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That man is an American and whenever US citizen is involved in something like that ,the other part will be found and put in jail. But, years can pass before authorities find those scammers, but sooner or later they'll be found, no doubt about that.
And for 1 million...he really could have put it all in Nasdaq/S&p 500 etf and live pretty well in almost any country.
Market grows for ~4% (the net real annualized return of the S&P 500 before taxes) average geometric return each year, just withdraw 3% at the end of each year and get richer.
1.2million is a full retirement in Europe with ....~30k net per year. No need to trade.
But,yeah...for all that happened to him, I'm sorry, it's a pity.
Exactly. My advice if you live only off trading, take your 100% of capital and divide it.
Put 1-10% into high-risk day trading, 90-99% overnight stocks, long-only of course.
If needed, rebalance it, mostly when there is a major decline in equity indices is going on.
Of course, if you specialize in day trading and really good, the proportion is the other way around.
Broker: Advantage Futures, Ninja/TT and InvestorRT/IQFeed.
Trading: Treasury futures
Posts: 312 since Nov 2010
Thanks Given: 194
Thanks Received: 912
I was a floor trader at the CBOT from 1986 to 2002, trading mostly in the Five Year T Note pit. I didn't know anyone who did backtesting for the purpose of making markets on the floor, though I did know a guy who did both on and off floor trading who probably did backtesting for his off floor activities. He worked some with Linda Bradford Raschke and he was also a brilliant and ballsy floor trader.
Concerning the word "edge", we lived to earn the edge, which was defined as buying at the bid or selling at the offer. It was the basis of our profitability. Most of us were more market makers than "traders". We would take either side of a trade (long or short) as long as we were getting the edge. That's not to say that we didn't have any directional bias, I certainly did much of the time, but as long as I was buying at the bid or selling at the offer, I'd take the trade. Whether I decided to keep and squeeze the trade or get out quickly was a function of directional bias. But my directional biases were ALWAYS developed as the day progressed based on order flow, not technical analysis.
Also, before I went to the floor I was a cash grain trader. My friends at Cargill in particular talked about edge all the time, in reference to trading cash grain. I believe they were referring to whatever competitive advantage one's particular place in the marketing chain offered; for example, I spent 5 years at a major agricultural cooperative (now Cenex Harvest States, or CHS) and our edge was our ability to originate large amounts of grain from our member coops who got paybacks based on our profitability and the amount they sold us.
"You don't need a weatherman to know which way the wind blows..."
The simplest form of "edge" manifests when you're posting a passive order. And that's found in the premium over fair value that you're willing to accept contraliquidity at. This can be any arbitrary value that you decide is compensation for inventory, pricing or pricing model risk for carrying the position. If my model forecasts that X is worth $x, the simplest way to provide passive liquidity is to ask for a symmetric edge of +/- some small delta, and bid $x-delta and offer $x+delta. You can only collect this premium when you compress the spread, but most of the time your edge will be wider than the BBO and out of touch. So whatever you use to develop a tighter delta — be it speed, informational advantage, modeling complexity — can be seen as your "edge".
(The market is extremely efficient. Even with low latency and sophisticated models, most of the time I'd be quoting outside the BBO — so depending on your sign convention, you could say my edge was very small or even negative.)
The reason floor traders don't really exist these days is because computers are so much better at finding fair value and updating their delta. You only need to look at the top 3~ firms that have replaced them: Citadel, Virtu etc. all use simulation and backtesting extensively.
Thank you for the write up and sharing your experiences.
A few questions please:
1. From your memory was floor traders scalping or swing trading from your experience? Scalping meaning taking small profits and swing trading meaning holding the trade position for longer minutes or hours.
2. What was the money mindset of the floor traders? Was it make a living to pay bills or get rich as fast I can to pay off debt, then working about making living?
Interesting experience. I think floor traders had the advantage of inside trading. It was a hand signal, a nose twitch, knowledge shared behind the scenes. Don't you think that this really accounts for the "edge"? Since electronic trading came into being, all that went away. The market doesn't give hand signals or nose twitches. But it does give a lot of technical information. To me, order flow is the most important tool for a scalper, which is what I do. You mentioned that you used order flow on the floor. I have no idea what that would have looked like in those days. What did order flow look like in those days? I remember seeing pictures of big boards flashing numbers. How were you able to read the order flow and use it to your advantage? Order flow tools today improve all the time. I couldn't trade without them.
It's always good to hear from someone who's been there, done that. Thanks for posting.
Broker: Advantage Futures, Ninja/TT and InvestorRT/IQFeed.
Trading: Treasury futures
Posts: 312 since Nov 2010
Thanks Given: 194
Thanks Received: 912
I do not trade any more. I've tried a couple times but I need an edge and I've decided I don't have the time or the financial urgency to devote the thousands of hours necessary to develop one. Even with the giant advantage of standing at the center of the trading universe (the floor) it took me three years and a fair amount of good luck before I became consistent enough to make a steady living. I don't need the money; I had a low eight figure career, and what I'm proudest of is that I managed to keep most of my money. Frankly, at age 65 there are things I'd rather do than stare at a screen 10 hours a day.
I am still interested in the business. What brought me back to this forum was curiosity about whether the people here are talking about AI and what they're saying. The last time I spent much time here, 5-6 years ago, there was not much discussion of it. But now I read about ChatGPT writing decent code and there are YouTube videos about people using it to trade, and I was wondering whether that comes up here.
I gather from your recent posts that you are retired from the HFT universe. I'm as curious about that as lots of others are about floor trader mentality. While I know a couple of the original investors at Getco, they don't talk about it and I don't ask. But I am dying to know how it works, in a general sort of way. I read "Flash Boys" by Michael Lewis but I don't think he ever got to see the real picture; mostly he wrote about arbitrage in a fragmented equities market, and there appeared to be a whole lot more than that going on when I was still trading the yield curve on the screen.
For example, I spent a couple years trading out of Advantage Futures satellite facility in Downers Grove, IL around 2005-6 with a lot of other traders and I once heard a guy bragging about how the group he was with had technology that could send out 17,000 messages/second. What would be the advantage of that?
Thanks in advance for whatever you're willing to share.
"You don't need a weatherman to know which way the wind blows..."
