Don't know exactly but they probably have different goals and timeframes. One may be scalping while one may be taking a longer term position and one may be hedging. There are lots of reasons to make a trade and guys with different goals, strategies and timeframes can often trade with each other and still have things work out well for them.

Seems my question may have been a little confusing so i'll try to clear some of it up.

Our floor was strictly institutional Bond and T-Bills trading. So our traders only traded with the other institutional trading firms and their traders there such as Merryl Lynch, cantor fitzgerald, TD securities, Deutsche Bank, solomon brothers, etc.

I monitored, cleared and settled all of those trades on a daily basis. Average trade between them was for about 5 million face value bonds. And each trader i'd say made about 14-30 trades on average per day. So when you think about it quite a fair chunk of capital flowed in and out of our office on a daily basis. Biggest single trade i ever cleared through was a T-bill one for half a billion. Most of the clients we had were for big mutual funds, or just straight new bond offerings coming onto the markets from governments, provinces and states, and some corporations.

Quite a few trades were obviously done on behalf of clients, who would then obviously take the win/loss as the values of the bonds changed. But quite a few of the traders were out there trading on their own as well to make profit for Goldman, just the same as many of their counterparts at other firms.

So all things being equal, given that their trading circles only extended to maybe 7 or 8 other traders to trade with, shouldnt at least half of them take losses?

With bonds obviously everyone can make profits as interest rates go down, but that would be counter balanced by the increased losses for when rates go up.

I remeber the rough average compensation some of those traders made, and it came in around $320K (this was like 13 years ago).

Maybe i myself am missing something, but how can all these guys be so well compensated when statistically there should be a very high percentage of losers?

[quote]
That should be your answer right there. On behalf of others means they are brokers, no? So, obviously they aren't losing money, their clients might be though.

I have a mathematics degree, am a programmer, started trading options 7 months ago while keeping my full time job, have written programs to run my technical analysis algorithms on equities, read books religiously, and have had incredible success so far this year. Yet I can find absolutely no way to break into the trading industry. Prop firms suck. Can't move to NY...looks like the only option for people like me is to trade on your own, learn great capital preservation, and try hard to survive over time as you have...would you agree or are there other ways to break into the industry? Thanks, and great thread.

I am not nearly an authority on the subject such as OP or some of the others here but i can tell you this:

When i was at goldman sachs, the competition to get one of those institutional bond trading posiitons was enormous. They get tons of resumes from top universities, top of the class type individuals. on our florr we had about 14 traders. Of all of them, only 1 of them had worked his way through the organization to that spot. He had started in the mail room, then got to settlements cage, then to junior trader, and finally lead trader on T-bills i think. He was also a total kizass, but at least it got him somewhere and i can respect that somewhat, even though he was a jerk to all those 'under' him, ie. the very same people in the positions he started out from.

There was also just ONE other guy who was hired straight from school and went through the interview process. As for ALL the others, and i mean ALL of them, its funny becuase everyone either had a father or uncle already working in the company somewhere, or were related to some bigshot politician, or some other high standing member in the wall street community.

Its all about who you know....

Funny thing is...the BEST traders were the very two who worked their way to get there....

Going for a interview for a trading/derivatives job would you mention poker or not.what trading topics would be good to brush up on before an interview?

% luck involved to where you are today?

I have no knowledge of brokering at all, but was offered a job opportunity as a Mercantile broker from someone I met through poker. I'm 20, I play for a living and don't plan on giving it up (3-4hrs a day only). I guess my [newb] questions so far would be:

How easy is it to leave work at work? I'd likely be playing 3hrs/night after my work day is over and would like to have a clear mind.

He would be teaching me and said there's no chance I can't pick it up after 6 weeks. Is that realistic considering I know nothing?

He assured me there was 0 chance I could lose my own money doing mercantile brokering; that's true, right?

We would be working off of contacts he's built through years on wallstreet, is that as huge of a gift as it sounds?

I'll be in this thread every now n then as I imagine a lot of questions will come up in the next few weeks. Hope my cluelessness is tolerable . Great questions and answers so far, very insightful.

I trade now full time, mainly scalping CL and TF (occasionally GC). Also swing trade equities and options. I have only been at if for a year and I think I have spread myself too thin.

Do you have a suggestion for the "optimal" number of instruments to trade?

thank you

HOLY BUMP BATMAN!

I almost forgot this thread even existed, haven't seen it in years

Physically I find it difficult to trade more than 2 markets at once unless I am doing a purely mechanical type of approach. I had an automated system running in the past when the markets were howling and I would typically trade 5 or 6 markets at a time. But now I have trouble finding one or two good markets to trade for my approach.

