Leasing exchange membership

Thanks Riskless.
However, I am not talking about a choice of trading the minis on the screen or on the floor. I am talking about having a choice of starting a trading business with a choice whether to trade an instrument such as emini or bund which could be screen based VS. start your business trading a commodity that is at this point only pit based such as gold or coffee or oil.Why would you pick 1 over the other. Thanks again.
 
Quote from Risk Less:

The edge on the floor is gone for Futures. Most of the paper is on the screen. In the ES and NQ the floor guys are getting run over by the screens.

The Options are a different story! You need to be in the Pit due to costs and flows, but the Pits are extremely competitive for the flows. In order to Market Make in the 10-Year or the S&P Options you better have some time to prove yourself and get some recognition from Brokers. A veteran floor trader will find it difficult to move into a new pit and get the trades that he wants. In addition, the markets are tight and traders need to inventory substantial positions to make a go of it. Capiatal is essential because you will need to take some swings.

Risk Less

I am not saying he is right or wrong just make sure you know where this guy stands. You run an electronic trading firm right riskless?

I think it's important on here for everyone to do your own homework. Most people on here that give advice are pushing something or speaking with a bias because they want to support and justify what they do. A natural human instinct.

Ask yourself this question, if there was no edge on the floor, then why would the locals be there? This is capitalism folks not charity. These guys are not donating their time to help feed poor traders. They are there because their bottom line justifies them being there. There is still some edge on the floor. Is it as great as it was 10 years ago? No. Having said that, the floor allows guys basically to trade at almost no cost, with no margins and yes, earn a spread.

They don't have expensive systems cost or worry about their system going down. Most of these guys work for themselves so no boss. They enjoy the company of their fellow peers on the floor and have a feel for the market that one can never appreciate on a screen.

Like I said, take everything you read on these boards with a grain of salt. I was told a lot of things about the death of the floors in Chicago and of course I believed it. Until I came up here to see for myself. I talked to 100 traders and 20 clearing firms. Walked down to the floor, stood outside the pits, asked a lot of questions. This is how you learn.
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Keep in mind that exchange approval for membership is not a layup. The applications at the CBOT and CME are very background intensive. Bad debt or past legal problems will raise eyebrows. A conviction or bankruptcy are virtual certainties to forfeit approval.
 
Quote from Pabst:

Keep in mind that exchange approval for membership is not a layup. The applications at the CBOT and CME are very background intensive. Bad debt or past legal problems will raise eyebrows. A conviction or bankruptcy are virtual certainties to forfeit approval.
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Actually no, my boss on the the Merc was on the membership committee and we discussed this because I had a DUI. They do check everything and are very thorough. There was a guy in our group who was investigated by the FBI because of an old warrant the CBOT investigators discovered. However, as long as your honest about past indiscretions and have positive net worth, you'll be O.K. The net worth thing was important from talking with people from the clearing firm and from meeting with the membeship committee of the CBOT. They specificialy asked about my negative net worth. Fortunately, I was trading for somebody else so it didn't matter. As far as convictions, my boss made it seem like it was no big deal as long as it was mentioned and it wasn't fraud.
 
Quote from Trajan:

Actually no, my boss on the the Merc was on the membership committee and we discussed this because I had a DUI. They do check everything and are very thorough. There was a guy in our group who was investigated by the FBI because of an old warrant the CBOT investigators discovered. However, as long as your honest about past indiscretions and have positive net worth, you'll be O.K. The net worth thing was important from talking with people from the clearing firm and from meeting with the membeship committee of the CBOT. They specificialy asked about my negative net worth. Fortunately, I was trading for somebody else so it didn't matter. As far as convictions, my boss made it seem like it was no big deal as long as it was mentioned and it wasn't fraud.
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I should say that the warrant for the guy was dropped and was bullshit considering it was his girlfriend who tthen became his wife who made the claim. The warrant was very old and obscure.
 
Quote from Trajan:

Actually no, my boss on the the Merc was on the membership committee and we discussed this because I had a DUI. They do check everything and are very thorough. There was a guy in our group who was investigated by the FBI because of an old warrant the CBOT investigators discovered. However, as long as your honest about past indiscretions and have positive net worth, you'll be O.K. The net worth thing was important from talking with people from the clearing firm and from meeting with the membeship committee of the CBOT. They specificialy asked about my negative net worth. Fortunately, I was trading for somebody else so it didn't matter. As far as convictions, my boss made it seem like it was no big deal as long as it was mentioned and it wasn't fraud.
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Trajan,

I needn't mean anything as innocuous as a DUI, but IMO with any felony conviction one's toast. I also knew a guy who had a judgement for like 2k (college loan), didn't even know he had it. CBOT membership committee put his app on hold until the debt was settled and proof of payment given. Like you I snuck in with a neg. net worth and they could've been cooler.
 
A couple of months ago, I spoke with a lady whose prime business is coaching traders who migrate from pit to screen. she charges upwards of 15K/trader for this program. The main points I gathered from the conversation is that futures trading is migrating from pit to screen so pit edge is going away. Looking back at that conversation, there are some things that doesn't sound right...
1. If paper is migrating from pit to screen and locals were making less money due to paper getting thinner, why not go to any of the contracts in Chicago or NY that trade good volume and are not threatened by the elec execution such as oil, grains, softs,etc.
I figure it is easier to change commodity than change from pit to screen.
2. I've heard of a good number of traders needing to train to learn how to trade screens.Does this imply that trading the screens are harder than open outcry and as such if one has a choice of trading screens vs. open outcry, one should go to the pit because it is a better positive expectancy game.


Thanks
 
Quote from GATrader:

floor vs. screen
If you had the choice of trading on the floor vs. screen based, which would you pick? Is being on the floor in an open outcry environment far better edge wise than the "sterile" environment of the screen? I am debating whether the floor edge is worth it-pain is the ass to apply 1.)$1,000 per month lease 2)NFA paperwork, 3)floor broker application costs of $1700.

Any thoughts as to why it would be worth all that trouble and expense? Thanks
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IMHO, it depends on how good your politics are. Do you know any brokers, are you related to anyone in a position that can help you?

Floor traders must have good politics to get order flow - which pays the bills and allows you to occasionally speculate.

Without good order flow you are just speculating and you may as well be trading from a screen.

That is also why many floor traders have a hard time switching pits. They don't have good politics in the new pit.

When the pits were growing, a new guy could find a home. But with the pits shrinking - its all about politics.

IMHO
 
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