Pit Trading

[bighog]

i have a copy of "Open Outcry", it is good to show someone if they want a further idea of the business. GOOD TAPE...

And on pit traders: many are plain vanilla scalpers that buy for the BID and sell at the ASK, where the regular non mkt makers but the ASK and sell at the BID. Everyone knows that is their edge. Other non scalpers use other methods, whatever works. In my opinion to trade anything without technicals is a hoax, What else is there? it would be like a rocket scientist shooting for the moon and beyond without the use of math, it ain't gonna happen.

How about this: Technical analysis is the mechanical part of finding setups to trade and intuition is the cognitive part telling you what you see in the setup of technical setup is a "Go, Pull the TRIGGER!!!!!"..................


In answer to the post below, Minn is primary mkt for hard wheat, but that price is a setoff from the Chicago wheat price. The difference is in the premium from the protein content of "macaroni" wheat that is grown up there and in the Dakotas

 

[SethArb]

is the mgex a primary market
for any commodities ?

www.mgex.com/seat_prices_2.html

 

[ChiBondKing]

Quote from will2205:

Is it safe to assume that none of you are actual pit traders. If so I would like some feedback on trading stratgies from a floor perspective. I've spoke to some of the locals here in Minneapolis and have been told that they decide to go long or short base on the paper coming in to the pit.I anyone can elaborate on this let me know. All I do know is the majority completely ignore techincals.

For short term intraday trading in the grains, I highly recommend The Logical Trader by Mark Fisher. A lot of my friends (a few retired from the game) used to play spreads in the grains (Jan corn vs. March corn and so on) That can be another opportunity if you want to hold on. The strategy behind that is to analyse longer term charts the night before, and when you get in in the morning, look at the overnight session. See how your spread trade is working, decide if you want a bull or a bear month spread and go into the pit and execute. You can capitalize on the move and exit at the close or hold overnight if you expect the trend to continue.

While your spreads are on, if you have money to do the shorter term daytrading, ACD system by Fisher and the rudimentary S/R levels that you calculated before you left home will definitely be of some help.

 

[ChiBondKing]

Quote from bighog:

i have a copy of "Open Outcry", it is good to show someone if they want a further idea of the business. GOOD TAPE...

And on pit traders: many are plain vanilla scalpers that buy for the BID and sell at the ASK, where the regular non mkt makers but the ASK and sell at the BID. Everyone knows that is their edge. Other non scalpers use other methods, whatever works. In my opinion to trade anything without technicals is a hoax, What else is there? it would be like a rocket scientist shooting for the moon and beyond without the use of math, it ain't gonna happen.

How about this: Technical analysis is the mechanical part of finding setups to trade and intuition is the cognitive part telling you what you see in the setup of technical setup is a "Go, Pull the TRIGGER!!!!!"..................


In answer to the post below, Minn is primary mkt for hard wheat, but that price is a setoff from the Chicago wheat price. The difference is in the premium from the protein content of "macaroni" wheat that is grown up there and in the Dakotas

Bighog-

From what I've seen in my experiences dealing with locals at least in the grains room (mcurto on here can comment from his vantage point over in the ritzy financials room) - there are no charts on the floor. All there is is you, a couple scraps of paper, and someone's dentyne on the back of your head.

With that said-
A lot of these guys for the 9:30 grains open will be at the CBOT 6am. They run their reports, get their acct statements, etc. and print out charts to give them an overall view of the market. By the time they get into the ring, those charts are stale and useless. Either you have some sort of system or a damn good ability to read the pit reporter LOL

-c

 

[ChiBondKing]

$30 to lease a seat on MGEX????? :eek:

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

 

[redbull13]

ChiBondKing,
I've worked in the grain room at the CBOT, and I have seen some traders using charts.

 

[ig0r]

Quote from TF13158:

ChiBondKing,
I've worked in the grain room at the CBOT, and I have seen some traders using charts.

Traders are different than locals. Not to mention that not even all locals are profitable...

 

[aPismoClam]

Quote from mcurto:

Daddyeaux,

Are you Cargill looking to hedge 5,000 corn futures or a huge cattle lot looking to move 1,000 live cattle futures? My guess is probably not. Commodities are generally illiquid and thrive upon the liquidity (whether one tick wide or ten ticks wide) that locals bring to the table. Granted, some of these guys are not that bright outside of the pit, but once they step foot into the pit they are like rocket scientists. These are not like the financial futures contracts, the whole world is not the market, the hedgers and speculators tend to be very localized and much smaller in scale than PIMCO and Citadel, and the rest of the hedge fund business for that matter. Throw commodity futures onto the screen and you create a recipe for smaller volumes and even more illiquid markets. The US grain markets are dominated by the select few (Cargill, ADM, Bunge). You can't tell me that they won't manipulate the markets on the screen to their advantage and to the disadvantage of the consumer. The price discovery provided by the pits is a value added proposition, at least in the grains and meats of Chicago. I can't speak from the New York point of view where the energies and metals tend to be more global in reach.

nyc -- coffee, sugar, cocoa, fcoj, cotton.

what do I know? I'm too new. Cocoa is screen-traded in London, so they say. I think the trade in the softs prefers the pit. There's too much at stake to gamble on alienating the floor community. That IS the market.

imho. and subject to change.

you're right about the pit. these guys don't seem too bright. but they are a sight to behold when the bell rings.

reminds me of some of the crackers I've met in Florida. appeared to be as dumb as posts. but as shrewd as they come.

anyone who thinks any idiot could make a market just hasn't tried it. the level of efficiency, intuition, skill and talent honed in the pits is awesome.

 

[mcurto]

The financials at the CBOT include just about every trader imaginable, it is trully a room full of diverse (from an intellectual standpoint) individuals. Most of the 30yr bond traders are pure outright traders that trade purely off of order flow. They use technical levels to a certain extent just to figure out where stops may be located. In other words, these are the group of guys that trade purely on feel of the market and don't necessarily trade huge size. The 10yr pit includes some absolutely HUGE traders. One is Hardy Brumfield, who again trades on order flow and is incredibly aggressive in willing to take on size paper. He has been better in picking his spots lately and is generally on the right side of most big moves after numbers and into stops. It seems for the most part he trades purely on market fundamentals. The other ten year guys are enormous yield curve traders and trade just about every yield curve spread and calendar spread on the floor. The two and five year pits are the same with mostly spreaders. The guys that do use technicals stick to Market Profile for the most part. In my opinion, knowing the fudnamentals of the market, dealers positions, and a sense of anticipation of what paper will do depending on more long-term yield levels is a good way to go about day-trading the bonds instead of purely scalping or spreading.

As for the grains, I used to talk to some of the higher-ups at Iowa Grain Co., and the owners have a family farm in western Illinois. To say these guys know fundamentals is an understatement. They sent an employee to South America to check out the status of their bean crop a few years ago. That is absolutely nuts. The only technical levels they use are daily pivots, or basically a value level, which they consider something rich or cheap when not trading at that level. They also trade quite a few spreads based on fundamentals and build sizeable positions in terms of the grain market, adding a little bit every day.

 

[ChiBondKing]

Quote from TF13158:

ChiBondKing,
I've worked in the grain room at the CBOT, and I have seen some traders using charts.

Yeah, but I've also seen some locals (another poster posted that locals and traders are different in a context) who trade off of order flow and still manage to make a nice tidy profit. They don't have charts.

But hey, different strokes for different folks.