Notes for Chat with Traders, Episode 112

Episode 112 ... Jorge Soltero (73:09)

• Lives in Puerto Rico
• Native Puerto Rican
• Not all flip-flops and shorts in Puerto Rico
• Best of both worlds (commerce & leisure) in Puerto Rico
• US regulations
• Studied in the US
• Philosophy major, University of Chicago
• Lived in Chicago 25 years ago (aware of exchanges: Board, Merc, CBOE)
• Had friends who worked on the floor
• Worked for Archdiocese of Chicago, board member was bond trader
• Admin job at Archdiocese, wasn't leaving a big salary job to try to trade
• Asked quick-thinking math questions in interviews
• Pacific Coast (San Francisco) used to have exclusive options listings for tech stocks
• First job at Apollo Trading (small market making firm)
• Clerk in currency pit on Merc floor, D-mark was huge, Yen big (1994?)
• Always worked on options side
• "Controlled chaos" on the floor
• Eurodollar floor huge, you needed to be tall and strong and loud and aggressive
• "You never want to be the biggest trader in the pit" (you need liquidity, avoid getting stuck)
• Occasional scuffles and shoving matches, have to pay a fine for "non-business-like language"
• Spend all day next to competition, not co-workers -- unique environment
• Lots of settling of slights, real and perceived, off the floor
• He'd be waiting off the floor at 4AM in San Francisco, floor opened at 4:30 AM, needed to claim spot in pit before 6:30 AM open
• Left Apollo, got job at Hull Trading
• Hull was well known, big user of trading technology, no third-party options pricing software
• Timber Hill had its own options pricing software
• Interview question: Stack of pennies as high as Sears Tower, would they fit in this room?
• Hull Trading style -- never boredom traded, not cowboys ... very methodical, more confident
• You have to trust your model if you trade options
• Went from Ten Year Note pit to Equities (OEX) ... used to be super big deal, the OEX
• Just trying to capture bid offer all day long
• "Pit awareness" way ahead of the machines in the past, not true anymore
• Blair Hull, blackjack "wizard" 
• Have an edge, exploit it when you have one, back off when you don't
• Hard to find a copy of Thorp's original book
• NCAA tournament a big recreational gambling thing
• Hull guys would try to model everything, horse racing, NCAA, etc. 
• Hull bought by Goldman Sachs in 1999
• You needed to fit in at Hull, everyone got along, traders, developers, etc. Good teamwork important.
• Goldman Sachs a more competitive place than Hull
• QQQQ just listed in 1999
• Moved to London with Goldman Sachs, had no idea what he was walking into
• Hard to switch from floor to screen, point and click and pick up phone
• No energy, no noise from the crowd ... hard to judge market tone
• Silence of being off-floor very strange, he was told to "please calm down"
• Got into backdoor of institutional side through Goldman buyout
• Moved to UBS, back in US, and then moved to Merrill Lynch (back in London from 2009)
• Information edge that institutional trader has over retail trader is no longer large 
• Heavily regulated on institutional side, duty to find best price and structure for clients
• Playing field no longer as distorted as it used to be
• Position size matters and how you're going to use leverage
• Enjoyed his pit days the most from his trading life
• Now he's isolated, trading his own money
• Institutional traders just reacting to client order flow
• Go where the liquidity is
• Mixed bag results for him for the last six months on his own, but he's optimistic
• May have to hire a programmer to try out ideas, building models
• First saw ETFs in 1996, thought they were a great product
• ETFs liquid, cheap
• Lots of ETFs have options listed on them
• Twitter: @El_9uapo (Old joke from the Three Amigos movie)

You Fear That You're Living in Lebanon

I suffered through the entire Spotify Global Top 50 song list and only found one song I liked ... this one ... she was born in 1997. (The post title is my interpretation of the unintelligible lyrics ... ain't true, ain't true, ain't true, no.) 

"Crying in the Club" Available at: Spotify http://smarturl.it/CamilaCabello_Sptfy iTunes http://smarturl.it/CITC Apple Music http://smarturl.it/CITC_AM Find Camila Here: Twitter: @camila_cabello IG: @camila_cabello Facebook: @97camilacabello Website: www.camilacabello.com Video Director: Emil Nava Video Producer: Mary Ann Tanedo For Rojas Vision, Inc. (C) 2017 Simco Ltd.

