Monday, October 31, 2011

My personal holiday

For me, November 1st every year is a personal holiday as it was the day in 1999 that I started as a clerk on the CME/CBOT, began trading off the floor in 2001 as a backed acct under my mentors and 4 years later in 2005 grew out of that to trade on my own.  Lots to celebrate!  Ironically this year is the first day I'll have it off since the clearing firm my trades go through just blew up (MF) and it'll be another day or so before it gets straightened out.

Earlier this year while on a train ride in France I took out the laptop and started writing a bit about how it was to even get a job on the floor.  It's not written for any particular audience, maybe my potential kids, but figured I'd put it up here as it leads up to the day of November 1st, 1999.  The length is 5 pages in Word and it's lightly edited so not totally complete, but hopefully it gives a laugh or two to others as it was fun to go down memory lane for me.  The story also shows why I enjoy the ride everyday cause it was a hassle to get here in the first place!

If you can't read it on the embed, here's the link to the scribd upload.


Sunday, October 30, 2011

CBOT telegraphic cipher

Trading via telegraph is more than old time, it's olde tyme.  To facilitate a more accurate way of receiving orders and relaying information, the Robinson Telegraphic Cipher was created in 1872 (a few years before invention of the telephone) to have a standardized listing of telegraphic communication at the Chicago Board of Trade.  The following pages are scanned from the 1897 edition of the cipher and to be honest I don't know when it ceased to be published.  Although I'll highlight a few scans, fortunately the entire book is scanned by google books so it can be seen here.  Basically the premise of the cipher was for the telegraph operators to translate a certain word into a phrase, number, word, etc...  to abbreviate it in an accurate and standardized manner.  (Click on photos to enlarge)

The first scan shows the table of contents as to which type of information is listed.  Now some might wonder why things other than wheat/corn were listed and that's because there was a provision pit at the CBOT which to my understanding had misc commodities trading in it like beef, etc....

This scan is of the first page and illustrates how the ciper actually works.  I clipped the sentence from the top which reads: "The following phrases have been arranged to save in a great measure looking through the book, when using the cipher for orders. The month or word for time of delivery, following the word for the amount. Example: "Abdicate, Achieve, March," translated reads, Buy 250 bbls. Mess Pork, March delivery."

There is also some blank spaces which can be filled in w/custom words/phrases/numbers/etc....

The final scan just shows some misc phrases which could be used to describe market activity. 

If anyone wants one, the cipher can be found in various booksellers on the internet for around $30 on up so it's not too rare. 

Friday, October 28, 2011


Like most work environments, most people don't like working on Friday afternoons and are ready to get the weekend started.  A lot of the funniest memories I have on the trading pits are people screwing around for laughs late on Friday as activity is usually slow and as they say, the devil makes work for idle hands.  Clerks and brokers were generally much more lighthearted than traders as most, particularly scalpers, were only still trading on Friday afternoons because they were either stuck on a position they couldn't get out of or down money on the day and trying to get it back. 

But of all the Friday afternoon memories, my favorite one is of a clerk that would stand on the outside steps of the S&P pit, his arms outstretched, facing the order desks an hour or two before the close and he'd yell, "COME ON 3:15 GAWD DAMMIT!" and everyone would clap and cheer thinking the same. 

Wednesday, October 26, 2011


I wasn’t going to comment on the #Occupy protests but I’m so fed up w/how misguided they are that I really can’t help myself even though this isn’t an appropriate forum.  I haven’t even been in Chicago for the past couple weeks but have known that the protests have taken place outside the CBOT.  Rather than elaborate on emotion or vague debates, I’d like to present facts as various demonstrations have taken place outside the same venue in years past with zero effect.
FACT: Virtually all of those remaining on the trading floor of the CME/CBOT are not in the 1% of top earners or even close to it.  The large participants for the most part left the trading floor  many, many years ago and those remaining are generally the foot-soldiers that execute what few orders that aren’t done electronically.  The executives that run the company don't even work in the building so it's a pointless venue to protest at.  

