These are the two biggest hurdles new commodity traders face, and overcoming them is a long and ongoing process. Contrary to Gordon Gekko’s famous (or infamous) line in the film Wall Street, greed is not good. In fact, in this business it could be lethal. How do you overcome these tendencies? Well, life on the floor is kind of like living in a big support group: not always pleasant, and certainly not always good for the ego!
When I was getting my feet wet and was still green as grass, I was surrounded by traders who had been in the pit for a very long time, some since the founding of the exchange. And believe me, they were the first to let me know when I messed up! A cardinal sin in the pits is to bid into someone’s offer. In other words, when you step into the pit, you announce yourself. Usually you simply shout out the month you’re trading—for example, SEP or OCT (September or October).
Then people in the pit will yell back something like “2 bid at 8.” That means they are willing to pay 2 or sell at 8. It’s just an indication, but it gives you an idea of where the market is. To bid through some-one’s offer means that if I entered the pit and bid 9 when they were offering at 8, it would be a very big no-no. And they let you know about it! So I only did that a couple of times before I wised up. Either you learn quickly down there or you’re out, no two ways about it. Those people who beat me up for that stuff are the very same ones who taught me the valuable lessons I needed to learn to trade these markets on and off the floor with incredible success.
By having experienced people around you or within your network you can find support and advice that can prove invaluable. Building an information and trading network can make implementing and adhering to trading discipline far less cumbersome and more enjoyable. Nobody will help you enforce your own rules—that’s each trader’s private responsibility—but a good network often can tell us as traders when we may be on the wrong path or simply talking our book. How do you build a network? In today’s world, it’s not hard at all.
As with everything in life, it’s good to have friends in the right places; one commodity that I value above almost all others is my network of traders.
The old saying that “two heads are better than one” is right on the money. Before I make a move into any trade, I get a feel for market sentiment by checking in with my network. Now I don’t rely entirely on them, not at all. I don’t always consult with them, but if I want another opinion I can always get one. I get thousands of e-mails a month, which help to give me a clear picture of what market participants are thinking and doing, and that can prove invaluable, too. You may not get thousands of e-mails (if you’re lucky), but chat rooms and other sources can be good places to see what others are thinking.
When I was getting my feet wet and was still green as grass, I was surrounded by traders who had been in the pit for a very long time, some since the founding of the exchange. And believe me, they were the first to let me know when I messed up! A cardinal sin in the pits is to bid into someone’s offer. In other words, when you step into the pit, you announce yourself. Usually you simply shout out the month you’re trading—for example, SEP or OCT (September or October).
Then people in the pit will yell back something like “2 bid at 8.” That means they are willing to pay 2 or sell at 8. It’s just an indication, but it gives you an idea of where the market is. To bid through some-one’s offer means that if I entered the pit and bid 9 when they were offering at 8, it would be a very big no-no. And they let you know about it! So I only did that a couple of times before I wised up. Either you learn quickly down there or you’re out, no two ways about it. Those people who beat me up for that stuff are the very same ones who taught me the valuable lessons I needed to learn to trade these markets on and off the floor with incredible success.
By having experienced people around you or within your network you can find support and advice that can prove invaluable. Building an information and trading network can make implementing and adhering to trading discipline far less cumbersome and more enjoyable. Nobody will help you enforce your own rules—that’s each trader’s private responsibility—but a good network often can tell us as traders when we may be on the wrong path or simply talking our book. How do you build a network? In today’s world, it’s not hard at all.
As with everything in life, it’s good to have friends in the right places; one commodity that I value above almost all others is my network of traders.
The old saying that “two heads are better than one” is right on the money. Before I make a move into any trade, I get a feel for market sentiment by checking in with my network. Now I don’t rely entirely on them, not at all. I don’t always consult with them, but if I want another opinion I can always get one. I get thousands of e-mails a month, which help to give me a clear picture of what market participants are thinking and doing, and that can prove invaluable, too. You may not get thousands of e-mails (if you’re lucky), but chat rooms and other sources can be good places to see what others are thinking.
