True Legendary Trading Stories
- Thread starter thetraderprofit
- Start date
FredBloggs
Guest
do you have her number?
LOL
Looking over this thread it's funny to see how many of it's posters are banned.
For the record on my earlier post regarding $750,000 loss for the sale of my internet company, those of you with any knowledge of M and A would have known that my shares where frozen for 12 months so I could NOT sell them at $750,000.
Finally one last story:
After 2.5 years of losing 50k (systems) and 75k from intra-daytrading loses, the last 2 months that I have been profitable I am now break even on this daytrading nonsense.
Here's the best part:
I am STOPPING and going back to fulltime swing trading and options writing.
I came, I saw, I conquered ... now back to SANITY!
Good trading to you all and good bye!
Looking over this thread it's funny to see how many of it's posters are banned.
For the record on my earlier post regarding $750,000 loss for the sale of my internet company, those of you with any knowledge of M and A would have known that my shares where frozen for 12 months so I could NOT sell them at $750,000.
Finally one last story:
After 2.5 years of losing 50k (systems) and 75k from intra-daytrading loses, the last 2 months that I have been profitable I am now break even on this daytrading nonsense.
Here's the best part:
I am STOPPING and going back to fulltime swing trading and options writing.
I came, I saw, I conquered ... now back to SANITY!
Good trading to you all and good bye!
There was one guy who thought he would receive a present from the nasdaq (1000$ bonus and a golden pen) if he would get the 200millionth traded share on microsoft on a busy day after earnings. He was sitting in trance for 5 minutes behind his screen with his finger on the enter button. He only missed by 5,000 or so. He still made 3 cents on his 100 shares.
I went to a prop firm on last thursday 10th-Feb-05. It was first time ever i was in a prop firm.
After meeting with the boss, i asked for a look at the trading room. Then he kindly shown me his traders' "today P&L records"
It was something like this:
trader 1 $5xx
trader 2 $0
trader 3 $47
trader 4 $0
trader 5 $7xx
trader 6 $11xxx
trader 7 $0
Trader 8 $83,xxx (he traded r/t x contracts =18223, I could not see what future was he trading)
The time was 1 hour and 50 minutes after market open. they all trade the firm's money i was told.
It is my dream to make $83K in less than 2 hours.
After meeting with the boss, i asked for a look at the trading room. Then he kindly shown me his traders' "today P&L records"
It was something like this:
trader 1 $5xx
trader 2 $0
trader 3 $47
trader 4 $0
trader 5 $7xx
trader 6 $11xxx
trader 7 $0
Trader 8 $83,xxx (he traded r/t x contracts =18223, I could not see what future was he trading)
The time was 1 hour and 50 minutes after market open. they all trade the firm's money i was told.
It is my dream to make $83K in less than 2 hours.
From Economist.com
Most great trades are done in secret by highly paid traders working for investment banks, hedge funds and so on. Rarely does this institutional activity cross paths with the world of retail finance. But for inventiveness in linking the two activities, one trade clearly stands out.
It originated in 1992 when the Italian government changed its previously lax rules on withholding tax for Eurobonds. At that time some specialist teams in London and other big financial centres did nothing but seek out tax arbitrages: by buying this bond here and moving it there, it was often possible to avoid taxes at the point of purchase and thereby earn extra returns. Exploiting Italy's rules had been one of the neatest such wheezes, so when it was thwarted several of the tax teams found themselves wondering what to do next.
Among them was Ludovico Filotti, who worked for Barings. In 1993 Mr Filotti was on holiday in Italy. Reading the local newspaper, something caught his eye. An advertisement was encouraging companies to buy bonds issued by Italy's Post Office. These bonds were postal savings bonds, rather like Britain's national savings certificates, and carried the guarantee of the Italian state. Mr Filotti was curious: normally such bonds would only be for retail investors, so he wondered on what terms companies could invest. Back in Britain, he sent his Italian father the equivalent of £100 and asked him to nip down to a post office to buy a bond certificate so that he could study the small print on the bond.
What he found was encouraging. The postal bonds were âzero couponâ, that is, unlike most bonds, which pay annual interest instalments, they would pay nothing until they matured, so investors would have to wait a set period before pocketing their returns and recovering their original investment. The bonds promised a return of three times the initial investment after 12 yearsâa rate equivalent to 9.6% a year.
Back at his bank, Mr Filotti explained his discovery to a colleague, John Hunter, who realised that this highly attractive rate would be even more so if the equally juicy rates on Italian-government bonds were to fall. That would open a spread between Italy's ordinary borrowings and the postal bonds, just the kind of âarbitrageâ opportunity traders love. But the most remarkable feature of the offer was that there was no upper limit on how much could be invested. Nor were there disadvantageous tax obligations for foreigners.
