high test scores. I loved playing poker, and had always won since I started playing after high school (graduated 2003). I had been playing more and more, building my roll both online and in local games. After playing all summer, I won something around 10k in the week right before my junior year, and made the (bad) decision to not go back to school.

I ended up playing for a living for 3 years, living in the same college town, never went broke and never got rich. I decided to back to school in fall of 2010, did really well my 1st semester back, then ended up dropping out again due to a combination of depression and substance abuse issues (booze).

My parents live in Colorado, I am blessed that they are very understanding and in the end they just want me to be happy. i went home and stayed with them for a couple months, doing therapy and trying to rebuild my online roll from scratch (won a Full Tilt tourney for 6k 2 days before Black Friday and that plan got ruined).

My grandfather was a successful New York lawyer, and generously left each of his grandchildren trust funds (mid 6 figures). I was about to turn 27, inherit this money, and had no idea what I was doing with my life. I've always been an avid skier and decided to move back to Colorado and ski bum for the winter. I gave a half assed attempt at finding a ski job but ended up just skiing and grinding poker in Blackhawk, CO a couple times per week. After ski season was over I again had nothing to do, but was in a good mental state and decided to take advantage of and opportunity.

My dad is a cash grain broker, and had a friend who was a veteran futures broker at the Chicago Board of Trade whom had always expressed interest in me because of what my dad told him about my poker. I went out to Chicago to visit him, and the moment I walked on the CBOT trading floor I knew I was interested in the business. He said he would let me come be a runner for the summer, and I packed my car and drove to Chicago in June 2012.

I worked hard, came in early and studied, and got promoted to clerk fairly quickly. After 2 1/2 years as a clerk, I got my CBOT membership last month. This provides me with the ability to solicit customer business, give advice to existing customers, and trade for my own account.

I just started trading last week and have been trading really small to get my feet wet, but did manage to make money in my 1st week My plan is to explore both the brokerage and trading aspects for a while and see what's working best for me. I think the trading side is more interesting to me right now, because if I can become successful at that it will provide me the opportunity to move anywhere and be my own boss. All I can do towards that goal is continue to work hard and learn.

If you spent the time to read this, thanks and hopefully you found my life so far somewhat interesting. Feel free to ask me about commodities trading, poker, or anything else and I will do my best to answer what I can.

Is everything electronic these days? Are there still opportunities for market-making, or are spreads virtually efficient?

Is there a liquidity problem in futures at the moment?

I assume you are in grains? Did they move grains into the financial room yet? I also assume options since futures are (or will soon be?) 100% electronic.

Seems like a strange time to be starting a floor trader career I spent 10+ years on the floors of both the CBOT and CME. Unless you have customers who want/need to know exactly what is happening in the options pits and who do complex spreads I see no reason whatsoever to be on the floor these days.

I was under the impression that even options pits on most floors are electronic these days. Are option pits still largely open outcry in Chicago?

They are closing the futures pits beginning of July and moving the grain options over beginning of September. I'm moving up to the office full time at the end of this month. I've never been in the pit myself, have been in the aisle on the screen since my 1st couple months there.

I agree there is no reason to be on the floor, we have just been delaying the inevitable. My boss has been off the floor for a couple years now. We do execute a decent portion of our options in the pit, but calling it in from upstairs shouldn't make much of a difference. So I guess I wouldn't call myself a floor trader, my desk was just on the floor the last few years.

In grain options I would say the volume is 60% open outcry 40% electronic. The options pits are still fairly well populated (of course all the market makers have a tablet with the screen in front of them as well). If you want to trade large size or anything complex (tied, calendar spreads, butterflies) the pit is still usually the best place to go for liquidity.

What percentage of your customers that make their own trading decisions show a profit at year end?

That's a tough one to answer, we have 3 kinds of customers.

We do hedging for commercial customers, so we don't see the cash side of the trades. Grains have been in a bear market over the last year, and since most of these guys are short hedging their futures accts are doing well right now.

Of the speculative customers where we clear their accts, I would say its 60% winners/40% losers.