Notes for Chat with Traders, Episode 113

Episode 113 ... Benjamin Small (60:02)

Interesting episode ... I know a bit more about Bitcoin now.

• Got Ph.D. in Electrical Engineering in 2006
• Wall street firms started hiring people like him to automate things
• At UBS in spring 2006
• "Junior Quantitative Researcher"
• Prop trading allowed before Volcker Rule
• UBS had huge retail market making operation
• Worked on whether to internalize retail order flow or send it to the Street
• Algorithm they design makes the decision
• UBS, Citadel, KCG biggest buyers of order flow
• They want exclusive access to retail order flow
• Most retail orders are market order or marketable orders
• Any order that's willing to cross the bid ask spread has value
• Non-marketable limit orders must be routed to an exchange
• Brokers pick an exchange where rebates highest
• Beginning 10-15 years ago, desks got more aggressive about maximizing profitability
• Equity options orders can't be internalized (illegal)
• Trading desks are profitable, so are retail investors getting screwed by them? Tricky question
• Off-exchange volume is ~30% of total volume
• Worked at Citadel, then Credit Suisse
• Built statistical models to improve prop trading desk algorithms for eight years in all
• Must constantly tweak, fine-tune models used by desk
• Monitoring the algorithms in real time to improve things
• Latency is a huge issue in US equity markets
• Have to optimize computer code so it's fastest, competitive edge
• Memory versus disk versus cache
• Worked at IEX, head of quantitative research for one year
• IEX had ambitions to become an exchange (now it is one)
• One of the inventors of the "Discretionary Peg" order
• Tries to predict on client's behalf to switch between inside peg and midpoint peg
• Works at Gemini currently, head of market structure
• Market structure an interesting combination of microeconomics, statistics, and computer science
• Most Bitcoin exchanges have central limit order book
• Winklevoss twins founded Gemini a few years ago
• Received licensing to trade Bitcoin from New York State Department of Financial Services ~15 months ago
• Gemini a fully regulated, licensed Bitcoin exchange
• Traditional financial services players could be comfortable with Bitcoin on Gemini
• Licensing important because US heavily regulates financial services
• Risk and compliance concerns put to rest
• Need to make an on-ramp for institutional money into Bitcoin
• Need to normalize Bitcoin, just another asset, not a crazy crypto-currency
• Evidence that people are seeing Bitcoin as a virtual store of value, not just a speculative thing
• More institutions are getting involved in Bitcoin
• Majority of Bitcoin trading is by professional Bitcoin market makers
• Only 20-25% of stock trading is retail
• Bitcoin not too tightly correlated with other asset classes, useful for portfolio managers
• Choice of exchange and wallet providers is all important ... your account could be hacked [or Mt. Gox'd]
• Many Bitcoin exchanges and wallet providers are not vigilant about security
• Can manage your own Bitcoin wallet but if you lose the key, it's lost
• Bitcoin trading primitive, only $15BB market cap
• Most sophisticated market makers don't want to deal with Bitcoin because it's too small
• Think of trading SPY by comparison -- tons of market makers, penny spread, hundreds of millions of notional at both bid and offer at any time
• Any aribtrage opportunities in Bitcoin?
• Arbitrage across exchanges worldwide ... liquidity, credit risk different by exchange
• Statistical arbitrage a profitable strategy by itself
• HFT haven't entered Bitcoin ecosystem ... yet
• Lots of scams and ponzi schemes in crypto-currencies, just like penny stocks
• Why is Bitcoin big in China? Avoiding capital controls and Chinese are natural speculators (gamblers)
• There are hundreds of other crypto-currencies, alt-coins
• Bitcoin is only five years old, but it's the "core concept"
• Ethereum network added a lot of new ideas, help ecosystem evolve, "Ether" is the token
• Ether has "smart contracts" -- like a derivative contract but enshrined in computer code, not law
• Ether faster than Bitcoin when it comes to settling transactions
• Founder of Ethereum is a young Russian kid from east Brooklyn
• Bitcoin has first-mover advantage
• 10 or 20 years from now, could be a much better idea than Bitcoin
• Gemini has anti-money-laundering controls
• Bitcoin is no scam
• Any alt-coin that doesn't have an adequate market cap should be avoided
• Look at the source code, all alt-coins are open source, do background research
• Lots of oddball alt-coins based on weird ideas
• Big laboratory for experimentation
• "Shitcoin"
• 4PM auction at Gemini, match buyers and sellers to get a solid price for the asset, one price
• Walrasian equilibrium is the algo they use
• Gemini exchange broadcasts forecasted auction price starting at 3:50 PM
• Bitcoin will eventually take its place among commodities like gold and oil (he predicts)
• Bitcoin has mathematically defined supply, so should become stable store of value [he says hopefully]
• Transactions take 30 minutes to clear on the blockchain -- slow!
• In future, with instant transfer of value, Bitcoin accepted at point of sale is a possibility
• We never touch paper currency anymore, all credit cards and (stored credit cards at) Amazon now
• Banks already have full control of your money, no need to be paranoid about it
• www.gemini.com
• Not on Twitter