In fact, the arbitrage quickly disappeared when Italy's interest rates rose rather than fell. The trading idea sat on a shelf. But, towards the end of 1995, Italy's economy began its path towards convergence with those of the other countries hoping to join the euro. That meant its interest rates began to fall. And, in the summer of 1996, they started to fall dramatically. Suddenly, the Post Office trade was on. Mr Hunter persuaded his new employer, a big Japanese bank, to buy $50m of the postal bonds.
At this stage, his trade became one of the greatest ever. It also became amusing. Mr Filotti, who had also gone to work at the same Japanese bank, flew to Italy and, escorted by police, carried a banker's draft for the equivalent of $50m into a post office. Queuing up alongside pensioners claiming their modest weekly infusion, he exchanged the draft for a savings bond. Soon the certificate was safely lodged in London. With no limit on the amounts that could be invested, a huge and profitable arbitrage was there for the taking.
Readers who are not financial experts need not worry about exactly how banks can exploit such trades, while the experts will understand that the bonds offered both option and swap opportunities to lock in big profits. Around the time of the trade, there was also large and unusual activity in the market for swaptions (options on swaps).
Mr Hunter, however, was unable to persuade his conservative masters to go further. No matter: he sold the idea for the trade, first to a single rival bank, then to several others. This set off a mad rush to buy the bonds before the opportunity disappeared. Bankers flew in droves to Italy, jostling to be in front of each other in the queue. In double-quick time UBS bought over $1 billion-worth of the bonds. CSFB bought the most, but, according to International Financing Review, a trade magazine, later gave back its profits when the Italian government threatened to withhold lucrative mandates for privatisations. Nomura made the biggest single purchase, plonking down $1.1 billion on the counter of a bemused clerk, who duly filled out a certificate for more than a trillion lire.
Of course, it could not last. After $3.6 billion of the bonds had been issued in the space of a few days, the Italian government suddenly put a ceiling on the amount that could be bought and made threats to the banks' future fee income. Too bad. Mr Hunter, however, is now the chief executive of Brains, a specialist broker that tries to make money by selling clever ideas to other traders.
Most great trades are done in secret by highly paid traders working for investment banks, hedge funds and so on. Rarely does this institutional activity cross paths with the world of retail finance. But for inventiveness in linking the two activities, one trade clearly stands out.
It originated in 1992 when the Italian government changed its previously lax rules on withholding tax for Eurobonds. At that time some specialist teams in London and other big financial centres did nothing but seek out tax arbitrages: by buying this bond here and moving it there, it was often possible to avoid taxes at the point of purchase and thereby earn extra returns. Exploiting Italy's rules had been one of the neatest such wheezes, so when it was thwarted several of the tax teams found themselves wondering what to do next.
Among them was Ludovico Filotti, who worked for Barings. In 1993 Mr Filotti was on holiday in Italy. Reading the local newspaper, something caught his eye. An advertisement was encouraging companies to buy bonds issued by Italy's Post Office. These bonds were postal savings bonds, rather like Britain's national savings certificates, and carried the guarantee of the Italian state. Mr Filotti was curious: normally such bonds would only be for retail investors, so he wondered on what terms companies could invest. Back in Britain, he sent his Italian father the equivalent of £100 and asked him to nip down to a post office to buy a bond certificate so that he could study the small print on the bond.
What he found was encouraging. The postal bonds were âzero couponâ, that is, unlike most bonds, which pay annual interest instalments, they would pay nothing until they matured, so investors would have to wait a set period before pocketing their returns and recovering their original investment. The bonds promised a return of three times the initial investment after 12 yearsâa rate equivalent to 9.6% a year.
Back at his bank, Mr Filotti explained his discovery to a colleague, John Hunter, who realised that this highly attractive rate would be even more so if the equally juicy rates on Italian-government bonds were to fall. That would open a spread between Italy's ordinary borrowings and the postal bonds, just the kind of âarbitrageâ opportunity traders love. But the most remarkable feature of the offer was that there was no upper limit on how much could be invested. Nor were there disadvantageous tax obligations for foreigners.
In fact, the arbitrage quickly disappeared when Italy's interest rates rose rather than fell. The trading idea sat on a shelf. But, towards the end of 1995, Italy's economy began its path towards convergence with those of the other countries hoping to join the euro. That meant its interest rates began to fall. And, in the summer of 1996, they started to fall dramatically. Suddenly, the Post Office trade was on. Mr Hunter persuaded his new employer, a big Japanese bank, to buy $50m of the postal bonds.
At this stage, his trade became one of the greatest ever. It also became amusing. Mr Filotti, who had also gone to work at the same Japanese bank, flew to Italy and, escorted by police, carried a banker's draft for the equivalent of $50m into a post office. Queuing up alongside pensioners claiming their modest weekly infusion, he exchanged the draft for a savings bond. Soon the certificate was safely lodged in London. With no limit on the amounts that could be invested, a huge and profitable arbitrage was there for the taking.
Readers who are not financial experts need not worry about exactly how banks can exploit such trades, while the experts will understand that the bonds offered both option and swap opportunities to lock in big profits. Around the time of the trade, there was also large and unusual activity in the market for swaptions (options on swaps).
