1989 Futures Trading Training Video You Should Watch

i’ I’ve had it for n years uh when we first talked about this seminar we talked about uh having an opportunity to sit down with a limited number of people and and talk in depth about trading Trad you in the pit rather than trading off on the screen um it’s something that I I guess I know a lot about because I’ve been doing it for a long time and I’ve always been uh lucky enough to make money um today is the fourth day in a row I’ve lost money I think that’s the first time about six years I’ve lost money four days in a row so I’m not a good move so I’m not entertaining any questions I’m not repeating myself so I was thinking about this I took a shower before I came up here and you know cry a little bit when I with it I started thinking uh do I want to be a good loser and I just as an aside and and I don’t really have a prepared speech okay so I’ll talk about Commodities and commodities Trad but one thing that I I I don’t want to be as a as a good loser I I don’t think anybody in this room wants to be a good loser and I don’t think anybody that wants to succeed in the pit wants be a good loser I don’t think there’s absolutely there’s no value to walking down the hall and having guys look at you and say that’s son of a bit he’s a good loser you know that he doesn’t get upset he likes to lose he smiles he’s a good loser that’s that’s the alpha School of trading and I don’t buy nobody wants to lose and nobody wants to be a good loser but there’s a difference between being a rotten loser and being mean your dog and me your kids when you lose and being dishonorable because you’re losing and I hope particularly in these times everybody this room if you’re going to trade in a pit I hope everybody in this room makes a commitment please please don’t be a goddamn okay there’s plenty of money that goes around it’s the best business in the world when I think about it Brokers particularly brokers in the United States treasury bond fit at the Board of Trade make more money with less risk less risk than anybody in the nation except for those guys in Florida with cigaretts and I I don’t think anybody in here has to be dishonorable in trading and and we’re in a new era now I think there was a time when when I like being a Commodities Trader and when people said uh you know what do you do for the living I said well I’m a Commodities Trader I likeed that because there was a veil of secrecy that surrounded the Board of Trade and everybody knew that uh boy we risk millions millions every day and all that and they didn’t know exactly what we did but they were fascinated by the fact that we were commod these trailers I know that when I was down in Florida about 3 or four weeks ago I told John here shouldn’t be should in this class I told ja so I fell asked me in Florida what I did for a living for for the first time in my life instead of saying gez I’m a Commodities Traer at the Board of Trade I went tez I well I’m in Investments okay so this is a new era and and and not the pre- but please let’s be honorable I mean you know you can take your lumps and even if you blow out let’s blow out honorably and it blow out honorably I’m sure there are enough guys down here that have made enough money that you can come back and talk and and away back into the business don’t burn any Bridges when you leave if you ever leave and please don’t do anything in the pit that’s going to affect all of us because I think some of the craft that’s gone on particularly at the Merc I can say that because I Bo okay I think it’s going to it’s going to affect all of us and I you know I don’t like the idea of standing init not KN a guy next to me as a team I don’t like that I don’t like the way the business is evolved and you know one thing when you die I guess when you die all you want to be able to do is you want to say I wasn’t arm that okay because it doesn’t make any any difference how much money you have CU you can’t take it with you and uh and really nobody gives a after it’s all said and done and we we’ve always said this up in the office after everything is said and done it’s style rather than substance if you went down with class that means a hell of a lot more uh if you lose money on a trade I think it makes means a hell of a lot more because in six months no matter how much you lost on that particular trade you’re I going to remember the trade okay so style rather than substance that’s a that’s my my sermon and I I mean on it but I’m kind of upset about all the crap that’s going on and I I hate the so when they said uh you know let’s have a seminar about trading Commodities um there were really only four things that I wanted to talk about and if you understand these four things I think everybody in here can be a Commodities Trader okay and and these are real Basics and unfortunately I can talk about any one of these areas for for 5 hours at a time but I’m going to try and cover all four sections as I go if you have a question please just pop your hand up okay and we’ll stop um let’s start at the beginning people in here I see have uh uh varying degrees of experience okay some of the people are established Traders and and and a lot of you I suppose are are brand new Traders is there anybody in here who hasn’t traded yet hasn’t traded one lot okay anybody that traded less than six months okay anybody incidentally it’s not a zero some total game okay for every winner there’s not a loser that’s not the way it goes they’re professional hedgers that use our Market it’s not a zero sum total gain but there’s only so much that you can take out of every pit and you divide that by the number of locals in the pit okay so the more locals in a pit the more that pie has to be divided up so when when people say G is at 07 toal game you know for every winner there’s a loser that’s baloney that’s not true but when you go into a pit you’re taking money out of the milth of the guys that you stand next to so understand when you go into a pit if the guy next to you doesn’t say gez it’s nice to see you thanks for coming and all that other stuff because to a certain extent you know you’re cost Mercedes so um four things about Commodities trading we’ll start with the first one okay and most of you already established but I think given the way the world is right now and given the way trade is we want to look at this again we want talk about choosing the right bit okay number two and this is probably the most important thing we’ll cover we want to talk about how to get trades number three uh and I think the Risk Managers would probably say this is most important we want to talk about taking a loss number four we want to talk about something I like to talk about is taking a profit okay so four things how do you choose the right pick um things are different than they were uh terms of the pits in choosing the right pit right now I think the first thing you have to zero Wi on is open interest when I glanced at this uh as you know the World Trade the biggest open interest is in the bonds uh open interest means that there are a lot of players in the marketplace and there’s room for you to go in there and and make a living okay when there’s a big open interest if something dramatic happens in the market rallies the shorts will cover the Longs will buy things happen if if if the market breaks the shorts will will press it the Longs will get out and things happen as long as there’s open interest in looking at that um if I were a new Trader the pits I look at at the Board of Trade would be uh the bond pit the bond options pit the 10-year note pit as some of the guys know very well uh the 5-year pit which has a great open interest um and then some of the green pits uh the green pits that I think I probably like the best and I think you probably have the best chance of making money in right away u in my opinion are are the meal and I I’m one of the few guys I think on the on the bond side John is another one that uh has had an opportunity to trade them up on the grain side too they’re different trades there’s no question about it uh I like to thinkig the grain trade is kind of a manate um but the it there more money on the on the financial side so when you when you choose a pit think about open interest think about volatility uh right now the big play everybody’s talking about the euro dollar pit that got an open interest I think now that exceeds a million uh I know they’ve had a lot of days where they’ve had five tick range and I think they’re paying for $25 ticks open interest in a situation like that isn’t quite as important as volatility make sure you go into a pit where there’s volatility because one of the things we’re going to talk about is how does somebody get a trade because you can be the nicest guy in the world and bid an offer all day long if you’re not getting trades you’re not making a living and if that pit isn’t moving if the bid isn’t changing and the offer isn’t changing you’re not going to get trades my opinion so uh this pertains primarily to the bond pit I think one of the things you really have to think about when you choose a pit is availability of a reasonable position uh our bondit uh speaking frankly is a little bit like a monopoly uh some of the squares in there some of the positions in there are boardwalk and Par Place some of them are are the greens some of the yellows and and the spots down in the middle for the guys that don’t spread and try and trade the front mon are a little bit like standing on Mediterranean uh I’m a firm believer in the fact that a spot makes the man rather than a man makes the spot uh we’ve got all kinds of players that want to get into the bond pit all kinds of houses all kinds of cash arbitr guys all kinds of spe houses all kinds of funds there’s plenty of paper coming into the pit from all angles if you stand in a good spot and you’re a one lot Trader and you can and you can get over the bumps and the grinds uh you’ll very quickly become a 50 L Trader and we’ll talk a little bit about difference probability between one L TR and 50 L Traders uh okay terms of choosing pit one of the things that that I think is terribly important is you’ve got to get a pit where you can get a position uh that’s meaningful I think for all intens and purposes the bond fit during the day is an awfully hard place to go and I how many guys in your trade bonds pretty big percentage I think you know if you’re down in down in a hole it’s hard to get trades and it’s hard for people to see you but I think there’s something even more important than that we talk about this a lot in the office we talk about sight angles there was an old thing in the Green Room people used to say you know we used to bring those orders down in the middle of the pit in the bean pit and and and you could stand down in the middle of that bean pit and get all the people you wanted and you could trade like crazy well I tell you what I traded in the middle of bean pit I was an idiot and any any Bean Traer that tells you or any grain Traer that tells you you don’t need to stand on the top step to be a good Trader the answer to that is you have to stand on the top step or as close to the top of a pit as you can get for one reason and one reason only it has to do with sight angles I guess what I messed around with it I think we can probably understand what goes on in an area which encompasses a field of about 90° okay so if I’m standing near the top of a pit and I have a field of about 90° I can’t see the whole pit but if I do this I can see the whole pit now as we talk about trading today you’re going to understand that one of the most important things you can do in the pit is you have to know what goes on you can’t be an idiot you can’t be there offering fives offering fives offering fives and not seeing all the locals on the other side getting loaded up at five ready to go five bid six bid seven bid you have to know what’s going on one of the ways you go on one of the ways you know what’s going on is we follow an open out price system we’re supposed to know what trades and don’t ever be afraid to ask anybody what in the world traded up there what trade because they’re supposed to tell you okay it’s not a secret and this isn’t aide this is not this is not a business for people uh you have to be able to yell and you have to be able to shout don’t be afraid to ask what we not okay so we’re talking about side angles I’m on the top step I can see a feel of about 90° I can see most of what goes on in this pit I basically know what’s happening I know what’s happening with the spreaders I know what’s happening in the back months I can even see a little bit into the other pits and I can see what’s going on in the other pits take that same guy moving down four steps here’s my feel of vision okay everything that transpires behind me I can’t see so here I am trying to be a scalper trying to follow all the rules six fit at 7 which I don’t believe in and we’ll talk about that okay Six B 7 six bit at 7 I’ll do anything you want okay if I sell s I’ll scratch them and I’ll scratch forever then when I go to the jewel store I tell them I scratched all my traes today but I can’t pay for my groceries so when you step down four steps your side angles about like this you can’t see what goes on behind you and when you look out this way you can’t see what’s happening in the corners either you’ve got to be able to see that pit so you’ve got to be able to go into a pit where you can see now along those same lines when you walk into a pit where’s a good place to stand a good place to stand in a pit is uh that area where the locals that drive the nicest cars and make the most money stand because one thing I think you’ll find out the longer you’re in this business is nobody nobody comes up with anything new everything that’s been done by you everything that’s been done by the guy that started 6 months before you has been done a thousand times before and there really aren’t too many new twists to making money when you’re in a pit so what you want to do I think and it I guess it’s kind of a like a cop out for me to say this I think the best way for anybody to become a good Trader is to become a copy okay you watch good Traders and you copy what they do you don’t necessarily dress the way they dress or talk the way they talk but you stand in a position is close to the position they stand in you watch them when they sell it they bid for it right away je he sold it and covered why he he sold it and offered more why he sold it a five and offered fours why it was me is cu I was going seven okay you want to know you want to know what the big boys are doing okay big dogs have it made follow big dogs when you go into a new pit when you choose a pit make sure you can get a position in that pit that closely approximates the position of big dogs now again the reason for that I think is fairly self-explanatory nobody reinvents the wheel on a regular basis I mean we’re we’re P scalers or scalp beggar 64 please sell at seven please okay there’s not much you can do to maximize your income other than stand in the right spot and and be disciplined but you know we’ll talk about all that other stuff