Chairman Recommended: Cherry & Olive Pitter

I eat a lot of olives and did a big study on whether it was better to buy pitted or unpitted olives. My conclusion after exhaustive research eating thousands of olives was you should always buy unpitted olives and pit them yourself.

I had been using this cherry pitter to pit my olives, but of course it didn't work very well. Then my wife bought this Cherry & Olive Pitter from Oxo and it is the bomb; it works beautifully! No splatter, easy to clean, and consistently smooth pitting.

I eat $13 worth of unpitted olives a week, so this thing is a steal at $13.

UPDATE (Jan. 2018): I'm on my third one of these as the previous two broke, so expect to replace it every quarter if you pit a lot of olives like I do. 

Notes for Chat with Traders, Episode 114

Episode 114 ... Brannigan Barrett (69:33)

• South African 
• Futures day trader
• Not easy to sit in front of the screens for ten hours a day
• Trading for four or five years
• Getting bigger is a process
• Write down why you want to get bigger
• Liquidity factors to consider
• Hates targets, thinks they are limiting
• "Clipping," "Clip" ... must be a British term for trade size?
• Always wanted to trade
• Formerly a currency dealer
• Landed in UK Sep. 1, 2011
• Got a job with "Futex" ?
• No futures trading in South Africa
• 400-500 millisecond delay in South Africa too great for day trading
• South Africa not a gambling culture
• Wage earners, value family life, not like the Western world
• Never taken "no" for an answer
• Futex took him on because of his enthusiasm
• Successful traders are dog fighters, have to keep coming back
• Types of traders in a firm all important
• Every successful trader super diligent about managing risk
• Lee Gibbs traded in his firm ("legendary trader")
• 6:20 AM every day Lee Gibbs in the office (he was already rich but that didn't matter)
• Everything Lee Gibbs did, Brannigan Barrett emulated
• Successful traders understand how to employ leverage
• Good traders know when to back off, take days off, and also know when to press
• Trusting yourself and your abilities takes at least two years
• One person's 10,000 hours of practice different from another person's 10,000 hours
• 2011 markets extremely volatile
• 2013 2014 markets were dead
• Not going to talk about Futex, but they had some of the best traders in the City
• Futex defunct now for some reason which goes unmentioned 
• Started with new firm in the City with four or five original Futex guys
• "Axia Futures" ?
• Trades across eight markets: 1) German bonds and US Ten Year 2) Emini S&P 500 and Euro Stoxx 50 3) Euro and Sterling 4) Oil & Gold
• Can watch him on YouTube and Periscope?
• Likes to trade "flows" ... going with the flow?
• Likes to trade news
• Prepares for Central Bank news
• If you think you can move the market, you're not going to last long
• He used to average down down down ... risk manager would shout out him
• He now reverses a trade when he's wrong
• Emotional, weak traders need to be taken advantage of ... identify where they are (where he used to be)
• Does daily debriefing
• "There is one good trade every single day" -- analyze it during daily debrief
• Only need to make one good trade a day
• Records his screens every day and then replays it during debrief
• He has daily checklist: 12 things he ticks off every day (going to the gym, etc.)
• Figures out what sets him off emotionally, then avoids it in future
• Not a time-based job, in the office at all hours
• Takes December and January off
• Traded US election starting 10PM till 8AM next day (London time) 
• Alex Hayward was his mentor, had a term "energy capital" ... you've only got so much energy for taking risk
• Most be people need someone to hold their hand; instead, write it down
• Your goals need a process ... make a tick sheet, a.k.a. a checklist
• You can make money doing the wrong thing or the right thing, so making money not a goal
• Open your mind up! Discard your false truths
• Trading is a skill you develop over time
• Everyone in the world would trade if it were easy
• Trading is a simple binary (up or down)
• Trading is a "silly silly game," don't make it complex
• Keep it simple
• Periscopes every Sunday
• Twitter: @Trader_Bran (doesn't remember it)