A lot depends on how often you are trading though. I tend to trade a lot so I find it more difficult to trade lots of different stuff. But if you only get a few signals a day you may be able to scan many markets.

Another consideration is market connectivity. It seems like everything gets goofy at the same time and in times of intense volatility I will often just focus on one at a time.

You say you are a scalper. When I scalp I typically just focus on one market at a time. However if I'm scalping CL and I notice GC start to get volatile I may switch.

Sorry, not my area of expertise. I am a nuts and bolts floor/screen guy and know little about the brokerage business.

Thanks very much!

grunching here, but are you doing client orders, prop or market making?

Started as a market maker but now am more of a prop.

Mr Baseball,

I apologize for not reading all ten pages... You still floating around on the floor or are you a comp trader now?

I run a private office through ADM out of North Dakota. What pits/commodities do you focus on now?

I am 95% hedging based 5% spec. And am currently working on building my timeline on my Credit Spreading of Ag's (grains mostly) to launch a starter fund.

I have been off of the floor since about 1999 and have upstairs on a screen ever since. This thread is 5 years old so a lot has changed since I initiated it. These days I trade mostly crude oil. I also trade metals and ags and ocassionally currencies. Natural gas used to be my favorite market but it has had all of the volatility sucked out of it since it crashed from the 08 bubble and has become horrible to trade. But whenever a market gets "hot" I sort of gravitate to it as I like volatile markets.

We trade similar products, do you happen to use Market Profile?

Also, many folks that I've spoken to had a real rough time moving from the floor to the screen. How was it for you?

I know this thread is old so pls just disregard if it's a hassle replying.

thanks again!

No hassle at all!

I don't use market profile.

As far as screen versus floor it is very different. I was actually one of the first to really make the leap from floor to screen as the floor was still quite healthy when I went upstairs.

Initially the screen was tremendous because it offered lots of different arb opportunities plus in the early days it still traded a lot like the floor did. As screen trading has evolved (and continues to evolve!) it gets tougher and tougher and you have constantly adapt to the environment as more and more high frequency and algo type stuff muddies the picture.

The floor was a closed environment where the screen is a wide open environment. On the floor orders came from the outside but everything was done right there. You could get a feel for where the orders were and lean on stuff and if you were quick enough you could always get out okay if need be. The screen is totally different. You can lean on nothing and there is a lot more volatily overall and especially more volatility in a narrow range which makes market making/scalping activities much more difficult. Early on you could "read the book" on the screen but algos have pretty much negated that and what the book shows on the screen is nothing but fiction as real orders are masked while "fake" orders are shown and cancelled before they could ever be filled.

Lots of guys just could never adapt to the wide openness of the screen and the resulting volatilty which makes floor style trading impossible to do on the screen. Different staregies and tactics need to be learned and employed for the screen.

what does "lean on" mean?

good thread, thank you very much for doing it

It's easiest to describe with an example.

Lets say I am long a market in the pit. I can see where all of the brokers are at with their orders. Lets assume that this fictional market is one bid and offered at two. I am trying to sell my long position at two. But I am "leaning" on the one bids around me knowing I can sell out my position at one if I have too. This was the bread and butter of the closed environment pit market makers.

If a screen market is one bid at two there is no possible way you can "lean" on the one bid. The environment is too wide open which causes very large small range volatility. On the screen the one bid may not even be real and for a one tick wide market to print 5 ticks away in either direction is commonplace as algos and the huge variety of participants can push the market around wildly in a small range.

This is why pit guys have trouble shifting to the screen because the small execution edge that pit traders got on each and every trade is no longer possible with screen trading.

great explaination...


you catching this downdraft in the /CL this a.m.? globex has been vrey kind to me today. looks like I'll be done for the day before the pit open...lol

Been watching Hoping for a volatile day and big swings. I'll probably start firing right after the trade balance number comes out in a few minutes.

Good luck!

It is interesting hearing the story over and over how the pit guys have handicapped themselves with their 'edge' and can't get themselves to move up to the screen. Old dogs and new tricks... Had lunch with a guy who in his biggest year, he is mostly a custom trader on the floor for bigger firms. Made $1.8million... and has yet to make money on the screen.

Who do you clear through out there?

looks like it is setting up for a wild one, worst day of rollover.

if/when you retire, how would you play the market?

alternatively, you're hired as a junior trader as day trader (stocks, bonds, commod?), how would you look to make money?

can small investor play market swings or do algorithms and speed put smallguy at disadvantage?

might be unfair q's but trying to gain from your expertise as to how the small investor should play markets? obviously small guys have some big advantages over huge investors (how does fidelity go from defense to offense quickly). some huge disadvantages too

thanks again!