all I’m saying is when you choose a pit make sure you can choose a pit where you can stand where the big dog stand in my opinion you know without giving out any secrets because everybody knows this you can walk around and I think in’s certain pits you can see where it’s easier for you to get in a position to stand where the the the big money makers SC now we trade I guess we trade 200,000 a day probably on average the I think in the not they’re probably trading 25,000 a day and in a 5 year I don’t know does any in 5 years five 5 or 6,000 okay when I started down here in 19 when I started down here in 80 we traded in bar and there were probably maybe 60 locals we traded 10 or 12,000 a day and I can remember the first day we traded 25,000 in the B everybody thre cards in the that was a big deal we traded 25,000 contracts we had more people in the v pit than they have in the note pit right now and we certainly had more people in bit than they had in pit and our open interest didn’t come anywhere close to the open interest to seeing those pits so I don’t think the opportunity for making money the Border trade is G you know a lot of people say God we weren’t on the wagon we didn’t get to trade bonds when bonds first started uh you know can we make any money down here I think your opportunities are exceed the opportunities we had I know you’re up for leas expenses are high I think people are paying probably three grand a month to lease a seat when I started iot we paid $2600 a month so it isn’t that much different um I think there’s opportunity once again just choose the right pit uh make sure when you choose that pit that you can get in a spot in the pit that gives you an opportunity to trade there just isn’t any advantage to being down in a hole when you’re trading we’ll talk a little bit about getting trades and how important it is to be in the right spot and see the right things okay I don’t think there’s any advantage in going into a pit where you can’t play right away where you can’t be in a position to do as much as that next guy okay when I look at the meal pit in the a pit you go to the meal pit in the aut pit and stand right next to the most successful Trader in a pit stand this close to him okay probably hit in ribs about five times we do it but you can stand right next to and theoretically that means you’re starting on an even K excep capitalization U capitalization was the next thing I was talking about in terms of choosing the pit you know there’s there’s two things to think about in terms of capitalization a scalper doesn’t need very much money okay and I use the term scalper in kind of a loose sense not in an Ever clip kind of a way ever clip is a guy that runs Alpha trading and probably is the best guy at the Board of Trade I think in terms of teaching new Traders thanks to Scot in terms of teaching new Traders how to trade and trade with discipline uh ever from the school of six bit at seven uh if I buy six, 1,000 20003 I’m out okay let’s go on to the next trade uh ever has a whole bunch of alpha traders that have come down to the board trading me a lot of money uh ever doesn’t have any Alpha traders that have come down to the board trade recently made any money but ever is the guy that taught everybody you know what a really meant to be a scalper and I know if any of you have ever had occasion to uh visit de let’s say in the morning I have on occasion okay we talk a little bit about the whole concept with scalping how every trade is a new every day is a new and do I can give you that speech but I want okay anyways uh capitalization when you come down here you have to worry about enough money to get into a pit period and a discussion if scalper okay capitalization counts if you’re going to go into an options pit and you got to start from an answering positions okay so just keep in mind in choosing the right piit uh you know what your capitalization look like and and from most of us I think it started out you know my capitalization whenever I had in my pocket basically what I had and uh I think to bore you with old stories but when I started I remember had up for first three months on my lease and John Ruth asked me to put three grand in my account said you bet I’ll bring a check in soon as I sell some foreign stock which you know takes a long time to clear on the ex at the end of two and a half months um John came down P said Char i’ like talked about trading you know see how you progress and all other stuff but you’ve only done about six trades and it was true from the first two and a half months I was down here I didn’t do anything I came down I was a former Harris banker and I started in the bond pit and I used to wear three piece suits for the Harris when I came down here I wor three-piece suit I took off my Jack and I had my vest on and I button my goldber coat like this over it and I spit in the pit go six and I go yep go seven Sellers and yep seven and about once a week I P standard day more and I buy one and I keep it for a day and and I get out of it and it was the end of about 2 and a half months I’ve been down about 2 and a half months and uh for me the whole concept of scalping was incredibly C just I didn’t know I didn’t know why you had to sell it when you bought sixes you know cuz I can remember it’ be six bit for 500 and 10 would be offered at 7 and all of a sudden Plaza would come in and sell 1,000 at 6 and sell 500 at 5 and 500 at4 and the one LP that I bought at six which I thought was the greatest deal ever you know was a three kick loser where I’d sell one at seven and there’d be 500 bid and before you know it i’ pick a profit on and they plug the hell out I became I became a spreader U and that was back in the days when tax walls were different and there was an incentive for people to use contract months with in the front month I don’t think we’ll ever see those those opportunities again but uh we’re going to talk about spread okay all right enough about choos with pit does everybody know what pit you want to trade in now okay yeah tell if anybody has any questions about pits individual pits and you don’t have anybody to ask come and ask me because I think I know people in most pits and I can talk you know to you a little bit about individual pits I think that’s the best way to go I would say this I think anybody that comes into the bond pit during the day right now is working up a dead dog ass okay I think the Bond at night is an opportunity although I understand the volatility to come out of that market a little bit but I think anybody that comes into the bondit during the day right now is really asking for trouble I mean I think you’re you’re trying to climb a top M uh I guess the ways to do it we can talk about that if anybody wants to handle on an individual basis but it is tough to like I said onard and the man doesn’t make spot okay we’re all Commodities Traders we’re in a pit uh we got in there you know incidentally when we started down in the South through a lot of you guys have heard these stories but some of us were were bright enough I guess to figure out that really met a difference as to what SAA stood in so guys like myself came down for 18 or 19 months in a row at 2:00 in the morning so we could get the right spot in the bond pit my brother came at 12:00 at night for 6 months cuz he was in a Time war with another guy so he’d get in at midnight and he’d uh me his spot I think eventually they made you sleep in the hallway and everybody would run open up the gates so you know there’s always been a premum amount bu okay anyways we’re Commodities Traders we’re in a pit I’m not going to talk first about taking the loss or taking the profit because that doesn’t mean anything unless you get trades so here’s what it’s all about okay I’m going to pick how do I get a trade over the history of the Board of Trade there’s been one group of traders that have consistently made money and those are spreaders up until the Bon pit there was no such thing as a scalper who made money and and and Johnny knows this and I know this when you were in The Bean pit and uh you were 6 for 100 and a guy sold you 100 at six everybody in the pit tested you they made it six sellers okay and if you were 5 and half fit for 100 uh maybe went back six bit but there was no such thing as a pit being a clearly defined six six fit at 6 and2 or 6 fit at 7 in the bond pit it is clearly defined as everybody knows it’s 6 fit at 7 okay in the bean pit and basically every other pit in the history of the boorder of trade there was no such thing as a clear Edge so there was no such thing as a scalper or a scal picker okay there were no successful scal Pickers in any pit everybody was a mini Speculator and a mini day trader in every pit and for the most part those guys like Busco okay the people that made money down here on a continual basis were spreaders and they spread and they spread and they spread and guys like me got started spreading I was a one lot Trader who traded once a week I went up in a cafeteria at noon and looked down at the P for 30 minutes figured out what they were doing and traded 265 contracts the last hour of the day and that’s how I started the trade and I was a 50 lot Trader the next day because I understood what spreading was all about people who spread are people down here that that I think mature faster as Traders and at least in the old days had an opportunity to make a lot of money now because tax laws are different there is no such thing as a spread okay there are guys in the middle of the bondit that make money spreading and if you’re a note spreader or a knob spreader you’re you’re if you’re a knob spreader you’re a pure spreader if you’re if you’re a not Trader you have to know what the spread’s doing because you have to take advantage of it when the opportunity presents itself but for the most part people in the financial instruments room who stand in those pits are not spreaders but they are everybody’s a spreader okay how do I get trades I have to adapt the mentality to spread it okay I’m a scalper in the bond pit I’m not a spreader what are you talking about Charlie well everybody spreads everybody that trades bonds from the outside spreads everybody that’s trading in the bond pit spreads every order that comes in is basically the function of a spread what does that mean we are in the bondit and I’ll talk about the bondit and any other individually in the bondit we are spreaders we’re trading bonds okay but really we’re trading bonds against some other commodity now as you know the bond market and Futures market and bonds is about this big and the cash Market is about this big so the most obvious relationship is yeah we’re we’re scalers in the bond pit we’re trading Futures Contract but everybody that trades against us into the bond pit is a spreader not everybody but about 65% of the people that send orders in the front l in the bond pit now are trading against another contract another cash contract for the most part okay so everybody is trading relationships now I talked to you a little bit about how frustrated I was when I started out in bond piit and I’d be six Pitt at seven but I’d say that why do I want to buy sixes well I want to buy sixes because everybody else does okay so what’s the probability that I’m going to get six zero okay I want to sell sevens when everybody else wanted to sell sevens so what’s the probability that I was going to get seven zero so how do you get trades you get trades by number one being a spreader at heart let’s take the bond pit because a lot of people familiar with it okay I want to trade the bond pit okay what do I want to spread against I want to spread against outside markets now what does that mean okay I’m in the bond trading bonds okay and I understand everybody understands if you don’t understand I’ll explain it to you right now if it’s a big six bid you want to buy sixes if it’s a big seven sellers you want to sell sevens okay you don’t learn anything else but they remember that okay now how do you get sixes and how do you get sevens how do you get sixes when they’re not quite as attractive as they were when 500 other people were trying to buy them and how do you sell sevens when they weren’t quite as attractive when 500 other people wanted to sell them you are an offer or a bid in the bond pit against another market now what that means simply is this we follow other markets in the bond okay as you know there are a whole bunch of guys that trade Bond are the Yen right they’re Yen they’re Yen Traders when the Yen ticks up they’re they’re a kind of aggressive seller in The Bu when the yend ticks down they’re an aggressive buyer uh if we’re watching this the Dow that thing okay if the Dow breaks you know we’re an aggressive seller or an aggressive fire depending on how much it’s broken uh we watch oil today at the end of the day we watched oil a little bit we did what oil did oil breaks we aggressive buyers at oil rallies we become aggressive sellers okay how does that get you trades I am not an advocate of stepping out when you’re trading okay I don’t believe that if a guy wants to trade and it’s six bit seven the will you trade is should buy 10 and it said okay now I got to trade on great I don’t think that’s the way to trade I think the best way for me to explain this is Brokers want to trade with MERS okay they want to trade with you but they really don’t know what you want unless you are an aggressive bid or an aggressive offer okay now the hardest thing in the world I think is for a relatively new Trader to step into a pit and be an aggressive six did or an aggressive seven offer when that person does not have a position on it because the bottom line is you just don’t know that much about what’s going on and you really you know why do I want to buy sixes why do I want to sell sevens you have to have a reason for doing it when I was a spreader I spread the middle month against the top month okay if I offered the middle month I offered it at 20 how many you got at 20 Charlie I look at the front month and see how many they offered at 16 which is what I wanted to buy I got 420 okay you’re a new tra who gives a I got 420 I want to buy this bread okay I was offering and I was offering with confidence when a broker had an order I’ll buy 100 he came to you okay because you knew you wanted to sell 20s there’s nothing worse than being a new Trader standing in a pit saying 6 s 6 S I really don’t know what I want to do I don’t know if I want buy Six I sell okay so Pur say you because he because well let basically all feel good make okay says hey what are you doing because he wants to do you a favor and you go 67 like that or you forget to say six at seven and he has five to sell at six and it’s gold okay that’s not the way to trade and that’s not the way to get trades to be a Meek six bit at seven is not the way to do it okay when you’re in the pick you want to offer Sev with confidence or you want to bid six confidence now how do you do that easily okay you do it against another Market you don’t have to fall in love with your bid and you don’t have to fall in love with your La I’m in a bond P okay and I decid today I’m going to be a Yen because