do any of you guys hate trading?

also, how long do people usually stay in trading and what do they do after?

I hate losing money.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

And made a shitload of money doing it.

The WSO Guide to Understanding TARP

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Edmundo Braverman should be considered a hero. He's like a Mini Gordon Gekko, haha!

I thought long and hard before I decided to become a full time trader. I knew from my history on the street (I started in equities before moving to commodities) that trading brought out my baser instincts and that it would be difficult to control my bad habits.

So the answer is, I went in reluctantly and eventually grew to hate it with a passion. For pretty much the last year I traded, I would wake up every morning and the first thing that would pop into my mind before my feet even hit the floor was, "God, I hate my fucking job."

But they throw huge money at you. So what are you going to do? You just have to grab as much of it as you can before you destroy yourself (or go to jail).

The WSO Guide to Understanding TARP

It was just a fucking grind. I was able to take my mind completely off the market for about 4 hours a day. Even getting drunk in the afternoon was done in a bar across the street from the office, so I could dash back there if something happened.

The people I had to work with were pretty much all like me, which makes for an utterly fucking miserable work environment. At the first hint of a trading error, they'd fucking dog pile on the other side of the trade to make it cost you even more. This was perceived as "funny" (and it was, every time I did it to someone). Try to imagine a trading floor where every guy on it would step on your throat and grab your wallet if you stumbled. The level of intensity it takes to survive such an environment, much less thrive in it, takes a huge toll on you mentally and physically.

On top of all that, we had enormous desk pressure. If your numbers were off for more than a month, you were out on your ass. You didn't dare take a long weekend off, much less attempt a vacation. You wouldn't have a desk when you got back.

I know all this sounds really horrible and some of you probably think I'm making it up. Just keep in mind that the job was never presented otherwise - in other words, we weren't lied to about it, we were told exactly how it would be going in. So we all chose to exist in that space in order to get rich. I can think of 4 or 5 of us who did. The rest (over 100 traders in a few years) put up with all the shit and still starved out.

We used to joke around that, "Thems that dies be the lucky ones..."

The WSO Guide to Understanding TARP

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This was in the days before prop shops. It was more of a boutique trading firm, but a similar structure to what would eventually evolve into prop trading.

I'm not trying to church it up by calling it a boutique, there is just no better word for it. We were a niche trading firm.

The WSO Guide to Understanding TARP

How long ago did you work as a trader?

What was the key to your success, considering so many others failed alongside you?

I worked as a full time commodities trader from 1997-1999.

The key to my success, or one of the major keys to my success, is that I was one of the first guys (in my sector of the market, anyway) to take a quant view of the market and apply computer science to trading back when everyone I was trading with was still basing their strategies on, "Gee, it gets cold in the winter, so I should buy heating oil in October."

I developed a system that exploited a small inefficiency in the inverse relationship of S&P futures to Treasuries, and I was able to deploy it in early 1999. The rest, as they say, is history. The system was effective for almost 6 weeks before it failed, and in that time I was able to shatter every trading record in the firm's history and make enough to walk away for good.

The WSO Guide to Understanding TARP

...i am highly skeptical of this 6 weeks trading the relationship between treasuries and stocks and you were set for good. What was the name of the firm and how much you were trading? Maybe our definitions of set for life are different but trading a small inefficiency in the market for 6 weeks at a small trading firm generally isnt enuff to "cash in your chips". The whole story is very strange. So fill in the details...especially since ur gone and it dosent matter anymore....

My first reaction is, "Why would I lie?". But I respect the skepticism.

My system and my 6-week run were simply an accelerator for what I had managed to make up to that point. For the record, I was trading with enough size during that period for the CME to dedicate a line to my firm alone. I wasn't trading thousands of contracts at a time, but I was trading hundreds.