FACT: Futures trading is simply risk transference where participants willingly enter into contracts with others as part of a free market to shift risk as they deem appropriate.  Profits/losses are shifted twice daily from winners to losers in a centralized clearinghouse so there are never any losses that result into a devastating build.  It’s the purest form of facing reality in real time with no excuses.  THE ENTIRE FINANCIAL CRISIS HAD NOTHING TO DO WITH FUTURES TRADING.  Risk cannot be avoid in the world, there are people willing to take it and others who wish to avoid it, so as long as they don't ask for bailouts it's noone else's business.

FACT: There is nothing that can be said to anyone who worked on the trading floor which they can be offended by or not heard worse of before.  Verbal joking/harassment was simply a part of everyday life and as a result everyone knew everyone’s opinion of each other, nothing can be said outside of the trading pits which tops what was said within it.   

FACT: Independent speculators such as myself are leveraged to the shirt on their back, if I or any others lose then we lose everything down to our home and everything in it.  Willingly that responsibility is accepted just as American pioneers accepted their risk/reward ratios to build this great country.  To boycott an entity such as CME Group which was reliable and actually prevented systematic losses during the financial crisis is pure ignorance. 

FACT: There has never been a contractual default of the Chicago clearing houses in their entire history dating back to the mid 1800s.  Protestors may not appreciate it but simply realize that no one will do business with anyone who doesn’t make good on their obligations.  It appears to me that all those protesting have never built ANYTHING substantial to understand the responsibilities and obligations it takes.

FACT: I’ve travelled widely to North Korea, Cuba, Turkmenistan, Russia, Ukraine, Zimbabwe, Vietnam, China, Philippines along w/virtually everywhere else from Sub-Saharan Africa shitholes to back alley India to flat on your ass poor South America……America as they say, love it or leave it!  Believe me, there are few in the countries I mentioned who wouldn’t trade places to be a poor immigrant (as my relatives were) in the US and in turn succeed as they wish.  Look in the mirror and live life to your full potential instead of being pissed at those who put in the 12+ hour days starting at 4am and reinvest in themselves and businesses over years to add real value to the world.  That is a discipline I haven’t seen exhibited amongst the protestors and believe I have plenty of ultra-liberal friends/family which I discuss the same issues with.  If you aren’t making it in America, you only have yourself to blame, there is more opportunity to succeed in whichever way you desire than anywhere else in the entire history of mankind here.

FACT: If you’re going to put blame about how the world works, the Chicago futures industry ain’t it and you should find real fault in the “poverty pimps” of Washington and other gov’t centers.    

FACT: I no longer give a shit and am in the process of moving from Chicago to Texas where these issues can be generally avoided. 

Monday, October 17, 2011

1980 CBOT ad

I really like this CBOT magazine ad from 1980, it simply states "With the freedom to fail, comes the freedom to succeed."  One of the great things about the US is that everyone generally gets a fair shot to succeed or fail on their own merits and that's certainly the case in trading. 

Monday, October 10, 2011

New trading pit frontier

Good news for those trading floor diehards that refuse to trade electronically and who have drifted to different trading floors across the world (believe there are more people who fall into this category than you'd imagine), there is a somewhat new trading pit in Addis Ababba, Ethopia to trade grains at the Ethiopian Commodities Exchange.

photo credit: flickr

To make it easier to trade, buyers and sellers are separated into two different jacket colors and all transactions are sealed w/a high five.  No doubt the flights from Chicago to Addis Ababba are gonna be packed w/guys who want a piece of that action.


Ethiopian Commodity Exchange was also featured in the PBS film The Market Maker, it's an hour long and is linked here.  The Market Maker is an excellent documentary and has a lot of parallels to the early days of Chicago grain trading and why a centralized market like the CBOT was formed.
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