Notes for Chat with Traders, Episode 115

Episode 115 ... Adam Grimes (107:14)

• Been in the markets for 20 years
• Started out trading small accounts while massively over-leveraged
• Day traded S&P 500 futures
• Got MBA and did a lot of PhD coursework
• Spent time on NY Mercantile Exchange
• CIO for Waverly Advisors 
• Has traded everything over every time frame
• "Been around the block a few times"
• Appeared on Chat with Traders episode 20
• Only looks at price, no fundamentals, no political factors
• Trading style is now very simple
• Used to have very marked-up charts, not anymore
• Tries to understand momentum and volatility
• Can't compete with HFT, but:
• There is power in human discretion, intuition
• P&L tells you if you're learning anything over time
• Need money and time to graduate from the "school of hard knocks"
• Discretionary traders need to "ask the data" about their ideas
• Spend a few hours to learn how to use Excel
• Don't need tick data and C++
• Easy to identify patterns in middle of chart, difficult to identify at hard right edge
• He's a "Numbers Nerd"
• Forward test with small trades
• Many find their brilliant system never beats buy and hold [Indeed]
• To pay for your time and risk, must beat buy and hold by huge margin
• Day trading edges usually don't cover transaction costs or the bid-ask spread
• Many successful traders don't understand why they make money
• Was a professional musician before he started trading
• Former composer of music
• Quants tend to be too rigid, lack creativity (engineering backgrounds)
• Big believer in meditation and breath work
• Doesn't base position size on confidence or a "pretty chart pattern"
• The market will encourage you to do the wrong thing at the wrong time
• Grew up in a farm community, so thought he could trade ag futures (wrong)
• He could have 12 hour conversation about any of these topics [I believe it]
• Had no math background (a musician) but he learned later on, anyone can do it
• Need knowledge first, then develop your skills
• People without emotional control rush to become system traders, but:
• Not a substitute, system trading has its own emotional pitfalls
• Focus on just one thing for a few years at first
• Don't be the bee who bounces from flower to flower
• Learning curve at least several years
• Do a lot of trades, collect a lot of data
• Five step plan for struggling traders:
• 1) stop the bleeding (stop trading)
• It's true that you can't learn to trade without trading (but you know you're a loser so stop)
• Struggling traders have no written trading plan 2) write a trading plan
• 3) Start backtesting (yes, they're worthless but you need to find an edge)
• 4) Start forward testing your successful backtest, but without money
• 5) Start trading it with real money (vanishingly small size), mainly about collecting data (slippage, commissions, etc.)
• Have to earn the right to trade size
• Need patience and discipline, trading is a real grind, most can't do it
• He's a fan of group trading, less likely to do "stupid shit" if it hurts everyone
• Trading journey above takes many many months
• Idea of 10,000 hours of practice is misguided
• Are you up for five years of consistent losses? Can you structure your life to do this?
• If you don't know you have an edge, you have no business trading
• Any money you make at first is pure luck
• Traders who are beaten up in the beginning have a better chance for success
• Has large free trading course at his blog
• www.adamhgrimes.com
• Twitter: @AdamHGrimes

Answers to Lingering Questions from Bloodline

Answers to these lingering questions posed by Bloodline:

1. Seriously, where was Meg? Or, really, where was Linda Cardellini for most of this season?

SAN FRANCISCO

2. And, if we’re working under the assumption Meg really wanted to disappear from her life, we’re assuming she could not practice the law under an assumed name — so how in the hell did she afford that sweet apartment in L.A.?

