Were you still approaching the markets as a position trader even though you were on the floor?
Yes, but it was just out of timidity.
So, I assume that many days you weren't even trading.
Right.
Was there any advantage to being on the floor?
No, not for me. But I did learn a lot from the experience, and I would recommend it to anybody who wants to
become a better trader. I used what I learned there for years.
What type of things did you learn?
You develop an almost subconscious sense of the market on the floor. You learn to gauge price movement by
the intensity of the voices in the ring. For example, when the market is active and moving, and then gets quiet, that
is often a sign that it is not going to go much further. Also, sometimes when the ring is moderately loud and suddenly
gets very loud, instead of being a sign that the market is ready to blast off, as you might think, it actually indicates
that the market is running into a greater amount of opposing orders.
But how do you use that type of information once you are off the floor? You said that the things
you learned on the floor helped you later on.
I learned the importance of intraday chart points, such as
earlier daily highs. At key intraday chart points, I
could take much larger positions than I could afford to hold, and if it didn't work immediately, I would get out quickly.
For example, at a critical intraday point, I would take a twenty-contract position, instead of the three to five contracts
I could afford to hold, using an extremely close stop. The market either took off and ran, or I was out. Sometimes I
would make 300,400 points or more, with only a 10-point risk. That was because, by being on the floor, I had
become familiar with how the market responded to those intraday points. My trading in those days was a little bit like
being a surfer. I was trying to hit the crest of the wave just at the right moment. But if it didn't work, I just got out. I
was getting a shot at making several hundred points and hardly risking anything. I later used that surfing technique
as a desk trader. Although that approach worked real well then, I don't think it would work as well in today's markets.
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