everybody’s following the Yen all right and the Yen breaks so the Yen relative to the dollar is weakening so we’re getting better and bonds are more attractive okay it’s six fit at 7 I’m not six bit at 7 I’m 6 for 20 6 for 10 6 for 10 okay now a broker wants to help you he wants to help you okay what does he do he comes to you if he has an opportunity comes to you I think the thing You’ got to remember is Brokers want to trade with you but they don’t know what you want to do for the most part if you’re a new Trader because you’re not you’re not evidencing any any confidence at all what you’re doing so today I follow the so I’m a spreader at heart okay I’m not doing anything in the end of it but I’m I’m doing bonds against the end all right so if I have to pick out something to do I’ll be a six bit six bid 6 for 20 are you at seven so to at 7 6 for 10 6 for 10 all the time watching what’s going on in the pit okay now if a broker wants to help you he says God get guy 6 for 10 and he goes to you more importantly how many have you noticed how many of you noticed you new Traders when you’re in that pit how ridiculous it is when you yell 6 to 10 s 10 at seven and you can hear your voice God get embarrassed and all that other stuff I don’t get embarrassed anymore but I did when I first when I first started trading everybody thought I was bidding if the number was six everybody thought I was bidding for six cuz I go six and I hear my voice and I get nervous okay and I really wouldn’t want to do it seven like that and you get because you’re embarrassed if you have a reason for doing what you’re doing it’s a little easier to be loud okay and if you’re loud we get into another concept it enlarges the pit size that you trade in okay and en large is theit that you trade in so to summarize the idea of spreading and I a lot of time I spreading and I shouldn’t have but I feel strongly about it if you’re in a market and you don’t know what to do and you don’t want to stand there like an go 6 Minute 7 6 Minute 7 6 Minute 7 and he has 20 to buy and he buys them from him cuz he’s saying 20 at 7 sell 20 at 7 and he has 10 to sell he sells it because he says 6 for 10 6 for 10 come up with a reason for bidding and come up with a reason for offering the easiest way to do it without knowing a lot about everybody’s position is to do it against another Market okay so if you’re going to follow the Yen as an example in the Buy and the end breaks become an aggressive bidder become a loud aggressive bidder 6 for 10 6 for 20 6 for 30 whatever now once you get it if you’re a new Trader you may want to get rid of it but at least you got the trade and that’s 3/4 of the battle getting a trade is 3/4 of the battle not half the battle okay and you’re an aggressive offer so you’re a spreader one of the things you spread against this outside Market you spread against the end what’s another thing you spread against you spread against the front line okay I see the big dogs up there and I see Jay noan shoveling to the big dogs okay he saw 105555 105 like that I know it’s just a matter of private Court’s going to go five C so what am I boy at the very least I’m an aggressive six seller now I’m spreading I’m spreading the front month against the front month I’m spreading my pit against his pit I’m offering sixes cuz he’s selling fives okay now it’s five bit at six but I’m offering sixes and I’m offering them aggressively now why is that good why do you want to offer and bid aggressively because if somebody wants to help you they’re going to trade with you if you’re bidding and offering aggressively if you’re not they’re not going to trade with you Brokers want to help you because they feel guilty they want to help you but they don’t know what to do when you’re an aggressive seller they know what to do I got 20 to buy so okay they don’t know what the market is or they do and they’re doing you a favor okay now you got that 20 and six and they’ve got all those fives they’re biding for them and they’re bidden for more you know it’s bullsh okay you got you 20 six for to go five okay oh you did five now you’ve sold sixes guess what you’re an aggressive five bid five bid five bid five bid okay a broker wants to help you he knows what he can do for you he knows you want to do something for you to be five bided six five bited six a broker has a 10 lot to buy he doesn’t want to stick you he doesn’t want to hurt you he doesn’t want to buy 10 at six from you if you don’t know how to handle it and he doesn’t want to buy 10 at six from you if you don’t want to sell it if you’re offering sixes you’re offering sixes because something happened in an outside Market or something happened in your Market when you saw something transpire on a to step or you saw something transpire in the middle of month so you become an aggressive offer or aggressive bid have a note here Brokers don’t want to trade with losers everybody in here that’s ever processed paper or broker paper knows you don’t like the sticker guy nobody likes the sticker okay here seven six seven and they say you 10 and all sudden they goes six Sellers and and they see five five they see it taking a loss they don’t want to trade with you anymore they don’t want to hurt you they don’t want to be responsible for you losing okay Brokers don’t like to trade with losers and they don’t like to trade with people that don’t evidence self-confidence you’ve got to act like you want those sixes you’ve got to act like you want to sell those sevens spreading how does that come into play I want to sell sevens because not cuz I’m a genius cuz I know that bonds are going to go down to dicks I want to sell sevens because something trans transpired into another Market that’s going to weaken the bond okay it’s going to weaken the bond market so I’m an aggressive seller something happened in the end or oil or in the Commodities basket or in the Dow or I hear the note the note guys screaming okay or I see something transpiring at top step or I see something transpiring in the middle month or in the back month I want to be a seller now I don’t have to live with it sell 20 at 7 sell 20 s forget that 6 for 10 6 for 10 okay I don’t have to live with it but when I offer it I offer it with meaning and I offer it with Vigor so a guy if he wants to will trade with you now remember you offer 20 at 7 and a and a and a big dog’s loaded okay he’s long he may want to shut you up okay he may want to buy your sevens even though he’s long at six he wants to shut you up and there’s some guys in the B that made a tremendous living you know getting shut up on a regular basis by guys that don’t want to screaming okay if you’re allowed traitor everybody in that know that yeah we everybody wants to trade with you if you want to trade if you go to a pit and you want to trade people want to trade with you but if you don’t know what you want to do they don’t want to trade with you and if you’re at s 6 bit at seven they don’t know what the hell you want okay so you got to have a reason for offing it and a reason for bid for okay the concept of your personal pit size my pit size when I’m six bit seven six b seven is about this pit okay and somebody says say two at six okay okay 88 or 8706 I bought two what’s your house what’s your brokage firm and you write that down on the card and that’s how you lose okay you write that down okay now starts to go six sellers so you go you want six you want six these are my buddies okay now I bought two with six and I sold you one and I sold you one my bit size is still this big okay I haven’t done anything to enhance my bit size you want to make more money you trade in a larger pit how large a pit can you trade in you trade in a pit that goes from that corner all the way around to that corner there’s only one way to do that that’s to be loud okay it’s not necessarily be obnoxious but that’s to be loud you’re 6 for 10 6 for 10 6 for 10 somebody over there say a 10 pleas me those say a 10 okay now you bought 10 at six okay now God forbid it goes six Sellers and you didn’t get a chance to get out if it’s five bit for 150 but all of a sudden there’s a pretty good six offer you’re long tant six it’s time for you to take your profit or take your loss okay so it’s time for you to take your loss if I do this five out five what have I done to enhance my position in the pit absolutely nothing what have I done to increase my pit size nothing I’m an my Pit’s this big I bought 10 at six and I lost $32.50 and this guy loves me and this guy loves me cuz they got a little shot at making money okay what do you do your long ten six it’s six sellers it’s time to sell you pick somebody out and you sell them 10 and you do it loud and you pick somebody out that can help you you don’t sell it to the guy next to you you look around the pit okay and there’s a broker bidden for 50 car bur let’s say from ref say a 10 at five okay you sell them 10 at five you put your name on the card what was that okay you just enlarged your pit size something right happens he’s got the scess he’s a broker he’s an idiot he’s about 10 and five I’ll bu 40 and 6 okay as soon as you get up say he’s not sh 40 and six and they 500 offer six okay now you’re 5 for 40 5 for 40 you just increased your pit size okay the five bid grows the six the six offer gets small you’re short 40 at six it’s time to cover you look around the pit when you have time you look around the pit and you say who can I buy these sixes from who can I give the edge up to that will come back and and make it worth my while Justin I’ll buy 40 at 6 Justin no I’ll bu 40 at 6 so later on in the day after you bought that 4086 went five sellers four sellers three sellers two sellers Justin noan part you we’re taking a loss but we’re nice enough to look him up and give him the 40 pick okay later in the day it’s two bit at three everybody in the world wants to buy twos you want to buy twos cuz the end’s breaking you two for 10 2 for 10 2 for 10 hey say you 50 thanks Justin okay it came back it came back to help you because you enlarged your pit size I can’t emphasize this enough don’t don’t don’t be a traiter that has a small group of friends okay and you commiserate after work and they say God we’re not getting any trades and whenever you get two he deserves one so you give him one don’t do that okay it’s not fair to him and it’s not fair to you when you trade trade with every corner of the pit and when you take a loss or when you take a profit we’ll talk about that okay when it’s time to take a loss and it’s time to take a profit when you take a loss and you take a profit take advantage of it you have a position when you have a position on you use that to your advantage you enlarge your pit this is the most important part of the Commodities business when your Traders when you get a trade and you have to get out and everybody has to get out of that trade sometime okay or else the clearing will get you out of it eventually when you have to get out take advantage of it okay give it the Su that can come back and help you now I’m a broker this is an open outright pit I’ve got 100 to sell there are 50 guys that want to buy fives and there are 50 guys that want to sell sixes okay by the rules I have 100 to sell I don’t have to say s 105 and the first got to say sold get some okay I’m a broker and I SP with fairy desk on people sell You2 u20 sell You2 You2 sell you20 and the customer gets the the fill that he deserves and the broker does his job now the broker has exercised judgment okay the broker has decided to Sprint fairy dust on somebody because at some point in time when that guy has a big position on and this broker go sellers into do it in his his house expects it he expects that guy to come back to him to take him out when when that guy has an opportunity to take out anybody in a place okay it goes both ways all right enlarge the size of your pit and do it by taking advantage of your position and the way you take advantage of your position is you know you’re long at five and it’s time for you to get out at five get out with the right people and make sure when you get out you get out loud okay the alpha guys God bless them do a tremendous job of getting out you know the alpha guys buy fives th12 th3 and they’re out at five and they let everybody know when they get out at five they don’t go s 10 so 10 five and 75 people trying to tear their face off to get to get the screen okay but it helps them it helps them in the long run okay this is why we’re charging $500 talk I’m going to talk about transition trading this all follows Under The Heading of how do I get trades you get trades by being a transition Trader first of all you get trades by being a spreader okay you’re a spreader you’re trading against other markets you’re bidding with a reason to buy you’re offering with a reason to sell this is when you don’t have a position on and you’re initiating a position okay you get trades by enlarging your pit you finally get a trade on and you take advantage of it okay remember for all the time you spend in that pit there’s probably six NS a day you have a position on okay good Traders have a position on from the time the bell rings I was going to say to the time the bell rings at the end of the day but there are some of us who are idiots that carry positions even past that last B okay and we have them the next day good Traders have positions on all day long if I have a position on if I’m long 105 and you’re flat and a broker say 6 for 10 who’s going to Winn who’s going to get to them first you or me I’ll beat your ass I okay I know what I want to do I want to sell sixes more realistically if I’m short at four and a broker says 6 for 10 I’ll beat your ass I way you get short at six trying to buy five okay if I have a position on you can’t believe how fast I get if you have a position on you can’t believe how fast you get you get smart you get fast but unfortunately new Traders have a position on about 6 n seconds a day okay so you’re 6 for one and finally s saids so and before you from cage so1 and six oh God that was close they could have done man sales they could have done man sales well I had it one ra could have died push could have died think about it all that stuff could happen the Champs could have decided to sell their entire portfolio while I had went headed on but got out get out hey Thank God now 3 and half hours later two for one so still two oh God could have done it again now you want to have a position on all day long you have a position on all day long because you PID with authority you offer with authority you enlarge the size of your pit and you becom a transition Trader what’s a transition Trader transition trading is a nice way of saying you steal trades after you become a Trader 95% of the guys in a bond pit and probably 95% of all the guys in all the pits steal trades that’s how to become Traders what does it mean to Ste sorry and am I am I telling you you should steal trades for living absolutely Val what I’m telling you is you want to be absolutely involved in whatever happens in that pit okay and if it’s six bit at seven and it goow six sellers ding ding ding There’s an opportunity for profit okay when it’s six