Paul Tudor Jones
- Thread starter bentedges
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Lol @ trading during the 80's.
Great video.
Great video.
Paul is a genius. That video was incredible. Just shows how little i know. There's an entire world behind the screen i know next-to-nothing about.
I guess you need to go back in time then. Geeeeez! A legend of raising money and hiring traders maybe
That tape actually should be viewed in context of "trading before computers and before the general public ever considered trading in commodities".
Back then compared to today, trading futures was NOT nearly as mainstream as today, not even close. Futures trading, aside from the major commercials and the pit local traders and a limited class of speculators was almost like a closed society. In other words the public was not involved, hedge funds were nothing back then compared to today and stock funds could not even consider trading in such a loser game as commodities.
Computers allowed for instant quotes, tick by tick charts on the fly, volume, indicators etc, etc. Do not forget stocks were first to be electronic traded and futures took a few years longer before order entry platforms were common as they are now. Getting futures to the computer and lined up with the clearing house was a harder task because futures needed to be reconciled on the fly relative to the margin reguirements. Stocks had a 3 day period to pay up if i remember right.
I waited on pins and needles for that to happen, took a long time but here we are today and futures have advanced to where the public, hedge funds, housewifes, everyone is trading them today. No phone calls, no more as high as $75 or more for each contract to buy or sell at merrill Lynch etc. (Believe it, :eek: :eek: )
What has NOT changed though is the % of those that lose. That tells you something very important, that being that computers are nice but whats between the ears is what matters to be a winner or a loser. That part of the game has not changed. Humans are not enhanced in their thinking and understanding of each other just because they have electricity in their house.
Back then compared to today, trading futures was NOT nearly as mainstream as today, not even close. Futures trading, aside from the major commercials and the pit local traders and a limited class of speculators was almost like a closed society. In other words the public was not involved, hedge funds were nothing back then compared to today and stock funds could not even consider trading in such a loser game as commodities.
Computers allowed for instant quotes, tick by tick charts on the fly, volume, indicators etc, etc. Do not forget stocks were first to be electronic traded and futures took a few years longer before order entry platforms were common as they are now. Getting futures to the computer and lined up with the clearing house was a harder task because futures needed to be reconciled on the fly relative to the margin reguirements. Stocks had a 3 day period to pay up if i remember right.
I waited on pins and needles for that to happen, took a long time but here we are today and futures have advanced to where the public, hedge funds, housewifes, everyone is trading them today. No phone calls, no more as high as $75 or more for each contract to buy or sell at merrill Lynch etc. (Believe it, :eek: :eek: )
What has NOT changed though is the % of those that lose. That tells you something very important, that being that computers are nice but whats between the ears is what matters to be a winner or a loser. That part of the game has not changed. Humans are not enhanced in their thinking and understanding of each other just because they have electricity in their house.
Yes, trading in the 80's!
Remember the Kansas City ValueLine futures contract?
The scenes of PTJ having floor brokers working a stock-index futures order was on the old NYFE floor adjacent to the NYSE on 85 Broad Street where they traded the "red-headed" stepchild of the S&P futures, the NYA Composite contract. This stock-index contract was owned by the NYSE, but they didn't really promote it all that much because of all the "heat" that the program trading/stock index futures stuff took during the 1987 Crash. The NYSE wanted know connection to that kind of a "product" whatsoever, because it was blamed (partly) for the Crash.
The NYFE wound up being acquired by the NY Cotton Exchange ( whose Chairman at the time was Paul Jones ) and eventually moved over to the main commodity trading floor in #4 World Trade Center (with the Comex, Nymex, Coffee, Cocoa, Sugar, and NY Cotton Exchange ) in 1988.
I remember first traveling out to NYC and the NYFE back in the Summer of 1983 and I was looking down into the trading ring from the observation booth. It was around lunch time and there were only about 20 people standing in the pit, with Michael Ganz making a two-sided market for floor brokers.
This was when you were lucky to have a retail commodity broker call your order in from his office (instead of sending it via "wire"), which usually required a 5-lot minimum and resulted in commissions of between $75 - $125.
Seat prices back then were around $20,000, but they eventually plummeted down to $100. In 1987, I went on my own after buying my seat for $100 from a guy on the Comex and scraping together the $20,000 capital requirement for my clearing firm, which was Spear, Leeds, & Kellogg (SLK). The seats traded back up to about $3,000 - $5,000 when the NYFE was acquired by the Cotton Exchange (which later became part of the NYBOT), but the seats never traded higher and eventually traded back down into 3-digits as volume collapsed and the majority of stock-index players used the S&P for their hedging/trading in the early 90's. By 1993, volume had dried up to only about 2,000 contracts a day and it was extremely dangerous trying to scalp and still be a "local" in that ring. Making money on a daily basis became nearly impossible and the contract eventually died a slow, horrible death before being absorbed by ICE.
There was also a Russell stock-index futures contract on the NYFE ( as well as the CRB Commodity Index contract ) but those contracts rarely traded, and only by "appointment".
A former NYFE trader taking down a small clearing firm (Klein & Company) to the tune of $,$$$,$$$ didn't help the NYFE contract on the NYBOT either.
Case went to the U.S. Supreme Court as Klein & Company sought to recover damages due to the trader blowing out, not too mention that the trader in question also had official capacity as a member of the settlement committee. As a result, Klein sued the NYBOT.
Very interesting case, and highlights the rights ( or lack of rights ) that a clearing firm has in this kind of situation even when it has been proven that settlements of futures contracts had been "manipulated".
http://www.oyez.org/cases/2000-2009/2007/2007_06_1265/
http://www.cftc.gov/opa/enf01/opa4542-01.htm
Case went to the U.S. Supreme Court as Klein & Company sought to recover damages due to the trader blowing out, not too mention that the trader in question also had official capacity as a member of the settlement committee. As a result, Klein sued the NYBOT.
Very interesting case, and highlights the rights ( or lack of rights ) that a clearing firm has in this kind of situation even when it has been proven that settlements of futures contracts had been "manipulated".
http://www.oyez.org/cases/2000-2009/2007/2007_06_1265/
http://www.cftc.gov/opa/enf01/opa4542-01.htm
Landis, thanks for the 'local-color' perspective. It must have been crazy trying to make money trading then. The only other video that I have seen that shows pit trading from that time is another public television production called 'Open Outcry'. Have you seen any other videos that focus on pit trading? Any other interviews that are near to the Jones interview?
Thanks again...
Thanks again...