The events leading up to that period were as follows:

1) Indonesian wildfires of 1997 and 1998 destroyed massive amounts of palm trees. We're talking scorched earth. Indonesia was the largest producer of palm oil at the time. Since the vast majority of the world (outside the U.S., obviously) relies on palm oil for daily sustenance, I took a large long position in soybean oil (BO), and it paid off. Big.

2) About this time, crude oil had drifted down to about $12 a barrel and unleaded gas was trading below 32 cents a gallon. Obviously unsustainable prices. I rolled my bean oil money into unleaded gas right before it ripped up to 59 cents a gallon. I'm not taking credit for being smart, just lucky timing and a fairly obvious trade. At the time, unleaded gas paid $420 per contract for every 1 cent it moved in your favor. I was trading the OTM options and generally paid about $800 per. So an option that went in the money by ten cents paid off $4,200 + time value for $800 invested. And I had a lot of them.

3) I rolled my unleaded gas money into my S&P/Treasuries system. By that time, I'd begun to attract some attention, so I had even more money to play with. I don't mean to make the trade sound complicated, because it wasn't. In a nutshell, when the S&P went up, the Treasuries went down, and vice versa. It was the height of the dot-com euphoria, so we were getting large moves one way or the other every single day. The system failed because it became obvious to everyone else after a few weeks.

And finally, Bondarb, when I cashed in my chips the final tally was probably less than you might think. But not by much.

The WSO Guide to Understanding TARP

Haven't heard that one before.

Pretty happy with the lumber I was given, don't need to worry about what I'm swinging in cyberspace.

The WSO Guide to Understanding TARP

...so how much did u make in P&L in that year? Hundreds of contracts on the CME contracts that I trade is really not very big size and certainly not enough to retire on. For eg, in Eurodollar futures which are probably the mosgt liquid CME futures contract 1,000 contracts = $25,000/bp ...so even catching a 300bps move would only make 7.5MM on that size of which you would keep 10-15%...not retiring money. S&P e-minis which are also highly liquid are 50 bucks a tick...so 500 contracts = 25,000/tick. Same math applies...not really easy to retire on these types of sizes. I am not trying to be accusatory, I ask because I am genuinely curious.

10-15% payout at a prop shop seems really really low. Standard for HFs taking sizeola but at a prop shop where most guys dont have over 10mm in bp thats just a very small payout.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

The minis weren't online yet, so we were trading hundreds of straight S&P contracts at $250 a point, sometimes twice a day. On the Treasury side, I seem to remember we were making $312.50 per point, but don't quote me on that, it was a long time ago.

As for payout, I worked for 20%. Probably could have done better elsewhere, but I was satisfied with it.

One thing I think you have to realize, and this is why it doesn't matter at all how much I actually made, is that the number is going to be different for every individual based on their personal situation.

For example, a guy who really loves what he is doing and looks forward to going to work each day is going to have a much higher walk-away number in his head than the guy who utterly detests the work (like me). Personal factors also weigh in on the decision, like outside investments, liquid net worth at the time of walk-away, lifestyle (simple vs. ostentatious), etc...

The job was wrecking my life, and I knew I needed out. So I just decided to put a number on it (twice what anyone had ever made in the firm's history) and when I hit that number, I punched out. If I hadn't hit it, I still would have walked out at the end of the year.

It's like the prize fighter who retires while he's still champ. There's nothing but downside for him if he sticks around. Here I'd done this amazing thing that had never been done before in my firm. What was I going to do - top it? The chances of that were nil.

Bondarb, I think you might enjoy what you do, in which case it would require "Fuck You" money for you to leave. That wasn't the case with me. All it took was "Fuck This" money, and I was out the door. What I mean by that is, the amount of money I made enables me to say Fuck This to anything I don't feel like doing for the rest of my life (hopefully). I consider Fuck You money to be private jets and things of that nature, and I'm not there by any means.

Sorry for the length of the post.

The WSO Guide to Understanding TARP

Edmundo, if what you made (twice the firm's record) was still not "fuck you" money, dare I ask how many prop shop traders get to that level?