fit at seven 99 out of 100 times you’re not going to make a damn nickel by buying sixes and selling sevens okay it’s six bit at seven no one’s going to sell you sixes and buy sevens from you because you’re good looking because you’re a new Trader it just doesn’t happen you want to play you got to get into the market any way you can how do you get into the market if you become a transition Trader what’s a transition Trader it’s six bid it’s seven sell 56 say 10 okay there were 10 bid for right there now you sold him 10 at six because he wanted to sell 500 all right did he get filled absolutely that’s your 10 now it’s six Sellers and you’re short 10 it’s six congratulations you’re in the market you’re playing when you’re in the market you’re make money when you’re not in the market you don’t do anything okay when you’re in the market you’re playing transition trading is a very very touchy subject I am not telling you to go out SCH trade okay but listen this is the way the world is six bid at 7 one of the big says sell 206 and you like okay you think it’s a good idea and he’s been for 25 so did he get his he sure did these are yours did he not get his hey I’ll buy 25 oh an honest guy somebody like me appreciates that you know and and believe me they remember it forever say 25 did he get yours I’ll be 25 I’m off you a little later in the day Big Shot sell 206 say 25 hey that’s my market oh you were off last time remember that okay what’s what’s fair is fair it’s a hard hard life okay and it’s a tough world out there you want to be in the market when the bid changes and the offer changes you want to be in the market okay that’s when the opportunity for money happens when the bid changes and the offer changes okay so you’re there you know what you want to do you see six is trading you’re anive must have seven sell it but by God you’re ready to go to Six okay anything can trip your wire so somebody says sell at six they want to sweep the market okay you help him sweep the market you sell him his 25 you give him his 25 because he deserves it because he was sweeping the market okay guess what later in the day later in the week later in the month that’ll come back tfold to you more importantly is that test teric thinking more importantly if he doesn’t want it or he gets filled that’s yours now here’s another situation 5 minute six sell 10 five sell 500 at five okay the guy that sells 10 five it’s his Market you sell 25 did he gets filled I never got my 10 L I’ll buy 10 hey that’s my market I offered 5005 he was first he offered 10 at five it’s your Market you’re in you’re short 15 at five in the market where you want to be short cuz big dog wants to sell them okay transition trading that’s how you get trades okay don’t steal trades don’t steal them when the market changes you be part of the action now how are you part of the action okay six bit s identify the six bits who’s a six bit how far is he from you how far is he from you ideally ideally you’re close enough to these guys where if it goes six Sellers and he gets filled the guy that turned to six sellers you can get these okay ideally now remember that’s got to do with pit position too if you’re a broker and I’m here okay and he’s standing next to you and I know you’re been for 25 and all a sudden big dog says 56 see 25 okay by the time I do that the guy next to is already grabbing so okay so proximity he something the closer you are to a Traer easy or broker easy get a trade Now understand also what the positions are of the locals around you okay so here’s John do he’s short 10 at seven you’re an aggressive seven seller he’s a lucky dog okay short 10 and seven you’re an aggressive seven seller and boom six sellers okay you’re offering him sixes because chances are he’s going to take his profit you’re in the market you’re a transition Trader if he’s short 10 s and it goes six sellers sell at six sell 500 at six sell 500 at six okay and he doesn’t go I’ll buy 10 I’ll buy 10 he’s not doing that okay he’s 5 for 10 5 for 10 and then he goes 6 for 10 okay it’s your Market it’s not it’s not anybody’s Market it’s any it’s anybody’s Market at that point in time do you understand me on that one okay now these are these are tough questions I think I think the guys that Trad B know that I feel pretty strongly about people that steel trades okay and sometimes I get vocal about it and I don’t like it I don’t like when people steal trades I think if you make a market you ought to get filled up and I think there a couple guys in the bit when they make a market they go sell it at six that means if you’re biding for it or thinking about biding for it or your mother wants them you know buy them from me they’re in off guys in thei they go s six bo bo you’re trying to buy 500 from them and they say okay those are the guys who make a living on if and when they become transition Traders okay or if and when you get an opportunity to be a transition Trader now transition I think transition does everybody understand what I’m talking about you want to get in the market okay and you want to get in the market and you want to do long at the bid or short at the offer how do you do it you’re standing in the pit somebody says sell it at 6 sell 300 at 6 Justin noan says sell 300 at 6 and they 125 bid okay so you selling was 25 you give the 25 adjustment I promise you it will come back to you it’ll come back to you okay not only that you’ve done a trade now remember this there are a lot of people in a lot of pits that lose money okay and there are a lot of people that try and turn it sellers when they’re never going to turn it sellers they’re try and turn it B when they’re never going to turn it so don’t get in a position where every time somebody says s 106 okay and you know everybody sold sevens just because they’re doing it say 25 cu the first thing you’ll be doing is BU 25 and 7 okay don’t do that when you’re a transition Trader you’re a transition Traer because you’re saying in your mind I want to be a seven Celler but if the opportunity presents itself I’ll be a six seller because I want to be short at six okay I can’t tell you how important it is and I can’t tell you how it changes your life when you’re a new Traer and you’re standing in the pit you don’t have a position on you’re looking at the uh you’re looking at the tiles in the ceiling you’re like me when I started out my God they’ve got microphones in the ceiling I’d stand there and look at him i’ look at his think that’s ridiculous ridiculous you know the guy next to me 6 for 100 7 and I wouldn’t even know what he was talking about wouldn’t even care because look at the people in the VIS alley they’re Amish do that a lot how much people cost me a lot of money understand look at that you want to be in the market when it’s 6 F 7 for 3 hours in any pit I don’t care how strong you are Mally it’s tough to keep involved okay but if six pit six sell five sell four sell four bit Five pit six pit solid six solid five 6 7 8 bit 10 B Charlie’s going 14 bit to cover your shorts okay that’s fun right that’s fun but it’s not fun if you’re it’s six oh it’s it’s it’s six oh boy this is free we go home hey I was working was incredible was it’s no good you want to play how do you play you play by being a transition Trader you want to be a seven seller it’s a light six bin Justin says sell 2006 s 25 I’ll buy 25 I’m okay I’m short 25 at six je it’s the biggest train I ever had do I want to be short at six sure it’s five sellers okay now we’ll talk about Tak later okay transition trading I’ll tell you how to buy those spies transition trading gentleman stealing okay that’s how you trade that’s how you get in fast and that’s how you keep your your interest peaked and remember if you have a position on I guarantee you you’re not going to believe how fast and how smart you okay if I don’t have a position on well maybe not me stupid okay but if some of you doesn’t have a position on and a broker says say 106 before you go sold you go six who’s offering those Sev I want to be long at six what’s the end doing what are those guys are on the Rock doing do I want to be long at six what do I think about this number coming out next Wednesday I want to be long at six you got 17 variables you got to think about do I want to be long at six okay if you’re short 10 at seven you can imagine how fast you say so if you’re an aggressive bidder because another Market is doing something the end’s breaking you can’t imagine and a six is a half Edge you can’t imagine how fast you are so okay all of a sudden you can fast you get fast I used to go home at night there was a kid in the bcy and Jeff Jeff is noer with us CU Jeff let his losses run too far and we’ll talk about that okay but Jeff was the fastest human being in the commodity’s business and I’ve seen seen them all he was the fastest he was faster than Henry Shack he was faster than Bobby Goldberg he was faster than Johnny he was the fastest man I ever saw and I always went home at night I said you know I I can be a Commodities Traer I think I can make money except there’s this guy Jeff Abrams and Jesus is he fast every time they offer it he SP every time they fit it he sells it and he’s fast and he spreads and he scalps and he does everything and he’s so fast and I’ll be standing next to him and I’ll say to myself and I’ll tell my wife this I know I want of My Sixes I I know I want to buy sixes and he’ll be short at seven and the B will sell sell 50 at six and we’ll both go so and he beat me every time because he had a position on when you have a position on you get fast you get fast real fast okay uh I don’t think I want to say any more about getting Trad other than uh I does everybody understand the concept of transition training does anybody have any questions about it does anybody have any questions about the concept of bidding and offering against another Market does any anybody any questions about uh taking advantage of your pit and enlarging your pit size okay one other thing I said it before and I’ll say it again Brokers want to trade with people that aren’t losers and they want to trade with people that sound like they’re making money that sound confident how do you sound confident a kind of an interesting test is you’re at home and you’re alone you say 6 for 10 and then you say a little louder 6 for 10 6 for 10 6 for 10 and you yell it okay are you yelling it in such a manner that it doesn’t sound like you’re dying that it doesn’t sound like you’re scared of death uh that it doesn’t sound like you’re not scared but really are scared that’s why you don’t sound like you’re scared as an example a lot of guys I know talk like this and if they increase their decibel level they talk like this and talk like this and talk like this and they go 6 for 10 6 for 10 but because they’re unsure themselves and uncomfortable and everything else when it’s time for them to bid they go they’ve all heard that in P it’s kind of a cute trick when you’re starting out cuz people go hey whose voice is that okay after a while you’re an idiot you’re unsure of yourself one thing you want to practice getting your decimal level up and let me tell you something there’s nothing more important than a big decimal level I think in terms of enlarging your pit size other than trading humongous size get your decimal level up by practicing you’re talking a speaking voice and bring that speaking voice up because you don’t want to put strange inflections in your voice whenever you bid and one thing you don’t want to do when you’re bidding 10 you listen to yourself and you’re embarrassed go oh jeez golly and You’ been it once and then an hour later you been it again because you were embarrassed the first time you did it you want to get to the point and this is this is a real good key to know when you’re going to make money trading Commodities you make money trading Commodities when you bid for it and offer it and you don’t particularly hear yourself okay when I offer it I don’t hear myself anymore sometimes P four days I heard myself days I couldn’t believe what I heard it’s America when you offer it and you’re not going God was that my voice like that then you’re J you’re not going to make any money practice High deci tels we have a broker in a bond pit that stands on the pit on the other side of me he’s a 500 life broker he could stand there in an empty pit and scream at the top of his lungs and I couldn’t hear him on my side of pit I’ll never as long as I live understand how really got a deck as big as he did but he did okay you got to have a big decimal level and there’s got to be something in your voice that says Hey I want to trade it of it is come on try and hurt me that’s part of it there are guys in our pit there guys in every pit that people trade with just cuz you want to hurt them there’s a guy in a bit Named Dave Garland some of you guys know okay Dave Garland doesn’t say solid six he says solid six you basically okay if you have a chance so you okay and that’s what he does he’s a confrontational Trader and that’s how he gets his trades he offers it in a confrontational manner he gets a lot of Trades I I don’t believe in the confrontational approach but I think what you have to do is you have to let people around you know what you want to do you want to buy sixes why do you want to buy sixes because you know they’ve been buying or the whole pit short of seven or the whole pits short at eight or whole pit short at five you want to buy sixes the outside markets tell you you want to buy sixes so you say I want to buy sixes okay and when you bid that you say that with the inflection of your voice or I want to sell settings and the inflection of voice is confident and Loud Pete besser is a bond Trader he’s a great Bond Trader he stands three steps down and his pit goes from corner to corner to corner because everybody can hear Pete and by God those Brokers say I want to trade with Pete because he bids and offers all day long now Peter he have F Fast Cash scam does everybody know about the cash scream in the Pont pit just for the guys that trade bonds everybody understands the cash scam in the Pont pit you got to understand okay it’s a it’s a screen in the corner like this and it has 20 different issues and the issue we look at is way down here in the right hand corner it’s a long Bond okay and it has a bit on a long Bond and an offer and when somebody in the cash Market says I’ll take that offer which is bullish for bonds okay you see a t for take or somebody says I’ll hit that bid but see an hit here meaning they hit that bid now in the old days when we had a fast screen which reported that stuff almost instantaneously got like that’s from made a living trading off the cash SC he was 6 7 they hit cash sell 10 at 7 s 10 at 7 sell 10 at 7 and there was one lone six bid there all the other six bits had been taken and Peter were taken now six sellers the pet short six he made a tremendous living because he followed the cash scen unfortunately the cash scen we follow in the baret now is a slow cash screen there’s a delay of up to 45 seconds between the time the trade occurs and it and it occurs on our screen but I’ll tell you there was a time there was a time when