INHERITED MONEY AND SAVINGS (AND HOUSEMATES)

3. Who really was that Beth Mackey lady? Did we ever really figure out if she was a Rayburn (secret love child of Robert) or what?

THAT'S THE IMPLICATION

4. Where was Evangeline? I know she was “recording” somewhere but what was the point of her coming into our lives in such a significant way in season 2 only for her to disappear completely?

SHE WAS FLAKEY

5. On that note, after creeping menacingly around for a whole season, why did Ozzy just up and kill himself?

HAUNTED BY DEMONS AFTER HIS HEAD INJURY

6. And, more importantly, was he really getting visions before his death thanks to getting his head kicked in?

YES

7. Did Sally Rayburn and Roy Gilbert have an affair?

YES

8. Why doesn’t Ben Rayburn ever get a chance to have a storyline of his own?

HE'S JUST A KID

9. Will the Inn really be entirely underwater in a few years?

MAYBE, THAT'S WHAT THE BANK APPRAISER THINKS ANYWAY

10. If Meg hates boats so much, how on earth does she know how to expertly pilot that sunfish?

SHE HATES POWERBOATS

11. Why did Kevin think he couldn’t get extradited from Cuba? Why didn’t Belle turn off her GPS?

NO EXTRADITION TREATY. BELLE MESSED UP.

12. Is Chelsea (the consistently wonderful Chloe Sevigny) going to be okay? Because if anyone deserves happiness…

SHE'S GOING TO MAKE BETTER MONEY WITH HER TITS AS A BAR MAID THAN SHE DID AS A NURSE

13. Will Eric O’Bannon (also consistently wonderful Jamie McShane) really serve 30 years for a crime he didn’t do? Or will John do right by him?

HE'S SCREWED

14. What was the deal with Diana repeatedly getting drunk out of the blue? Were there any hints to this behavior before this season?

SAD, LONELY, SEPARATED ... OF COURSE SHE'S DRINKING

15. Who was Janie having sex with?

NO ONE. THAT WAS DIANA'S DESPERATE ATTEMPT TO GET JOHN'S ATTENTION

16. What ever happened to Meg’s hot affair dude, Alec (Steven Pasquele)?

WHO CARES

17. What was the significance of Meg’s big back tattoo?

BREAKING FREE

18. Did we ever really get to the bottom of that seahorse necklace thing?

IT'S WHAT SARAH DROPPED IN THE ROCKS THAT LED TO HER DROWNING

19. Why did the Rayburns suddenly become Catholic in season 3?

COULD HAVE BEEN AN EPISCOPAL PRIEST MAYBE? 

20. Who has Robert’s ukulele?

IT'S STILL ON THE WALL

21. Why couldn’t they get Ben Mendelsohn a better wig?

OR YOUNG BEN MENDELSOHN A BETTER WIG

22. Why couldn’t they get Owen Teague a better wig?

SEE ABOVE

23. Why did the show decide to introduce apparently important figures — John’s BFF, Mike Gallagher, or his new comely partner Detective Carol—right at the end?

MIKE HIRED AWAY THE SHERIFF ... CAROL WAS JUST ANOTHER HOTTIE

24. But did Carol eventually get the job of sheriff?

NO

25. Did Mike really come to town just to court Sheriff Franco away?

YES, AND HIT ON DIANA AGAIN (I HOPE)

26. Why was John not mad that Mike made a pass at his wife?

EVERYONE MAKES A PASS AT JOHN'S WIFE

27. What on earth was Roy Gilbert’s deal anyway? How did he get tangled up with the Rayburns and get them the money for the Inn?

HE KILLED SOMEONE WHILE DRUNK, THE RAYBURNS KEPT HIS SECRET, HE FUNDED THEIR PURCHASE OF THE INN. HE WAS A CROOKED GUY INVOLVED IN LOTS OF SHADY STUFF

28. Where did all his money come from, anyway?

SEE ABOVE

29. Why must Kevin be the only Rayburn to be punished?

BECAUSE HE'S THE STUPIDEST (AND WEAKEST, AS SALLY CRUELLY SNARLED IN THE FINALE)

30. How will Kevin survive wearing closed-toed shoes?

WHO SAYS HE'S GOING TO PRISON?