Mr Hunter, however, was unable to persuade his conservative masters to go further. No matter: he sold the idea for the trade, first to a single rival bank, then to several others. This set off a mad rush to buy the bonds before the opportunity disappeared. Bankers flew in droves to Italy, jostling to be in front of each other in the queue. In double-quick time UBS bought over $1 billion-worth of the bonds. CSFB bought the most, but, according to International Financing Review, a trade magazine, later gave back its profits when the Italian government threatened to withhold lucrative mandates for privatisations. Nomura made the biggest single purchase, plonking down $1.1 billion on the counter of a bemused clerk, who duly filled out a certificate for more than a trillion lire.
Of course, it could not last. After $3.6 billion of the bonds had been issued in the space of a few days, the Italian government suddenly put a ceiling on the amount that could be bought and made threats to the banks' future fee income. Too bad. Mr Hunter, however, is now the chief executive of Brains, a specialist broker that tries to make money by selling clever ideas to other traders.
However, an even better contender for the title must be the trade conceived by Sir John Templeton to profit from the 1990s internet bubble. A renowned investor, Sir John will be remembered for many trades, not least the one in 1939 in which he bought shares in 104 almost worthless, and in some cases already bankrupt, New York stockbrokers. Hitler had just invaded Poland, and the young Mr Templeton correctly foresaw that abundant surpluses of goods and commodities would soon become scarcities, leading to a strong recovery of financial-asset prices. Within three years he had turned a profit on 100 of the 104 purchases.
Sixty years later, long experience suggested to Sir John that technology and internet shares were an especially inflated part of a huge bubble. The problem was to construct an investment strategy that could exploit this. His solution was ingenious, so much so that it wins the âWish I'd thought of thatâ prize by a mile.
For every flotation there is a âlock-upâ period during which insiders at the company are forbidden to sell any of their shares. Sir John reasoned that, in a bubble market, these insiders would generally be keen to sell once they could. After all, this was their only way of getting a lot of money out of their venture if it was unlikely to mature into a profitable long-term business and, as insiders, they ought to know better than anyone that few of their companies were likely to stay the course. So he systematically sold their shares short just before the end of the lock-up. That meant he could buy the shares back more cheaply if they fell in price, as he reckoned they would.
Sir John acted with great discipline. First, he decided to sell only those shares that were trading at more than three times their original price. Then he set precise points at which he would take profits if prices fellâand he would ruthlessly cut his losses if a particular share held up unexpectedly. In the end he made 84 separate transactions, each for $2.2m. The results were spectacular. Sir John made a return of almost 50% on his $185m bet. On some positions, he made profits of more than 90%
Sixty years later, long experience suggested to Sir John that technology and internet shares were an especially inflated part of a huge bubble. The problem was to construct an investment strategy that could exploit this. His solution was ingenious, so much so that it wins the âWish I'd thought of thatâ prize by a mile.
For every flotation there is a âlock-upâ period during which insiders at the company are forbidden to sell any of their shares. Sir John reasoned that, in a bubble market, these insiders would generally be keen to sell once they could. After all, this was their only way of getting a lot of money out of their venture if it was unlikely to mature into a profitable long-term business and, as insiders, they ought to know better than anyone that few of their companies were likely to stay the course. So he systematically sold their shares short just before the end of the lock-up. That meant he could buy the shares back more cheaply if they fell in price, as he reckoned they would.
Sir John acted with great discipline. First, he decided to sell only those shares that were trading at more than three times their original price. Then he set precise points at which he would take profits if prices fellâand he would ruthlessly cut his losses if a particular share held up unexpectedly. In the end he made 84 separate transactions, each for $2.2m. The results were spectacular. Sir John made a return of almost 50% on his $185m bet. On some positions, he made profits of more than 90%
last year 2 mil, trading what?
thats impressive in this market
what kind of buying power did he have back with 1m a day swings??
where did you read this ? in a book ?
gosh ... I wonder how old sir john is now
and if this money was his own ?
he is a legend ... so I guess I would like to know
some stories about when he lost too !
-Sir John acted with great discipline. First, he decided to sell only those shares that were trading at more than three times their original price. Then he set precise points at which he would take profits if prices fellâand he would ruthlessly cut his losses if a particular share held up unexpectedly. In the end he made 84 separate transactions, each for $2.2m. The results were spectacular. Sir John made a return of almost 50% on his $185m bet. On some positions, he made profits of more than 90%-
gosh ... I wonder how old sir john is now
and if this money was his own ?
he is a legend ... so I guess I would like to know
some stories about when he lost too !
-Sir John acted with great discipline. First, he decided to sell only those shares that were trading at more than three times their original price. Then he set precise points at which he would take profits if prices fellâand he would ruthlessly cut his losses if a particular share held up unexpectedly. In the end he made 84 separate transactions, each for $2.2m. The results were spectacular. Sir John made a return of almost 50% on his $185m bet. On some positions, he made profits of more than 90%-