they trade the equivalent of 14 Bonds on that cash stream and Tommy ball went sell 500 bonds our against that cash scen because like I said where the tail cash is the dog okay and the tail don’t Wag the Dog the dog wags the tail and they were spreading everybody spreads guys that trade bonds you know the guys on the outside they trade against cash they know what’s going on okay on the cash market and this was our little gunser of the cash market and this is how a scalper which is a hard thing to be I’m six fit at seven do anything to me you can’t hurt me cuz I’m six bit at seven if you sell me sixes I’ll get rid of them at six if you buy sevens me I’ll buy sevens and scratch the trade you can’t hurt me that’s a nice concept but it’s hard it’s hard to get trades because your voice indicates you’re uncertain and you’re six bit seven and a b say say you 10 at six you always hesitate because you really don’t know if you want to buy sixes or not you got to have a reason for bidding and a reason for offering and transition trading and I hope everybody understands that concept and once again because you know I feel strongly about this okay I feel strongly about honor I’m not talking about stealing trades I’m talking about being in the market okay if it’s six bit at seven and it goes six sellers you want to be part of the six sellers you want to sell sixes if that’s a good deal or you want to be a five bit right in their face the end’s ticking down ticking down ticking down ticking down you know the bit short okay and it goes six cellers you’re five bit right in your face five for 20 and you’re loud okay I know it eats in the bond pit that’s throw 10 lot 20 lot 50 lot High occasionally you’ll get one of those okay how do you think a loss three is taking a loss important yeah why is it I put a star on this why is it important because if you don’t take your losses you can’t play with us okay because we’re going to chew you up and spit you out and get rid of you got to take a loss before I get into the specifics of taking a loss let’s go back a little bit to the concept of the larg UN pit when you take a loss hurts and it should hurt and I said it before I say it again nobody nobody should be a good loser okay don’t be a good loser it doesn’t it doesn’t sitck right with you it doesn’t look good on you and it isn’t good for the people you love don’t be a good loser okay but when you have to take a loss take it take it like a man more woman okay and take advantage of it and make sure that the loss you take comes back and helps you out later so I’m long 10 at six and go six sellers it’s time for me to get out cuz I’m not going to sell sixes now I’m long 10 at six and it’s 5 minutes six and I’m an aggressive six seller and everybody that knows me knows I want to sell sixes and they can hear it in my voice and they know damn well I’ll sell sixes and I want to sell them doubly dead because I’m long at six but I’m not going to sell them at six it just isn’t meant to be okay so I have to sell 10 at five don’t five s five don’t do that do not do that pick somebody out you have that kind of time and take advantage of it when you take a loss use it to your advantage it’s a very easy concept use it to your advantage use it by selling it to people that will come back to you okay there are locals in our in our pit as an example there are locals in the bean pit there are locals in almost every pit that are locals but really aren’t locals to a certain extent they act like workers I remember the first time I ever talked to him at Goldberg I’ve been in the business four years and I gave a little thing on spreading and somebody said why are you talking about spreading I good I sprad well I got you wear a broker they did they thought I was a broker and a lot of people still think I’m a PR okay because I give up the edge too much but that means if you want to get out you probably want to go to a local like me that will come back you and I’m not saying me go to a local that trade size okay they can help you at some point in time okay people scratch other people’s backs it’s 5 minutes 6 you’re long it’s 6 you got to sell 10 at 5 take advantage of it sell it to somebody that will come back and help you at a later date cuz I got the $312 s is gone it’s gone forever okay it’s not like spreading when you spread when you actually spread one month against another month the first ticket is on the house if I blow a spread and don’t do it right I wanted to buy 16s and I buy 17s well I still haven’t lost the money because I still have a chance to come back and sell 17s as a spread when I scalp and I lose that first tick and that’s all we’re talking about today scal basically okay and I lose that first tick by God it’s gone and it’s gone forever unless I can plant a seed so I plant a seed okay I enlarge my pit size and and I sell that 10 lot to somebody that can help me when you get out when you get out of the trade you get out first of all first of all you get out it’s no more fun okay when you’re standing in a pit you’re long at six and your stomach’s tight and it’s five minut at six and it’s not fun get out get out of the trade it isn’t Fun it isn’t neat go do something else okay go do another trade get out when it’s not fun sometimes when you’re long at six and it’s trading six but you want to hang on to this one there may be somebody you want to sell it to that would be your advantage you maybe a broker there with discretion on an order do everybody you’re all trat you know what it means when they go like this down it means when the desk goes like this to the broker that means I’m giving you one tick discretion okay so you’re 6 for 50 but you can go up to seven all right so I’m a broker and I got 50 to buy somebody sells me 10 six I go to seven by the rules I don’t have to go back to him but as a matter of edate who do I go back to the guy that so me sixes okay now you wanted to be long at 6 the world wants to sell it at 700 you sell 10 at 6 cuz you were long there now you’re sure 47 that’s the greatest trade you ever made okay that’s not keep that in mind discretion helps go to people that can exercise discretion on your trades when you’re taking a loss so you get out when it’s no fun you get out when it’s to your advantage when you walk into that pit before you start the day you say Okay I want to trade with fluidity I want to trade with Charisma I want to trade with style I want to knock their socks off but I got to have some rules okay because you can’t imagine how fast those losses Mount up if you don’t have rules so you walk into that pit and you say all right I don’t want to be an alpha Trader I don’t want to buy it at six and count it three and sell it at six but if I got I want to have some rules the easiest rule for everybody to follow is in any pit if you’re longer in a sech price and you were too slow to get out before when sellers take a deep breath sell it a kick load okay it’s a one tick loss that’s being mechanical you forget about the trade you put it in your pocket and you go on to your next trade do I believe in that absolutely not do I think you to do as a new Trader absolutely okay I believe you ought to trade handle every trade individually here’s how you handle a trade okay long at six it’s six sellers Five pit if I had my brothers what could I do and we all play that game when we stand in a pit I think I know I do I say to myself it’s five at six wish I get my 500 I really like it okay so if I’m long 50 at six and it’s six sellers I’m probably not going to puke my 505 away okay there’s going to have to be a reason for meting those sellers now we get around to this but there are probably 20 reasons why you should sell it five and I think we got to talk about it okay but the first thing to remember is when you walk into that piit you want to have style and you want to have Charisma and you want to be your own man and and believe me I don’t understand for the life of me why anybody would want to be a Commodities Trader given the publicity we’ve gotten and some of the conditions we work under with one exception you want to make money okay so we’re here to make money and that’s an important thing to remember when you walk into that pit there’s not going to be any psychic reinforcement no one’s going to come up you and say no and you don’t give a if they do because if it isn’t in your statement you can’t eat it okay I know when I started out I lived for the moments when somebody would come over me and say hey nice trade you know oh God that’s great it was like in a check in your personnel file no one cares about that anymore okay you are independent operators your slee balls and slime bags and your neighbors think you cheat okay they think that they you take advantage of them every time they put an order in you think that they they think you’ve stolen from their ant you’re here for one reason and one reason only you are economic animals that’s all we are now I like to think we’re more than that okay I like the think we do our job I like the think we provide a service which we do but we are economic animals when it all gets down there’s no personnel file anywhere that says Charlie was a good guy on this day and he was a bad guy on that day you know mik Manny has my training statement Charlie was an on this day and he was a good guy on NY okay the only thing that we really relate to is our trading statement you walk into that pit you’re there there is any more glamour associated with being a Commodities trater that all went out the window all a said I st okay you are a Commodities trater because you want to make money so when you walk in that fits you got to have some rules one of the things you got to do when you walk in that fit is you got to say I got to be a mechanical now you have to set your limitations okay I think an excellent way for a new Trader to start is I’m not taking anything more than a one tick loss okay because if I don’t take anything more than a one tick loss I’m always going to have enough money to come back tomorrow and that’s the name of this game the name of this game is no matter how badly I did today I took my losses in a manner that was good enough so that I can come back tomorrow just keep that in mind okay so for a for a new Trader for a new Trader you’re long at six it’s six sellers you take a deep breath you think about it can you get out at six probably not cu’s your a new Trader not going to trade with you anyways 100 could trade at six 200 could trade at six 400 could trade at six and they probably won’t trade with you get out of five okay now don’t shut up for the rest of the day catch your breath and keep trading okay and understand what went wrong now the longer you trade the more trades you do I always thought a rule of I you had to do four or 5,000 trades before you’ve been faced with everything now being faced with everything means you’re long at six Matt sales it’s even sellers before you know it okay you had to handle that you’re long at 6 green span says something it’s 12 B okay now now you know what to do with the six TI profer you experience the six six TI profit a broker sells you 10 at six sells you 10 at 5 sells you 10 at 4 sells you 50 at 3 before you know it and you don’t want that much okay but you have to puke it okay that’s a new experience a broker uh a broker buys 200 from you right out of the blue and you have to scratch or take a loss that’s a new experience it takes four or 5,000 trades I think four or 5,000 contracts Trad before You’ experienced everything now once you’ve experienced everything you’re okay but in the in room okay you have to build up your time served with with positions on and that’s what trading is all about the longer time you serve in a pit with a position on the more you know about yourself the more you know about trading if I’m WR 10 at six and I sell them at six 3 hundredths of a second later and I get my next trade later that day or early the next day okay I haven’t learned much I was long at 6 and I got out at 6 why’d you get out at 6 there was six I don’t want to take a loss okay when you get to the point where you have a position on and you can actually say I’m long at 6 who’s bidding who’s offering what’s it trading do I want to be long at 6 what are the outside markets doing and you know your mind your mind works very quickly when you’re long at six and you can work that quickly where you where you understand the 17 variables involved in trading okay or 20 variables involved then you’re okay the only way you get to that position is when you have a position on because I’m telling you something people’s personalities change it would be a 58 CA and somebody says say 20 at three and you become an idiot an Absolut idiot you’re long 23 me me what’s the market trading you look at the board to see if the Market’s really three bit in four as you look at and and you know and you just absolutely forget everything you’ve ever learned so you have to serve time with positions on the longer you spend with time on the better treated you become because the more you’ll understand and more you’ll understand how to handle yourself under Fire okay because it’s one thing to be long 10 at six and there’s 500 bid and 500 offer and by God it’s 6.7 for the last 10 minutes and it ain’t going anywhere and I probably won’t sell sevens but I damn well won’t sell fives that’s one thing and that’s quite another thing that number comes out okay you’re 10 at 6 and he says you want 38 you want 525 you want 620 okay that’s a whole lot different you have to handle differently you learn a lot lot about yourself you learn a lot about trading and you learn how to move and one of the most important things you learn is how do I get out now we’ve already decided we’re going to be mechanical when we walk in the pit as new Traders we’re going to take losses okay I take a loss when I have time I take a loss and I take it to my advantage I enlarge my pit size by trading with somebody in a far Corner okay now and long 10 six sellers five sellers how do I get out okay here’s one way to get out sell 10 and four sell 10 and three sell 10 and two sell 10 and one okay when it’s trading four up there the guys next to you will buy it all right you know sell them out at 4 that’s one way to get out okay there’s another way to get out at all times know who the Brokers are and who the locals are and what their positions are you can’t tell what local position is or what vocal ERS going be no where to go when it’s time for you to get out when you don’t give a and you want to get out okay and your voice gets a little screechy because you just want to get out don’t offer it to the microphone in the ceiling they don’t care be how much people won’t trade with you nobody will believe me I tried to sell it to the gallery every been days you want them you want them an E I don’t want they don’t want them nobody wants them okay you have to know where to go don’t offer it to the world don’t offer it to specific people or specific locations within the pit okay and long 10 at 6 it’s time to get out s 10 at 4 no eye contact no nothing who’s he talking to if I sell fours or I sell fives I’ll come back and get him okay but if he says