Many of my readers have shown special interest in the behavior of floor traders. To people doing stock, Forex, dow futures or emini day trading, floor traders have a mystique and they want a peak behind the curtain.
I’ve never been a floor trader, but I’ve been trained by floor traders that took me right down into the pits of the CME so I could experience it up close and personal during market hours. I’ve visited the New York Stock Exchange, the Chicago futures exchangesÂ several times, but to me there was something special about the Chicago markets. The energy is very different than New York and I loved it.
I’ve also been to the Tokyo Stock Exchange, but that is now completely electronic and is as silent as the Chicago pits are loud. The energy of the TSE is just like walking into a library! Click here to read more about my trip to the Tokyo Stock Exchange.
Most screen traders (those who trade from computers) assume that floor traders have some special edge that screen traders don’t. There is, or was, some truth to that. But actually most floor traders are not successful. In addition, the open outcry system of the floor is giving way to electronic trading and the “floors” around the country, and the world, are shrinking and even disappearing.
While that transition represents progress, the nostolgic part of me mourns that loss. The floor has a unique and exciting quality that I hate to see disappear.
So if the pits are on the way out, what’s the point of learning about them?
It’s important because screen trading gives you the impression that the markets move based on the lines and squiggles of indicators. But when you stand on the floor of an exchange you see, hear, smell and feel that what really moves the market is people. You can hear their energy, you can see the greed on their faces and you can almost smell their fear.
That’s the REAL market, and that’s what makes the market really move.
Today I share with you the first video of this series on floor trading. It is actually a preview to a new movie that is coming out which looks very interesting.
Please post your comments and questions below about the video and about floor trading.