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Want "real life" stories?
Read "Market Wizards" and "The New Gatsbys".
The former is about "real life" pit trading "big boys" and the latter is a
collection of experiences. Maybe a little embellishment here and there, but
both are good, enjoyable reads...
And you just may pick up one or two trading "golden nuggets" here or
there........
----- Original Message -----
From: "Timothy Morge" <tmorge@xxxxxxxxxxxxxxx>
To: "Jerry Gress" <thegress@xxxxxxxxxxxxx>
Cc: "Omega List" <omega-list@xxxxxxxxxx>
Sent: Wednesday, July 12, 2000 10:20 AM
Subject: Re: Real Life Stories
> 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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