sell 10 and 4 lock size man I know I can’t sell for it cuz he offered me 10 and four okay so you’re out of the ball game okay and if you’re a big Trader you might just want to buy 10 all right or if you’re a a broker you may have 10 to buy or you may go like that and you show me where it’s happening okay but you have to make eye contact and you make eye contact with as many people as you can as quickly as you can sell 10 at 4 okay and I just took this row out of the game okay but if I go sell 10 at four this will give this okay they want to sell 10 5 so they can buy my 10 4 so when it’s time to puke make eye contact okay when it’s time to get out and get out fast know where you’re going know where the paper is we know in our pits any pit you trade in you know where the paper is you know where the Brokers are at the big decks those are the most likely candidates big locals are are likely candidates okay make sure you make eye contact and make eye contact with as many people it’s possible now one of the ways you make eye contact is you increase the volume of your voice so if the market is screaming down lawn you going go sell 10 at four and make eye contact you would to know you got 10 to sell okay and sometimes you would to know you got 10 to sell a No Object s 10 and you just look for the there okay or you make ey contact with somebody and say sell you 10 sold I bet you 90% of the big brokers in in the bond P an example if you should sell you 10 they go sold and they they wouldn’t negotiate price but they’d come back you and say even it was if it was 30 at the time and it’s 20 now they go yeah I bought that 10 from me God darn it and the price was 30 okay get out by making eye contact when it’s time to puke and you can’t use it to your advantage get out and get out by making eye contact by being loud and be mechanical one TI rul is hard to follow but remember this people down here at the Board of Trade that survive have a low PUK point knows what that is that means I’m long at four I’m long at two I’m long at even I’m long at 30 I’m going at 28 I’m not even thinking about getting out because I don’t got over two point I can stay with this stuff forever no it doesn’t come mad I figured out early on there were a number of times I was in the pit and I’d be long and a market would be breaking and I would say God please make the market come back I don’t think I am I think a lot of people have said that you know it took me 9 years to figure out that the reason why God never let it come back is because there were people in that bit that were as good as I that was going God please let it break okay so there were people working against me all the time as many times I can remember there’s a guy in our office who did the best deal ever he said God he was short 10 he’s balling he has a beard if you know what I’m talking about okay he was short 10 the markco was a point against him he said if you let it come back I’ll get out of the business okay there was a point against him it never came back and he stayed in the business thank goodness okay so God doesn’t trade bonds I guarantee you he doesn’t care what you’re going to name your next kid he don’t trade bonds he doesn’t care what kind of trouble you’re in he doesn’t three5 you got to have a puke point when you’re long at 4 you don’t get looking to buy them at two unless you’ve been around a long time okay when you’re long and four you want to get out okay you want to throw those contracts up all over your shoes a puke point the people that do the best in there are people that have a low puke point you got to puke you got to get out when you have a position on that goes against you you got to get out and you got to make sure that there’s something inside you that’s always clicking that’s your self-defense mechanism that want would just stay with something bad too long okay she pray right back tomorrow okay part of taking a loss is being able to determine at the time you have a position on are you short with all the other idiots or are you long with all the other idiots how do you know if idiots in Long now remember this okay I’m a local and I’m I’m long tenant six and you’re a local and you’re long tenant six you’re long tenant five you’re long tenant s you’re long tenant three you’re long tenant 10 okay that’s one people seven loc we long 70 Lots between us we have an order just like Brokers we’re supposed to sell those 70 Lots worst can because that’s the way locals get out they sell them worst can okay so if Charlie’s long 200 and Biz is long 200 bn’s long 18,000 okay right and all these little guys over there all got 50 lots and they’re all wrong okay all of a sudden you say in your mind you knowz these guys are wrong about 700 contracts between them now they have an order get out of those 700 contracts wor can cuz that’s how you get out of your position okay how do you know of your lawn and the rest of the pits law the easiest way is to be in a position where your sight angle is such as you can see what’s going on okay nothing worse than surprises we had a surprise today without going into specifics on who’s who we had a surprise today somebody in one of the corners the north east corner came out 6 bid 6 bid you remember okay we didn’t know what was going on I never 500 offer at six six bid he’s Trader and then all the other Bal for Brokers came out seven bid eight bid cuz B for was covered in 2000 they sold an 01 M 31 and they started in that corner okay when he came out bid we knew all the other idiots were short along with us how did we know we knew because number one nobody was putting a high ball everybody know what a low ball and a high ball are okay I’m trading at home and I see my screen and it’s 2 minut three 2 minut three well there’s $300 for three okay and I’m short and they take the threes out and print a for b a high ball isn’t really not the Tribune will disagree with this but I’m telling you the truth a high ball is not the five stops okay a high ball is to paint a picture for screen Traders you paint a picture all right you want a four quote on it so the guys that are short are queasy okay and they got that feeling in their stomach these are traders that trade over the screen they see that four out there and it’s three bit four three bit four it’s three for1 500 off four if they’re a big Trader they have access to that information but you’re still painting that screen four for one four for one four for one because you want to paint that screen okay now the pitch short it’s 2 three goes three bit where’s that four where’s that four well I know I ain’t putting it out because I know I’m short I know all these guys are short and they’re not putting it out so no four comes out so one way to know if you’re short with all the other idiots is out any High going out okay if you’re wrong with all the and the Market’s breaking you see that little ball coming out no okay what does that mean it means you’re in a wrong shoe you want to be a lone holder okay I do and it’s probably to your advantage to a certain extent not to be in a position where everybody in the pits long and you’re long with okay because it just doesn’t work out it just never works out because when those people get out everybody tries to get through that door at the same time and it just isn’t big enough and like I said when all and never been times in our pit an example on on Friday I would guess between 8725 and 8720 on the way down the pit collectively was probably long probably long now these are not speculators these are day Traders and scalpers probably long 5,000 bonds okay and everybody looked at everybody and said it’s time to get out okay and we all got out Point more all right that cost people money you got to know what everybody else is you don’t want to be with everybody else cuz when they all get out you don’t want to be there okay understand pit noise everybody knows what pit noise is okay jez look at all the seven sellers everybody wants to sell it at seven is it because they’re long at 6 no no when does the pit Get Loud the pit gets loud when everybody’s short and they offer it or the bit gets Lou when everybody’s and I say everybody and it’s a term that’s all in using shouldn’t be but you know what I’m saying when a majority of the participants with a majority of the contracts available for trade are short if I’m short you’re not going to see me standing there going 6 for 179 6 for 179 okay I’m not going to do that I’m not going to tell you what my position is I’m going to say sell it at 7 God please let me sell it at 7 so my daughter can have that operation I got to sell it at 7 6479 sell it at seven it means more than anything in the world to me to sell at seven okay and I’m screaming it and screaming it and you’re screaming it cuz you’re short 10 at7 okay so when that pits loud and everybody’s like this everybody’s like this it ain’t cuz they’re long here it’s because they’re short they’re short here they’re short here they’re short here they’re short there okay and they want the market to go down everybody believes that if you don’t dig for it and offer it it’ll go down and I guarantee you that a necessarily choose now what happens the world’s offering it at seven and the pit Noises Off from seven and you’re standing there and you’re saying well if I had a phone on and I was talking to the desk I would say to the desk there’s 7,000 offered at 7 and there’s only maybe 300 bid at six well as soon as the first 100 trades at 7 what happens to all those offers revolver B sound bad get me out okay like that so when the noise is loud and everybody says sell it at 7even there’s a chance there’s a rat there okay a dead R right and you got to understand that because one of the things you do when you start out you you say Okay I want to be a Trader and I want to get into the market and I want to bid an offer with confidence so there are 50000 people offering it at 7 so I’ll say to the broker sell it at 7 like this and he’ll try and buy from Seven guys and you go no thanks no no no no okay and he’ll buy the 20th from seven year in the market the 4 know you’re paying 89 10 okay understand pit noise people get loud when they’re fakeing people get loud when they’re fake video and they get loud when they’re fake offering and understand that this is important okay one last thing when you’re taking a loss make sure you know what the big dogs are doing okay when I say big dogs I’m talking about big local and big Brokers make sure you know what they’re doing when a big broker comes out and says sell it at five no number sell it at four no number sell it at three no number I guarantee you he’s not put the position on and he’s probably not out of his position he’s probably processing paper around them okay now if a big big local comes out and say sell it at five sell it at four sell it at three what what do you know from that you know this you know that somebody that has enough money to have a big fund or is trading cash is loading that guy up and he’s trying to get out of there okay so if you’re long there’s that PUK reflex get out if you’re short we’ll talk a little bit about taking the profit later okay because you’re not going to be the first guy in the world to BU when big locals when big dogs start going for the door they’re probably processing paper keep that in mind and if they’re processing paper they’re processing paper large enough to affect price action over the course of the next few minutes keep that in mind uh another thing about big dogs a lot of them aren’t good fades for that very same reason big dogs aren’t good Fades because they they reflect what’s transpiring around them okay and if it’s a big dog flying solo they’re definitely not a good fade because they’ve got everybody on the wrong side um big dogs make a lot of money and they’re not good faves a lot of the time and remember that okay if a guy this is another thing too in terms of taking a loss like I said you want to make eye contact the bigger the trader you make eye contact with the more he feels responsible for taking you out of his trade I can’t explain that to you all I can tell you is that that’s true okay if you make eye contact with a big Trader and you’re stuck and you want to sell it okay and you say sell it for and you make eye contact all right something good will happen in terms of getting out of that trade it just happens but when you’re when you’re trying to initiate a position a lot of times it doesn’t make a lot of sense to fade a big dog particularly when he starts the Big G okay now Big G in the B we had a big dog goes sell it sell it at four you didn’t want to buy fives and you didn’t want to buy buy fours when he said so three he said on your mark he had said and if he had said s it two you would have said you got okay don’t fade a big dog when he starts his show you want to fade a big dog at the end of his show terms of taking a loss again this is only kind of Tak a loss does everybody understanding about big dogs you know what I’m saying when I say big dogs I’m talking about big Traders and big Brokers big Traders simply reflect the action of the paper around them when a Trader this is 99 out of 100 times when a large LGE Trader a 200 500 lot Trader starts selling it okay he’s selling it because he’s getting it he’s not selling it because he’s getting out of his position he’s selling it because he’s getting it from somewhere and he wants to put it down on the market and get out of it okay those are pretty bad Fates and in terms of taking a profit you got to be slow in terms of taking advantage of that okay if somebody starts getting momentum up you know there are rules of thumb and everybody has a different rule of thumb for their pit in our pit in the B is an example somebody tell me how many ticks does it take to move 2,000 miles a relatively normal Market maximum four okay you can move 2,000 bonds maximum 4 TI that means they got a big order they want to sell 2,000 stack sold 2500 between 22 and 18 the other day he starts when he starts his show at 22 you don’t want to get involved when it’s 20 sellers 19 sellers 18 sellers you want to be an aggressive you know we talked about being aggressive off aggressive bid you don’t want to necessarily be an aggressive an aggressive day okay how many ticks does it take to sell 500 D in our Bally Tak a 10 right okay if you see a broker now if you see a broker sell it to a local sell 500 to a local okay if you’re long at five and you see a broker and it’s five Sellers and you see a broker sell 500 to a local what is your first action if you’re you say thanks for having me I want to get out now okay and you get out and you get out any way you can and you don’t necessarily make eye contact with a broken that just bought 500 okay but you make eye contact with some you get out now the thing that happens when you’re down in the middle of a pit and this is why I’m not a real big fan of going to a pit a small pip when you’re down in the middle of a pit you have your site angle okay and you know exactly what they’re doing from there to there but behind you they’re doing stuff you never dream they were doing and it’s going to come raining down on you and those Brokers aren’t