How do people trade in the pits?

Quote from ammo:

gamma, thnx for the info,do you know the cost to lease a cbot seat today to trade,spus or bonds
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CBOT
http://www.cbot.com/cbot/pub/page/0,3181,936,00.html

CME
http://www.cme.com/trading/mem/price/leaseprices.html

NYMEX
http://www.nymex.com/ss_nymex_lease.aspx

COMEX Div.
http://www.nymex.com/ss_comex_lease.aspx

MGEX
http://www.mgex.com/seat_prices.html

KCBT (i dont think they have exact prices on there website...but i talked to them about 3-4 months ago and it was about $500)
http://kcbt.com/membership_6.html

...LANDIS: Very interesting story about WTC attack and what it was like on the floor that day
 
Didn't you guys ever watch 'Trading Places'?

"[approaching the New York Commodities Exchange]
Louis Winthorpe III: Think big, think positive, never show any sign of weakness. Always go for the throat. Buy low, sell high. Fear? That's the other guy's problem. Nothing you have ever experienced will prepare you for the absolute carnage you are about to witness. Super Bowl, World Series - they don't know what pressure is. In this building, it's either kill or be killed. You make no friends in the pits and you take no prisoners. One minute you're up half a million in soybeans and the next, boom, your kids don't go to college and they've repossessed your Bentley. Are you with me?
Billy Ray Valentine: Yeah, we got to kill the motherfuckers - we got to kill 'em!"
 
Quote from futuresRX:

I'm going to try and answer a few of your questions here.

When you're a trader and you make a trade (for example the S&P 500), you announce your bid/offer (example: 4 at 3.40, would imply sell 4 contracts 1333.40 or whatever its trading it around now). Then, when someone says buy them or you negotiate the trade out with someone (very quickly), and you mark down the info on a trading card with their clearing firm and badge. These are all processed during and at the end of the day to match the trades.

Rarely does this end in arbitration, as usually if there is a price discrepancy they'll check the audit trail (you have to announce your trade to the quote person in the pit) and confirm the trades. Often, they will just split the price difference (like say you said you bought them at 1333.40 and I said I sold at 1334.40, we would just agree on 1333.90 and be done).

Not every trader has a runner to confirm and match the trades, but clearing firms usually employ runners to confirm trades for their customers that route directly to the pit.

Floor traders pay the absolute lowest commission. I pay $0.20 per side to the exchange for the S&P trades (my clearing firm charges $0.21 each extra) and $0.11 each for my active market, Lean Hogs. One tick on the big S&P will net me $24.18, which is nice if you can manage it 100s of times a day.

CME is moving over to the CBOT building (they already have begun doing so) and the CME floor is being converted to office space.

Also, if I'm not mistaken, the capital requirement is around $100,000 unless you can strike a deal with your clearing firm.

There are many opportunities still present in the pits, however 95% of people don't make it because they're too crazy or just can't stand when a trade goes 5 ticks against them. People can make over $50k in a day (believe me I've seen it) and also lose their entire account. My son just started trading with me in the hogs, and he was down $18,000 the first day, sending his account into a debit amount.
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Do you or most locals just offer a few ticks higher right after you bought the bid? And what % of your trades result in scratches?

With your SnP example, the math is amazing. Given a regular spread in the pit is 30 to 50 cents, if you can do 10 cars and make 50 cents, thats $1250 a day (very decent living indeed). How do able is that? And how big is the risk when your target is only 50 cents?
 
Quote from jsmooth:

...LANDIS: Very interesting story about WTC attack and what it was like on the floor that day
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You are welcome.
I "missed" the 9/11 attack, but tragically several of my friends did not.
:(
 
Quote from dipper17:

1250 a day in a vacum, dont forget all your fixed and all your variable expenses.
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A seat lease is about $3k right now, and commisions, we are talking 50 cents a contract.

I would imagine if a local has good relationship with a broker, which give him trades while the other guy is still bidding at that price and can easily turn around and scratch it, $1K to $2K net income in the pit is pretty doable and with little risk too
 
I would say 1000 to 2000 for a guy just off the boat stepping into the pit is a pipe dream.

I dont know what the seat lease is these days or what all of the expenses are anymore but I guess their monthly nut before dollar one would be pushing 8 to 10k, and thats without having to do any soft money stuff to even get a sniff of order flow.
 
Quote from cashmoney69:

do traders in the pits have a longer "life span" than us at home?..can any average joe be a pit trader if they have the capital minimum?
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no they usually have high blood pressure, and suicide-prone and manic depressive is common in pit traders.
 
Quote from illinimatt81:

Yes, this still applies. The only way I know of to get on the floor would be to have a trader with a seat take you in personally. That is how I was able to tour the floor. To be hoenst, there isn't much going on at the CME anymore as the pits are already moving down the street to the CBOT.

There is a documentary entitled "Floored" coming out about the CME and pit trading coming out in 2009. It is being shot by a trader at the CME. Looks like it will be a great piece.

http://www.chicagotribune.com/business/chi-mon-floored-movie-cmemar03,0,6977071.story

www.flooredthemovie.com
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Movie looks like a must see. looking forward to watching it
 
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