31. Who will take care of Rocky?

BELLE! SHE ISN'T GOING ANYWHERE

32. Why did Sally really leave the day of Sarah’s death?

FIGHT WITH HUSBAND OVER HER AFFAIR WITH ROY, OR ANY ONE OF HER HUSBAND'S MANY AFFAIRS

33. Why did the Rayburns like taking the bus so much?

UNTRACEABLE ... CAN BUY TICKETS WITH CASH (UNLIKE AIRLINES)

34. Whatever happened to John Rayburn’s dog, Surf?

WHO CARES

35. What happened to Mia Kirshner?

SARAH DIED

36. What really happened after John Rayburn’s deep sea fishing accident?

HE SUFFERED FROM OXYGEN DEPRIVATION, MESSED UP HIS MIND, TEMPORARILY

37. Was that marlin’s brutal attacker ever brought to justice?

THE CUBAN WITH A FOUL MOUTH? (SPANISH SWEAR WORDS ARE THE BEST, BY THE WAY)

38. What does John say to Nolan out on the dock?

YOU DECIDE

39. Does it even matter?

IT DOES. WRITE YOUR OWN ENDING TO THIS TRAGEDY, BECAUSE IT'S STILL A TRAGEDY

Notes for Chat with Traders, Episode 116

Episode 116 ... Sean Hendelman (65:44)

Good episode ... Hendelman "bursts a lot of bubbles," but he's right on the money, knows of what he speaks.

• University of Michigan grad
• Got an MBA at Stern (NYU)
• Sounds like a New Yorker
• Started on mortgage-backed securities desk
• Greenwich Capital Markets
• 1999 decided to start a trading business
• Started with $50,000, lost within 3-4 months
• Kept at it
• Took him 18 months to get good
• Founded Nexus Capital (2003) -- 40 traders [like an arcade?]
• Read a lot of Peter Lynch in high school
• Interested in trading in 1993-1994, while in high school
• Worked as tennis instructor at country club, made good money (15K a summer)
• Bought names he liked (Peter Lynch advice): DELL CSCO MSFT ORCL 
• Put all his tennis money ($5-$10K) in each of above stocks, made massive money during dot com bubble
• Luckily took all money out before bubble burst and bought NYC apartment, turned cash poor
• Thought he was a genius
• Made six figures at Greenwich Capital, which was good, able to save
• Expensive to learn how to trade
• SDLI QCOM, buying thousand share lots [Only old guys remember symbols like SDLI, JDSU :)]
• Started hedge fund in 2002-2003, stat arb fund, broke even, expensive to run 
• Running $15MM, not enough to make it work, too many expenses
• First $50K loss was a great first learning experience
• Not a math guy, not a programmer, doesn't know C++
• Backs 25% of traders in his firm on prop side, other 3/4 self-fund
• Traders in his firm have all kinds of styles
• T3 name of his firm
• T3 has 1,000 active accounts
• Has two broker-dealers, one prop, one retail
• Need series 57 license to use prop broker-dealer
• T3 makes money on commissions, interest, profit splits
• T3 only caters to active traders, competes with IB and TradeStation
• Holdbacks and payouts of the trader's capital
• Not focused on futures or forex -- don't understand, too much leverage
• T3 can't spend enough money on infrastructure to compete with HFTs anymore
• Co-location of servers, routing, data, compliance, best of the best programmers -- all expensive
• T3's HFT successful 2004 to 2014, now much harder
• HFT very crowded now
• Hudson River, Virtu hired lots of people, built big organizations
• T3 takes liquidity, no passive orders
• 99% of all bids and offers aren't real [yes, I've found this too]
• Flashing and spoofing very common
• HFT never take liquidity at size, would show their hand
• No more low hanging fruit in high frequency trading
• Scott Redler his partner, "Red Dog Reversal," lives highly structured life
• Everything gets priced in very quickly now
• Medium frequency strategies also being priced in very quickly
• Medium frequency not as expensive, no need for co-location, etc.
• Medium frequency traders' success rates very low
• Most don't understand market impact or slippage (+commissions)
• Never backtest, always forward test, use 100 shares, take a few thousand trades, will have realistic market impact data
• Tiny number of medium frequency guys successful and when they are, profits only last a short time [I'm sure he's right]
• CalTech MIT guys are already exploiting every obvious edge
• There are no edges out there ... they have better tech and programmers than you
• Your ideas aren't good enough, someone else already tried and discarded them long ago
• Your ideas after market impact, commissions, paying the spread, won't make money
• Best black box traders are constantly changing, evolving strategies
• 1 in 20 smart traders who try to automate things succeed
• Medium frequency is the same as an active trader
• Will take you a long time and lots of capital to even test your ideas
• Double your commissions and slippage estimates
• Good strategy might have 50% success rate after six months and tweaking
• T3 has 50 strategies running live
• Laughs when people say they didn't run their strategy with real money
• Successful hand traders' pattern recognition still ahead of black boxes
• Momentum traders (buying and selling within minutes) going away, black boxes taken all the profits away
• Good traders don't get excited when they make money
• No emotion with a black box, faster than humans, can prepare well in advance
• Best business advice: Change. Adapt. Don't be afraid to make mistakes. Money in, money out -- positive cash flow   
• Best trading advice: Risk management, emotions in check.  Preparation.
• Best traders are in the office earliest, reading, adapting to the market
• Don't try to beat the market, you're never going to do it
• www.t3live.com

