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Here is an e-mail I received from Timothy Morge about the interview with Sid Kaz. |
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Neal, |
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This interview does a great job of capturing the essence of learning to be a successful floor trader. (I know. I held a seat for 6 long months in 1995, and I quickly learned that the ego I had developed from being a successful off-floor trader kept me from developing into a successful floor trader.) Having read this interview, I wish I had known about the program. I truly would have tried it. |
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Although I dabbled with trading silver and gold during college, I learned to trade as a market maker in the cash currency markets beginning in 1980. Those next five or six years were great times to be a market maker, and now that I've read the interview, I can tell you the skills needed to be a great market maker in the cash currencies, when they are as actively traded bank to bank as they were then, are the same skills you'd learn and utilize as a floor trader. Before I left the bank world in 1990, I probably taught over 100 traders to be competent market makers, and one of the difficult skills to teach was keeping only the position you wanted. At a top volume bank, I was making 500 trades a day and turning over near $8 billion US. Other banks were calling in constantly, so I'd have three to five other traders answering phones and relaying my two-sided price, then telling me if I just bought or sold $5 million US or more on each price. If someone dealt on my price, I'd shade my next price accordingly. If they passed, I'd have someone getting me a two-way price back, so I could dump what I didn't wantor I would turn the position in the cash brokers or on the IMM floor. |
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As you pointed out in the interview, it's the dealing without thinking part that cannot break down. Although I might turn over $8 billion US in a day, I probably never kept positions that averaged more than $50 million US in either direction at one time, and the key to making money was the ability to turn volume over and over and over, making a pip here and there on all of those turns. But if you begin thinking you actually know where it's all going |
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