|
PureBytes Links
Trading Reference Links
|
Dear David & Group,
Several years ago, I visited my various brokers in Chicago, an activity that I
should have made much earlier in my trading career. I vividly recall one (among
many) experiences I had there, this one on the floor of the CME, and
specifically on the side of the S&P pit. This broker (who shall go nameless)
had two banks of S&P trading desks, one retail (for individuals like you and me,
generally, the 1- and 2-lot traders; there, a 5-10 lot was size) and the other
commercial (where I saw them unload 1000 S&P contracts in a fast market with
only a 0.5 point spread among them all). Regarding your question, what I recall
is that they introduced me to one of their clerks whose job it was at their
retail desk to monitor a computer running a charting program (I don't think it
was TS) and tell the guys when likely technical signals would get hit ---
signals like a 14-period stochastic on a 5-min chart, various common moving
average cross-overs, Fibonacci retracements and extensions, and so forth.
They'd shout around the desks, so-and-so will be hit at [some price], and of
course, guess what would happen, their guys on the floor would step in front of
the signals and fade the hell out of them. Who made money? Well, what I can
tell you is that this broker paid this clerk to monitor his computer full-time,
and their guys on the floor kept fading these signals. The law has a phrase
"Res ipsa loquitor", which means "the act speaks for itself." Did these guys
have an edge or what? Res ipsa loquitor!
Sincerely,
Richard
David Folster wrote:
> I would be interested to hear comments re: what peole think about too many
> people trading the same system, i.e. does it negatively effect the system?
> I've always wondered about why people say this is so. It seems to me that
> the more buying/selling power there is, the stronger it would make the
> system. But that is just logic off the top of my head; I have no idea how
> this would really play out. It also seems to me that even if the concept
> were true, that the stock market is so huge, it would be difficult for any
> one system to be negatively affected by a large number of people trading it.
>
> People often say that if there were a large number of people trading a
> system, eventually the floor would start fading those signals... but does
> anyone actually do that? Does anyone actually know people who say, "hey OB
> (or whatever) is going long, lets fade it!" ? That seems kind of unlikely
> to me, but I'd be interested to hear comments from people who know better.
>
> Thanks,
>
> David
|