necessarily going to pound on you the people that are going to pound on you are the locals that stand on the step above okay so you don’t see what’s going on so you’re an aggressive forbid because the end’s breaking and the local behind you boom so how many you want and he’s a 10 lap Traer you know something’s wrong he saw something you didn’t see okay so that’s why you’ve got to be in a pit we have good side angle at night 99% of those positions in the B you see just about everything that goes on so unfortunately uh in terms of taking a loss okay if you want about if you want to talk about trading in in graduate school terms okay 400 level courses when do I reverse okay I’m long at five long 10 at five when do I sell 20 at 4 the reverse that’s a you start 284 to reverse when you become a damn good Trader okay I would not recommend anybody that’s just starting out that’s filling up the cab base to be a reverse when you get out of a trade nothing worse than being long 10 at five soell 204 by 10 5 you just turn a 10 pick loss into quite to cost and believe me it happens you know it happens everybody’s seen it happen Okay when you’re on 10 and 5 until you had X number of hours in the pit with a position on like I said you become an idiot okay so you go on 10 and five and you’re an idiot and you’re looking for fours okay and you’re mad and you say well Five Guy look at how big that five offer is and it’s pit noise it’s not a legitimate offer but you’re an idiot so you don’t even know that you say well I got to get this money back I’ll see a 20 and4 or where she I I’ll see a 10 now you’re short 10 and four okay 9 100 times you’re going to pay five for that and you’ve taken a 10 tick loss and made it a 20 tick loss if you want to reverse you have to have a reason for revers okay who can give me five reasons for revers who can give me one reason for reverse I’m long five give me a reason to reverse could be yeah I don’t like that you be I don’t I don’t think they play that in chart Point keep chart Point yeah I don’t buy that either I think that’s you want to trade charts you trade in front of a screen you’re long at five you reverse at four when you see somebody shoveling four still that’s the most obvious reason okay and you know it’s long because you saw him by fives and you saw him by fours okay that’s a good way to reverse that’s a good reason to reverse here’s another good reason to reverse a good reason for a new tra to reverse is cuz you bought bought it at five and you’re probably needid okay and not only did you buy it at five the Market’s so good and so efficient that it knows you’re an idiot okay and the market the market typically reverses and it reverses over preassigned digits all right now a good number a good reversal number in any Market any Market that I’ve traded is as an example seven tick 7 or eight TI okay what does that mean that means the Market’s trading 20 that’s trading 21 22 23 24 25 26 s’s trade maybe a couple eights trade 7 6 5 4 3 2 1 why why did it reverse after 7even picks because the brave Boys sold those 20s and sold those 21s when their houses on okay they got no P point and then they sold them at 24 and they sold them at 25 and then they sold a l at 26 and at 27 they wanted out they wanted a puke okay they puke so the brave boys with their big position time PUK I know that I’ve done it more than once okay less than three times more than once okay so I’m sure of 2021 225 and I PUK at seven that’s why I PUK that’s why the market went up to seven because I decided to get out okay why did you buy sevens because you’re a new Trader and 20s look terrible because as you know by now if the market looks terrible it’s going up if it looks great it’s going down okay so the market looks terrible at 20 you weren’t even thinking about buying in 20 you weren’t thinking think about buying it at 21 you weren’t thinking about buying it at 22 okay and you’re not allowed anyways no one’s going to trade with you all right at 23 you start saying tell you what I like to buy this stuff so you bit 24 when it’s four bid now it’s five bid for 30 seconds and you say I really like to buy it five bid okay six bid noise noise noise I really like to buy it six bid now why all the noise because everybody’s getting out okay six bit I really like to buy it seven bit oh man I got to have it seven bits say again that’s exactly what happens sell it at seven sell it at six okay it took you seven tick to get the courage up to get into the market all right and then you’re out now why is it good for you to reverse it’s good for you as a nutr to revers in situation like that because the market tends to sway like this okay the market sways back and forth very rarely does it go boom and very ear does it go boom and when it goes boom then our statements typically go boom okay because we look for these sways all right the market sways back and forth give be seven ticks eight ticks in in your technical trading classes that pay 792 and 16 ticks okay at Board of Trade and the bond contract those are the those are reversal points okay keep that in mind when you’re trading so that when you get aggressive when you really want to buy it the reason why you really want to buy it is because you should have bought it at 20 hour trade in 27 you say hey get me in this parade I want to be in this parade we don’t want to be in that okay when the market looks best that’s when it’s going to break and when it looks worst that’s when it’s going to round okay so you don’t want to get in that parade and when you get in that parade and you know we’ve red from 20 and we’re trading 28 and you B those eights and you have to puke and those sevens are starting to disappear that may be the one time you say if I’m going to reverse that’s what I’m going to reverse okay everybody understand the ccept of a market and it sways back and forth that market it’s it’s an animal it’s smart it says I’ll let these guys get short and I’ll let them show me how much courage they have and then right about here I’ll make them PUK all over themselves okay and then I’m we’ll go down here and and they’ve been short all the way up and they don’t want to be short anymore so now they get long and then right about here they’ll PE over themselves and they’ll go right back like that and the market typically goes back and forth like that be aware of what your swing points are in your Market okay and trade them trade them a bit okay now remember there are days there are days when the market doesn’t stop in those days on when we talk about opening range trades in my opinion the strongest trade in the commodity’s business is an opening range trade okay if the opening range trade designates the high or low for the day that in my opinion is the strongest trade in the business today is an example when bonds became I think open R this morning was 25 26 got 24 hour that was a low for the day that wasn’t what was important was important was Friday when I think range is 1335 my mind 135 that with the high for the D money from there and an opening Train opening range trade happens a lot of times if you’ve got an opening range as one end of your range and the market swings like this be ready because it’ll swing back and forth and also bang down to the next level swing back and forth and bang down to the next level okay you don’t care about that particularly all you want to do is trade the market and take a tick or two out of it okay but you got to keep that stuff in mind because it all goes back to how do I get trades you get trades by being an aggressive bid and an aggressive seller now there’s a guy that trades in a b name is Jim aleski who trades through Alpha if they’re 500 bit at six he’s the Lone Wolf offer in 287 and he’s there every time and that’s how he gets his trades okay now he knows that there’s a lot of noise that’s why it’s B strong six and there pit noise and it isn’t real and he’d like to sell sevens and he also knows he’s quick enough where he sells sevens he he knows he’s going to be able to get out from a scratch you can be particularly when you start basing your bids and offers on other markets and more transpar P you can be the author the whole world six bid you can be the 10 at seven and you want to get some trades you’re going to get some trades because if the whole world six bid and you’re 10 at 7even you’re going to trade with people you want to trade with who do you want to trade with you want to trade with people that are initially in positions okay I want to trade with you because you want to trade and you don’t know that much you just know you want to trade right so I got to get out of this all right 7 PR 10 sold cuz you’re there okay now I traded with somebody that didn’t really have a good reason for buying okay except that he should have bought it at 20 and if You’ have bought it 20 you have 80 ticks and 80 tick would have paid his mortgage for two months okay but he didn’t get in at 20 so he’s going to get in at 27 you want to trade with people that have a bad reason for trading okay I want to sell it at 7 and I want to sell it to the guy that’s initiating a position I want to sell it at s and I want to sell it to the guy that’s covering a short at a lower price because once you take a loss when somebody else is taking the loss remember this the same thing happens to them that happens to you okay they get stupid and they’ll cover at any price okay so those are the people I want to initiate my trades I want to sell it to people that are covering or sell it to people initiating positions or I want to sell it to Brokers because you may be a broker executing an order for the dentist in Buffalo and he didn’t know from chinola he wants to buy P 7 because because his investment C the country to by 10 okay so he’s doing it you want you want to be on the other side of that order um there’s a whole lot about taking a profit but I tell you what some you guys are going to trade it 5:00 and I think we’re getting we’re getting late so why don’t you ask me some questions if anybody has any questions if there’s anything you want me to talk about clarify yes what about panic panic you feel like you’re on the edge no be a position if you’re in a position of indecision and you have a position on remember that indecision is a decision okay if you have a bad position on you want to get out of that position because you don’t want it to drain your resources okay so you got a position on and you can feel it in your stomach and you say Jesus something’s wrong okay now how do you avoid that real panicky feeling well number one when you’re a new Trader you sure as hell don’t trade when the numbers coming out and you don’t have a position okay because that’s when you need the most you don’t trade between 1035 and 1045 a Trader because the FED comes into the bond market and this okay and you don’t want to be involved if they do unexpected Mass skills uh and you never want to be the wrong way when somebody’s going to make an unexpected comment on the news Services that’s one of my rules when you feel Panic coming on I’d like to say just step back and and and and figure out what’s going on but I think what happens is you know there’s so much that we don’t use in terms of our talents something somewhere inside of you is telling you get the hell out of this train okay and do it and just execute it and get out so but remember this too I feel you have to have a reason for getting in a trade okay you have to really have a reason for getting in a trade and you have to have a reason to get out and when you’re a good enough Traer you can stand there and remember what everybody’s everybody’s goal okay is to be the eye in the center of the hurricane you stand in a commodity spit and it’s a hurricane okay and it’s cor around you you’re like this you’re right in the middle of the hurricane and you say yeah I want to sell G SS yeah I want to buy five from that guy and I want to start to one of six you want to be the eye in the center of the hurricane you want to avoid the Panic that’s everybody goal we have to be the center of calm okay the only way you develop that is with time spent in the with position’s on and nothing breeds nothing breeds success like success nothing does away with a feeling of panic like having enough success where you know even if if I have a bad feeling in my stomach about this tree I want to get out I know that that’s not the end of my we I know I’m going to have another opport question uh six pit at seven you buy 10 at six uh what’s been happening in the bonds lately is say uh it goes Sellers and there it’s five bid for 300 and you think well there’s five bid for 300 six is my you know trade I might be able to scratch this all of a sudden fives are gone I are you saying immediately get out at five and then if they’re gone I mean are you immediately outed for I I’m not an advocate of one tick losses I’m an advocate of being mechanical when you walk in pit when I walk in the pit now I was just for the contradiction when I walk in the pit I’m an new trador I say to myself I’m taking a one tick loss okay and I am I’m going to take a one tick loss unless the situation presents itself where I don’t what I’m saying is this every trade has to be analyzed on its own merits okay I’m long at six I’m long 10 at six I have to analyze that trade do I want to be long 10 at six or not okay theoretically if I say I don’t want to be long at 10 at six I’m out at six okay I can’t get out at 6 9 long 10 at 6 it’s 5 bid at 6 I want to analyze the trade okay it’s 5 bit at 6 forget about the 10 long at 6 do I want to be long at 5 or do I want to be short at 6 okay you’re saying you look the situation over and you say I’m long 10 at six but if I got if I can get 10 at five I got a damn good chance of selling sixes and making a profit on this thing okay so you buy your 10 and five now you’re only going to get your 10 and five if everybody else thinks you’re wrong okay or if somebody else thinks you’re wrong all right so you have to start questioning yourself then okay if you’re wrong 10 at 6 and 10 at 5 if your puke mechanism hasn’t hasn’t come into effect then it better come into effect you better save yourself I’m going to sell fours unless Alan Greenspan nephew walks into the P starts by five and six you got to get out you got to get out the reason why you got to get out is because you were wrong you were wrong now when you brought those sixes you have to look at it in the context of everything remember I was talking about that too why did I get sixes is the rest of the world long at six what are the outside markets doing what are the houses doing okay why did he give me 10 and six why all these people in the P sell me 10 and six why why was I lucky enough to get 10 and six there are days weeks months and years when I feel like the only reason why I got sixes is because God knew they were no good okay so we sell so somebody sells me 10 six cuz I knew knew they’re no good okay there are days when you’re not going to be trading well everything you get turn the garbage and those days become good days for you and you exemplify a good Trader when you can take those days and miny and miny Minify your losses that’s