I honestly don't where the rally is. He said "first friday of september which is 9/3/2004. But here is the chart on that friday (daily). He mentioned shorting off of 68...unless I'm missing something, doesn't look like it?
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- Thread starter Bill Pro
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I honestly don't where the rally is. He said "first friday of september which is 9/3/2004. But here is the chart on that friday (daily). He mentioned shorting off of 68...unless I'm missing something, doesn't look like it?
Does the price make sense? Is he just talking about the last two digits? I would have to assume so.
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I highly enjoyed reading your opening post, and few people take their time to write that well, so thanks. An era that seems distant from today's anonymous screen trading (but in reality less than two decades ago).
How much was the effective maximum risk on your half a million winner in your estimate?
How much was the effective maximum risk on your half a million winner in your estimate?
Thank you so much for those kind words.
I'm not sure how to answer your question as to what was the effective maximum risk of that trade. Any answer would be backward looking because maximum risk exposure calculations certainly did not get made at the front end of trades. I know that sounds odd. But trading in the pit was an entirely different formula than trading on the screen. I believe this is why I don't know of one single trader who successfully made the transition from the floor to the screen. He or she might be out there. I just haven't met them yet.
To try to answer the question looking in the rear view mirror, the market had just rallied 25 basis points off of a mildly bullish number. In the one or two seconds of processing that fundamental analyses coupled with the technical chart resistance that I had at 68, I felt like 68 was a good selling point. Did I think the broker would buy 1,000 from me when I offered the market at 68? No way. I was hoping to sell a few hundred. Did I have to take all 1,000? No. I could have said, "100 only" or "200 only". But these were split-second decisions made in the pit. Why in that split-second did I take all 1,000? I honestly don't know.
Theoretically the market could have gone up another 25 basis points or more and I would have been forced to do my best to get out at whatever price I could. But going back to the fact that the market rallied 25 basis points off of a mildly bullish number - and again, this is pure hindsight - I would say that the realistic top of this overextended move was properly established of somewhere in the high 60s or low 70s.
This exercise really does a great job of highlighting one of the many differences between trading on the screen and trading in the pit. In the pit you could be more "seat of your pants" for lack of a better phrase. The pit was more forgiving. I will definitely consider expanding on this in a future post.
I'm not sure how to answer your question as to what was the effective maximum risk of that trade. Any answer would be backward looking because maximum risk exposure calculations certainly did not get made at the front end of trades. I know that sounds odd. But trading in the pit was an entirely different formula than trading on the screen. I believe this is why I don't know of one single trader who successfully made the transition from the floor to the screen. He or she might be out there. I just haven't met them yet.
To try to answer the question looking in the rear view mirror, the market had just rallied 25 basis points off of a mildly bullish number. In the one or two seconds of processing that fundamental analyses coupled with the technical chart resistance that I had at 68, I felt like 68 was a good selling point. Did I think the broker would buy 1,000 from me when I offered the market at 68? No way. I was hoping to sell a few hundred. Did I have to take all 1,000? No. I could have said, "100 only" or "200 only". But these were split-second decisions made in the pit. Why in that split-second did I take all 1,000? I honestly don't know.
Theoretically the market could have gone up another 25 basis points or more and I would have been forced to do my best to get out at whatever price I could. But going back to the fact that the market rallied 25 basis points off of a mildly bullish number - and again, this is pure hindsight - I would say that the realistic top of this overextended move was properly established of somewhere in the high 60s or low 70s.
This exercise really does a great job of highlighting one of the many differences between trading on the screen and trading in the pit. In the pit you could be more "seat of your pants" for lack of a better phrase. The pit was more forgiving. I will definitely consider expanding on this in a future post.
That's because the continuous contract is always different than the front month when you go back in time, as you can see from the chart below.
I think Tom Sosnoff is the only floor trader to have hit the lottery after leaving the floor. He went on to found Thinkorswim, which was later acquired by TDAmeritrade. He then found TastyTrade, which again was bought by IG. And I think, from what I can tell from his videos, he still trades actively for his own account.
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LOL sounds like you are using[ hit the lotto; a stupid tax on people that cant do math] as a figure of speech; even though its possible i just read you wrong.
I read with discretion + sure dont believe 88% of what i read in WSJ;
IBD newspaper most likely about 95-99% true .
Rich Dennis did poorly by his own admission 1st year; but stlll a multimillionaire after leaving the pits.
I havent personally met him or any Jack Schwager top traders; but he's reliable, more so than the WSJ, which i still read some.
I took risk$ when younger that made sense @ the time ;
but i now but title insurance on RE......