Why are there fewer such trades? Has the marketplace gotten more sophisticated? Yes. There are many more professional traders than in my early days. In those years, I had an edge just by
knowing the angles that Ed Seykota and Amos Hosteller laught me. Now everybody knows those principles. You have
trading rooms filled with bright people and computers.
In those days, you watched the board, and you would buy corn when it moved above a key chart point An
hour later the grain elevator operator would gel a call from his broker and he mighl buy. The nexl day, Ihe brokerage
house would recommend the trade, pushing the market up some more. On the third day, we would get short covering
from the people that were wrong, and then some fresh buying from the dentists of the world, who finally got the word
that il was the right time lo buy. Al that lime, I was one of the first ones lo buy because I was one of the few
professional traders playing the game. I would wind up selling out lo the dentists several days later.
You're talking about short-term trades. Weren't you trading for the major moves? I traded some major moves, but many times I would make my profits in two or three days in jusl that kind of
trade.
When did you get back in the market? Well, the dentisls weren'l going to keep their positions, since they were buying at the wrong time. So when
the market would fall back, I would go back in. Nowadays, the moment the market breaks a key chart point, it is
perceived by a whole universe of traders.
So the lagged follow-up trades are no longer there? Right, the grain elevator operator has already bet. The dentists don't count because their level of trading
participation is infinitesimal.
Is that because they now have their money invested with fund managers instead of trading by themselves? Right, and even if the dentists are still there, they are trading one-lots, which is a meaningless position when
the fund managers are trading a thousand at a clip. Now you almost have to be contrary. You have to ask, "Isn't it
true that all my fellow professional traders are already in, so who is left to buy?" You didn't have to worry about that
before, because there was always somebody left to buy—the people who were getting the information or reacting
slower. Now, everybody is just as decisive, just as fast.
