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Jerry:
My response may not be what you are looking for, but here goes:
I had been trading for about 18 years when I finally decided to go on the floor
of the CME. My wife actually suggested it, because she kept hearing me talk
about how the pits are slowing disappearing. Her thought: I'd been trading on
the phone with the CME and CBOT all these years. Would I feel like I missed
something if I hadn't spent some time trading in the pits?
Once I began the registration process for getting a CME seat, I spent the next
six weeks or so with a visitor pass to the pits and I tried to spend the whole
trading day in the pits. For me, there was so much noise and action going on
that I needed to acclimate myself to the pit environment. By the time my seat
came through, it was clear that the pits were a very different place to trade,
relative to my past trading environments. It was extremely easy to be 'swayed'
into positions by the noise and enthusiasm of the pits.
To solve this issue for me, each morning at breakfast at the Merc club [CME
members restaurant], I put down a game plan for the trading day in the various
commodities I planned to trade that day. The most important thing I learned was
that to trade in the pits without a plan was much worse than trading in the pits
with a *bad* plan. Pick a plan of action for the day and then do your best to
execute it. I would print out swing charts and then run my retracements and
projections, support and resistance. Then I'd put these levels into a table that
was easy to read and I marked the important levels in red with a highlighting
marker. On the top of that table, I printed very clearly the two or three things
I planned to accomplish that trading session in that commodity--so I might have
written down that in my swing trade analysis, I would be looking for a place to
sell. And once I got short, I would be looking for XX as support and YY as my
stop-loss level.
Of course, there were mornings when the plan was useless in the first fifteen
minutes of trading--a large gap opening, for example, or a surprise in an
economic number released at 7:30. In that case, I left the pits and went back to
the office of my clearing firm and ran new charts and made new tables and
developed a new plan. I *did not* walk right behind the pits and use the readily
available CQG and FutureSource machines for a quick look and feel--I found
quickly that that was like taking sugar or a drug that spurred me to trade with
poor analysis. To get to my clearing firm's office, I had to go down the
escalator and then up the elevators. I found that the ten or fifteen minute
action of leaving the floor and getting into an office cleared my mind and
allowed me to re-think the markets.
What did I look at when I was literally in the pits? You don't have to look at
the boards for prices. Everyone standing around is shouting and using hand
signals. If you are trying to read prices off of the board, it usually means you
are disoriented. About the only time I would use the price boards was when I was
trading something that was being driven by a different commodity. For example,
if I was in the Dmark pit and the DM was rallying based on a really strong yen,
I would keep my eyes on the yen prices on the board. At that time, the yen pit
was not particularly close to the DM pit [several pits away] but you could
always hear when the yen made a new high or low--the noise is unmistakable in a
running market.
Other than looking at news releases as they are flashed up on the boards, I
didn't find much use for them. I did not watch the Qcha in the S&Ps, for
example; but then, I was never a scalper.
I had a great time in the CME pits. It isn't for everyone--in fact, after six
months or so, I found that I was walking into the pits and then executing; then
I leave the pits until prices got near my stop or profit levels. That's pretty
much what I do all day in my trading office, so I got rid of my seat. Trading
for six hours in the CME pits takes an incredible amount of stamina and energy.
I think most people think the locals stand around at a party, waiting to steal
money from you when you place an order. It's really hard work. If you get the
chance to go on the floors of the exchanges, go! There's no experience like pit
trading.
Best,
Tim Morge
Jerry Gress wrote:
> Hi Tim,
>
> I always like reading the stories of the pits.
>
> When you were in the pits what was the number one board display did you look
> at?? Besides the 'noise' , hand signals, runners, shouting of the big
> players, what did you look at that off floor traders can have access to?
>
> Regards,
>
> Jerry Gress
> Stockton, Calif. USA
> trader@xxxxxxxxxxxxx
>
> ----- Original Message -----
> From: "Timothy Morge" <tmorge@xxxxxxxxxxxxxxx>
> To: "Ron" <ron560@xxxxxxxxxxx>
> Cc: "Omega List" <omega-list@xxxxxxxxxx>
> Sent: Tuesday, July 11, 2000 10:27 AM
> Subject: Re: DATA Discrepency BE AFRAID!!!
>
> > Ron:
> >
> > If have ever visited the futures exchanges--or better yet--pit traded for
> a
> > period of time, you'd see that the prices we get from data vendors [and
> the data
> > the exchanges send out] are only fairly crude representations of where the
> > market is. Remember, except for the totally electronic exchanges, we are
> seeing
> > prices that are derived from a group of clerks standing outside the pit,
> typing
> > away as fast or slow as they wish. Often, I'll do an order in a pit like
> the
> > Nasdaq futures [where I have direct phones to the pit] and after I make
> the
> > trade and confirm the trade and price is moving away from where I made the
> > trade, my broker will be shouting at a pit 'recorder' to get the price on
> the
> > *blanking* screen.
> >
> > I had a seat on the CME for a stretch of time. Trading in the currency and
> S&P
> > pits for any period of time there will give you a better feel for the
> 'noise'
> > contained in the data most of us use. You clean it the best you can and
> trust
> > techniques you use that are successful over time. Data streams from
> different
> > sources may not match--especially if they are using different data plants.
> >
> > What do you do in this case? You'll have to watch both data streams with
> your
> > indicator and then choose which you trust and which is successful. This
> may be
> > the lesson that shows you just how subjective most indicators are.
> >
> > Be careful out there! This is real money!
> >
> > Best,
> >
> > Tim Morge
> >
> > Ron wrote:
> >
> > > Please consider the following example:
> > >
> > > DTN Feed_IBM 60min_Stochastic Crossover
> > > A crossover buy is generated using DTN data.
> > >
> > > Quote.com Feed_IBM 60min_Stochastic No Crossover
> > > No crossover in Quote.com data using same stochastic parameters.
> > >
> > > What do you do? Both feeds have been working fine all day and tick
> counts
> > > are within 95% of each other but obviously there is a discrepancy in the
> > > data between the two feds. Its very hard to get to independent feed to
> match
> > > data exactly, especially on the lower time frames.
> > >
> > > Since no two feed are the same does it make sence to test systems on one
> > > data source and trade it using another. No matter how reliable your data
> > > source is for historical data there is no guarantee that your real time
> data
> > > matches the intrinsic characteristics of your historical data source.
> Infact
> > > most often the performances will NOT be the same for the same system.
> This
> > > highly limits the type of systems that can be traded in real-time and
> tested
> > > historically. SO BE AFRAID!!!
> > >
> > > This data problem has been bugging me for a long time and unless you
> have
> > > direct feeds from exchanges and full control over the data distribution
> and
> > > filtering process you may be trading based on artificially adjusted
> data.
> > >
> > > So where do you draw the line.
> > >
> > > All comments appreciated. Thanks
> >
> >
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