06-15-2012 08:23 AM
Was reading an interesting thread in Marketeye's chat about what 'locals' actually know, act on and trade. I can't stress to the general public enough that the people that really know what is going on are the commercial players as well as the farmers.
In the 'old' days, when a membership on the exchange meant something, the information gathered in the pit by standing there and seeing what entity was doing what (ie Cargill a big seller) and when they were doing it was definitely a big advantage. When ticker tapes were your best form of mass communication the ability to stand in the arena in 'real time' and see what was happening would really make a difference.
Now, with weather model computers, events outside the realm of the product (ie Greece) and widely advertised world money flows actually make standing in the pit, or what is left of the pit, a real disadvantage. The electronic age has really handed back the advantage and the power to the folks who really get the fundamentals and the news in a timely fashion. The 'local' pit trader is the last one to know, if at all.
I will never forget about 20 years ago, a large successful trader that I really respected who was considered a trading god in the interest rate pits actually confided in me that he had no idea what the bank base rate was at the time, whether it was going to change and if it was to change what way was it likely to move. What he did know was that 'a certain bank' was massively short and he was an expert at gaming the positions of other large speculative players and hedgers. And of course he thrived on risk. After our conversation I had to revise my view of trading. There are those that use the market to hedge. There are those that use the market for speculation and there are those that simply provide liquidity for short term gain.
06-15-2012 08:35 AM
Excellent insight. With so much attention being put on electronic trading, how important is the overnight activity now to the direction of the pit opening? It seems as though Early Calls are harder to project, due to the market being open throughout the morning vs. not being open at the 9:30 pit start. I'm not sure if I'm being clear. But, it seems the market is really being dominated by Globex and less by what the market might do at 9:30am? In that vein, does anybody really care what the Early Calls are anymore?
06-15-2012 08:46 AM
The early calls aren't really early calls anymore. This appears to me to be more like the floor of a casino... always open just more people at certain times of the day.
The big jerks in price may take place at different times but the herks and jerks of the morning and evening trade may get evened out a little. JMHO
06-15-2012 08:51 AM
Soros said that the only fundamental that matters is money, i.e., which way it's flowing. I firmly believe that in order to trade successfully all one has to do is follow the price. (Well, there's also the whole discipline and patience aspect, psychological makeup stuff that is hard to come by.) Knowing what's going on fundamentally (China, weather, etc.) will not necessarily translate into profit in the markets. I'm not surprised at all with Shellady's story about the interest rate trader. I trade soybeans a lot, but I don't think I could tell you what a soybean looks like. I'm pretty sure I've never seen one in person.
06-15-2012 09:23 AM
Ive noticed something by watching markets and looking at charts. There are certain times during the night market when marktes make major moves. For example, markets seem to make moves at 8 pm at night , 2 am and 4 am in the morning and sometiems at 8 am (Central time) ? It happens failry often that major moves start at one or more of these times. Are foreign markets opening at any of these times? Other reasons?