Hate Your Next Door Neighbor But Don't Forget To Say Grace

Has to be one of the greatest protest songs (written by Phil Schlein) from the 1960s, beautifully delivered by Barry McGuire.... 

Ah- The Circle of, um, Life?

Notes for Chat with Traders, Episode 117

Episode 117 ... Larry Alintoff (72:00)

• Lives in Florida
• Sounds like a New Yorker
• Trading for 30 years
• University of Michigan grad
• Sophomore year of college, watching FNN on day of 1987 crash -- hooked him on markets
• Born in 1967
• Started plotting prices on graph paper in his dorm room
• Read as many books about trading as he could
• Discovered "pressure points" 
• Ascending triangle, or sideways action [he discovered coiling, power of ever narrowing range]
• High frequency traders sniff out order flow and run ahead
• Worked at RefCo, forex broker, odd hours from 2 PM to midnight
• Worked for Paul Tudor Jones
• Reminiscences of a Stock Operator (favorite book)
• "Yuge"
• "... if that makes sense." Ends a lot of sentences with this phrase
• Paul Tudor Jones staked him and a group of people a bit of money
• Traded from a little office at RefCo
• "Yuman psychology"
• No guidance from Jones or his people
• Jones kept close tabs on positions of all the people he staked, created "sentiment indicator"
• All people who trade for a long time evolve
• Friend trading stock options on the American Stock Exchange, he joined him
• Profits just handed to you there, no need to think or understand what you were doing
• American Stock Exchange had no competition, everyone must see specialist on floor
• Other exchanges started to make markets in options, spreads narrowed with competition
• Pacific Coast, Boston, CBOE broke up American Stock Exchange monopoly
• Went to New York Board of Trade, worked in frozen concentrated orange juice pit
• Good traders can separate signal (good information) from noise
• What should happen versus what did happen? Pay attention to that
• People who grow oranges know the orange juice market better than guys on the floor
• Have a point where you know you're wrong, and get out
• He takes profits too quickly
• Make sure no one trade really hurts you
• When Trump won and the market should have gone down and didn't, that was valuable information
• Turns over his portfolio every five days
• Holds 80 - 100 longs and 80 - 100 shorts
• Computing power today so great, he can filter thousands of stocks for his criteria in a minute
• Larry has yellow pads, he's not a programmer, gives his ideas to the young programmers
• Knew the floor was coming to an end, everything going electronic
• Had to figure out how to do what he did on the floor once he was off the floor
• Hated weekends, couldn't trade then, deeply depressed every Friday afternoon
• Obsessed with markets for 30 years
• He's not a quitter, not lazy ... a workaholic about the markets
• "Yuman nature" will never change ... fear and greed still exactly the same, elation and despair
• Keeps a low profile
• Twitter: @AlintoffLarry