We also execute trades for hedge fund traders and guys who are trading the prop side for commercials. However, we give up the business different clearing firms, so I can't see their overall P&L. But if I had to guess, 80% win and 20% lose.

Zero sum game, never easy...

Could you briefly explain how this works to someone who only has a cursory knowledge of what you do?

In case you need to brush up on the basics of futures:
http://www.investopedia.com/university/futures/

My main job functions as a broker are to:

• Execute trades for customers. Every customer has different needs/methods of communication. Some of them execute their own trades electronically.
• Make sure all trades go through correctly.
• Monitor my customer's margin requirements to insure their accounts are properly funded.
• Gather information about what is going on in the market.

I then also have a small personal trading account for myself, funded with my own money. Customers always come 1st, but in my downtime I am learning how to trade for myself.

What selling strategy would you offer to a producer (we raise corn & soybeans) to maximize profits, while hedging against huge losses. I'd say we're not risk averse.

Thanks for the complete honesty. It's always interesting seeing how people get where they are.

Could you explain your edge in the commodity market in a paragraph or two?

Buy puts to achieve this goal, you can lock in something of a margin and if there is a weather problem this growing season you are not limiting your upside as much as a traditional short hedge. Grain volatility is cheap right now too (as it deserves to be).

I would market my beans more aggressively than corn. Bean upside is limited, there is a record South American crop sitting above the market and if the US has average yield we could still easily see an $8 handle on beans.

wonder who you are cause i live in colorado and play in blackhawk sometimes we probably know each other.

My main edge is going to come through information flow. On top of the standard market information, I have access to contacts that are trading cash grain in every major worldwide market. I get to talk to some of the top traders in the business and execute their trades. My boss has 30+ years of success in the business (both trading and brokering) and takes time to teach me stuff. All these sources are willing to answer my questions and help me learn.

In terms of actual trading, I have the advantage of not being under pressure to make money (although I of course want to!). I have the cushion of a salary, so I can afford to wait for good setups and if I don't see anything I like in the market I can do nothing.

I've only played in Blackhawk 2 times in the last 3 years. When I'm in Colorado now I am either seeing family/friends or enjoying nature. If you were playing the 2/5-100 game at Ameristar during the winter of 2011-12 we would definitely recognize each other.

What are the bankroll requirements for starting off as a commodities trader? If it depends on the market then which markets are the cheapest?

how much of your day to day brokering/studying is based on basis and cash market flow versus futures flow?

in grains, if you started off trading 1 lots while taking home a max position of 5 contracts, you would want to have $50,000. I'm trying to keep my margin to equity ratio of 5-15% with a maximum of 20%.

If you only bought options you could maybe start with $20,000, but your risk of ruin would be pretty high.

If you only traded calendar spreads (same position size), you could start with $10,000, but you need to have good knowledge of cash market fundamentals to beat that game.

50% cash mkt, 40% futures flow, 10% outside mkts.

i wish i had more questions, cash/basis/brokering are interesting topics for me since i only trade futures. but i don't really know much about them, if that makes sense.

do you find yourself looking more at corn, wheat, or soybeans?

do you have a fundamental opinion regarding volatility this summer/fall? i wonder if these huge crops the last 2 years have caused some kind of shift in hedging or if nothing drastic has changed and volatility will kick up in a month or two. i never got to trade the crazy summer of 2012 w/ the drought.

if we had another drought this year, do you think things will get super crazy or do we have enough in stocks from last 2 years that things shouldnt go too nuts?

Oh man I did not even think to ask about the drought in California. Has that had any effect on markets yet? How long does it take to start to effect futures if at all?

One of my observations was when the price of gas tanked after oil dropped to 50 a barrel. Bit then in Cali, due to environmental regulations requiring a very specific blend of gas, the price went right back up after the plant exploded in Torrance.

My point is if something like that happens and the pprice of gas rises again in a market like California can the same be said for crops effected by drought in California? And do those factors ripple out to the commodities markets?

My hypothesis: yes it does have an effect.

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http://www.statista.com/statistics/1...at-production/
http://www.statista.com/statistics/1...ing-us-states/
http://stuffaboutstates.com/agricult...grain_corn.htm

tl;dr california aint about that crops life