a registered trademark of L America okay I think if you bought sixes and you thought they were okay and you bought fives and you thought they were okay and now it’s five s in your face you got to step back and say real quickly you know maybe I just don’t have the feel for this particular Market why I get out and start over Okay so you get out so how do you get out say a 20 to 4 absolutely not who’s a four bid who needs him who’s going to say he’s the best guy in the world because he sold me 20 to 4 if I’m going to take a loss that’s what I’ll take it with or you sell tenant for to see if that starts the Amal lanche or you sell 10 for and and it’s five big right back in your face okay have a reason for doing everything you do how do you know you’re a good Trader here’s how you know you’re a good Trader okay you buy 10 at six you’re long 10 at six it goes six sellers five bids you’re ready to sell fives boom it’s six bid you say I’m long 10 at six I want to be long at six there’s 500 bid okay the locals are short the Brokers are buying it the outside markets are supporting my position I long 10 at six what do I do okay do I stand there and I’m the lone wolf and in in the wilderness going sell T EXC me I haven’t had in four days I get excited just thinking about being do you say sell 10 at 7 sell 10 at 7 sell 10 at 7 and you’re the only 8 in the world offering 10 at 7 or do you say okay here’s the market you know what I’d like to be long at six all I want to do is buy sixes in your l 10 already 6 for 20 6 for 20 boom seven bid instead of puking you take a look at the market okay and remember now all this stuff has to happen fast and the longer you have a position out in the pit the faster happens now you’re long at 7even do I want to sell 108 get out of my position do I want to buy 10 s well guess what you bid seven all say they got 20 at 7 they got 10 at six and 20 7 you just added to a winner what a feeling that is that’s the best feeling in the world okay now you’re long 30 8bit okay well you don’t like 8bit because you’re $500 at 9 okay so you’re long 30 first thing you do is sell 30 at 8 to a broker okay you sell them 30 at 8 he buy 70 at 9 okay you’re a 10 lot Trader all of a sudden you’re short 70 at 9 all right and then 500 there now because you had positions on all right and your grandfather owned the a major Railway in southw United States so you can afford to have a position on like that all right you say I’m short 78 n all right do I want to be short at nine or do I want to or do I say like 70 is too big a number okay let’s see take the zero off if you’re short seven at n which seems like the national Deb of Ethiopia sometimes okay you’re short 7 at n do I want to be short 7 at9 or before I can okay cuz I want to get out of that trade now and short 2 at 9 when you’re a good Trader you say I’m short 7 at n my unit is one or my unit is two but guess what I’m short 7 at 9 and I’ve identified where I can get out I know where I can get out I’m short seven at n now I may want to scream 8 for seven like Banshee or I may want to say nothing and F my arms and see if the market starts going back my way okay so the way you become a good Trader and the way you know you’re a good Trader is that first day you add to a winner let me tell you something there are a lot of guys that are traded for a long time that never added to a winner now there’s two ways to add to a winner you long 10 at six and you say you know I want I want to do one of these things I’m comfortable so instead of saying sell 10 at 7 like this okay spook in the market or or being the only idiot in the world offering 10 at 7 and the whole pit knows that if you buy 10 at six they’re buil with seven or six or five right away because you’re going to puke you say six for 10 and just because I’m sure if I don’t give any balls I’ll say you 10 at six okay now you’re long 20 at six six for 10 nothing feels better than that and all a sudden it Go seven b and you had to do a winner or it’s you buy sixes and you’re buy sevens you buy it’s ever clip you know to quote a guy that like I said I feel very strongly about said human nature says cut your cut your winnings human nature says I’m long at six I have an opportunity to sell setts get me out okay that’s human nature human nature says ride your losses and long at six should I sell those fives God you know if I sell those fives I ose $312 what can I do with $312 pay my $32 P my R I can’t sell F sell it four that’s $625 I can’t do that that’s right for two months sell it at three Jesus now we’re talking over $10 million I can’t possibly sell it at three okay and you’re stuck human nature says PR those losses don’t do it when you’re a good Commodities Trader when you’re a good commod Traer everything you do hurts you’re long at 6 and it hurts to be long cuz the market was up at 9 it was up at 9 and now it’s down and even and you’re long you’re long and even and it just broke nine ticks and it hurts and that pit listen to the pit everybody is brother and their CL want to sell it at one people be honest people sell it at one sell at one okay and you’re want it even well until they get you out of your position you’re okay and it hurts it hurts to stay with it and the first time somebody says 1 for 10 oh you can’t wait tear his face off and sell it to him okay but if you fight human nature and and you do whatever coach says you let that loss run let that win run okay now it’s one B you let it run you you want to sell it to you’ve already spent the money you allocated the money your Christmas fund and everything else payle Sam that iy won’t come around the house anymore I can sell these threes don’t do it you got to fight it if there’s a reason to do it but remember you got to have a reason for everything you do if you’re standing in the pit and I’ll I’ll reemphasize this if you’re standing in the pit like a nail okay you’re not going to have a reason for anything you’ve got to say okay why do I want to be long now we talk a little bit about the reasons why you want to be long and you want to be short outside Market action position of the locals what weighs the paper for is a big dog hot or a big dog cold a big dog okay what are the guys me want to do Pit noise that gives it away what’s the pit noise people let stuff remind okay you got to have a reason for doing what you’re doing and again to reemphasize the name of this game is getting trades you’re not going to get trades unless they know you want to trade okay and sometimes you have to have a crutch okay and the crutch you lean on is oh the end r five ticks okay so I’ll being an aggressive B but you got to have a crutch because nobody in the world just like you said you buy sixes and you buy and all sudden they’re all gone nobody in the world knows where that Market’s going to go you have to have an outside crutch and that’ll help you bid offer with with the strength and be loud too you know Lou the louder you are the bigger yours you know that I think that would help you the louder you are other questions well I think one of the things I was going to talk about in terms of taking a profit no here treating case do I think it’s going to trade the bit I think if the issue 200 indictment where you want but I don’t think it’s going to happen in the B I think it’s going to be hard uh Commodities trading is funny I’ve known successful doctors lawyers teachers they all at a certain point in time wanted to give it up and go do something else I don’t know anybody the exception of Rich Dennis and I know there’s a story here I don’t know anybody that’s good at Commodities trading okay nobody wants to there’s a pyramid effect in the bond pit that’s incredible I know guys that have going and trade when they were undergo chemotherapy because they like the trade okay they don’t do it do it people don’t want to leave the B okay I don’t think I think it’s going to be harder than hell to move your way out now here’s what I think also okay I think that everybody’s entire little spot pit and I think if you wanted to make a point and go to the B St in a great spot I think that’ be great I think though that people in there will probably do harm you they do harm you for a good reason we talked about transition trading I make money you make money as a transition Trader who gives you the opportunity to be a transition Trader large locals and broks okay those are the guys that change the market if a guy changes the market that’s the guy I’m going to make my and I tell you it’s true you get a guy in there that changes a bid and changes the offer that guy puts money in your pocket and to a certain extent you don’t want to upset there and I’m not saying you to a certain extent the other guys in the pick don’t want somebody coming in as a twoot Trader standing where a 500 line Trader stands cuz he’s not going to give them a chance to be transition Traders he’s not going to give them a chance here’s here’s another way to be a transition Traer okay I’m a look one I’m a big dog okay I’m standing there like this 35 okay by 50 that doesn’t happen so 700 people scream as he’s saying Charli sell it at five okay now that’s legitimate that’s fair you saw the big dog take fives so they made it five sellers if you’re smart and quick you’re got a chance to sell FES cuz you saw the Big Dog by FES and knew it was going five sellers you want people like that you want targets you want targets around a bit with the with the with Targets on their chest because you want to be able to trade I think it’s going to trade though change I don’t think it’s going to trade think it’s going to be hard to get a good spot of it I really do I think though you have more opportunity to down on other pits than you ever did before now what do I think about the mid end I think anybody that makes money in the midam is either the luckiest dog that ever lived or a Speculator or on his way to becoming a Speculator along the lines of Rich Denis or Tomy Lewis a mid am is a hard place to learn now I know from a financial standpoint it’s where it’s the easiest Road it’s the easiest place for you to start out but I’m telling you it’s hard it’s hard in there why is it hard in the mid who you trading against boys yeah you’re trading you’re trading against your friends right okay now in the mid to a certain extent it’s a zero something throw game okay un fortunately I mean if the locals are winning their local soltion mamers are trading against Arbitrage now are they trading Arbitrage guys what are they trading against well they’re selling sevens in the midm when there are 500 offered seven in the bond pit and in the opinion of the broker flashing information back to the desk it’s probably going to go six sellers so that’s when the mid brok 22 and S okay where they’re selling against cash now if they’re selling against cash and they’re doing it in the mid am they think it’s such a great sale they probably got the same offer half the size in the bond fit and they’re just say see see if you can get me 22 bonds sold try and do it at the midam OR at the board okay because whoever buys those 20 bonds is a m Year all right you’re trading against people in the mid am that have a tough time losing same thing I think is is true about our silver pits some our smaller smaller precious metals pits you’re traing against guys that are AR against New York it’s a hard way to make a live it really is hard I think you can learn a lot in the M am you learn how to bid an offer you learn how to pick your losses you learn how to card you learn how to be vocal you learn how to Big with authority because in the mid am you really are trading against that screen okay everybody in the midam says you’re trading against that screen that says what the big bond is doing and you’re trading against that screen that says what cash do 45 seconds goow okay so when you do the mid am trade you do it with authority I think if I was at the mid amm the thing I would probably do is I’d try and trade the mid amm Bond contract as an example against another contract i’ probably become uh an absurd spreader trading midam bonds against Swiss I think there’s a guy next Trad bonds against Swiss I try to do something along that line it’s a hard way to go and I tell you if you can go through the mid process and 6 months after 6 months you say you know I really think I know how to trade a little bit now I guarantee you’ll find somebody down here give you little money to get into another pit because the midam is a hard place to work hard place to work any other questions Mike man Mike he’s not here now he’s the beans tell you I had I had uh some pretty good success in the beans I had two big months back to back and I like to spread but you know in a bean pit 100 lot’s kind of a big deal and a 200 lot is huge and a million Lots incredibly huge okay well when I was in there was a big deal I mean if I had 400 beans on he’s got 400 beans on okay 400 beans moves 2 cents you lose $88,000 in bonds if you go like this in a trade big you can lose $88,000 that cost you $8,000 okay the dollars were different the overall dollars were bigger in the financial because the tick was 3125 I was trading 500 bonds so I was trading for 16,000 bucks a tick and the beans if I traded 200 beans which is a big number okay you’re trading for 2,000 $2,000 a ticket so if you had limited success in either pit and I’ve always had limited success my limited success was more profitable than the bond I wasn’t now it gets me back to a point that I was going to talk about in terms of take and profits who’s a better Trader the one lot Trader that trades 100 a day and makes 30 ticks or the 10 lot Trader that trades 10 times a day and makes 30 ticks who’s a better Trader a one Trader I think it’s a better Trader I think the best probably the best small Trader in the world sitting in this okay but if I had my wish he wouldn’t be a one lat Trader he’ be a 20 lat Trader or a 50 lat Trader then I could borrow Millions from it remember now if you have the principles down right okay if you have a low PE point you know when to get out this the principles are the same if you’re long 10 20 50 100 maybe up to 100 or so okay or if you’re long one the principles are the same it takes less to make more when you’re a larger Trader I’m the only guy that’s going to say this and the clear fir is going to hate it I believe with all my heart and soul bigger is better than the come out of this business the larger you trade the better it is for you the more profitable you are when you trade one Lots no matter how loud L is only a certain size when you trade 10 lots that pit gets bigger when you do a 50 lot and you’re loud and you know what you’re doing and you do it with confidence and you handle it your Pit’s huge and you trade 100 lot and they look for you okay you can be in the bachel where is it where okay your pit gets huge and when it comes down to percentage of Trades that are profitable if I’m a 50 lot Trader with discipline and I lose on 20% of my trades and I make money on 30% of my trades and I scratch 50% of my trades think how much more money I make than if I’m a oneel Trader and more importantly think how many more good trades I get if I’m a larger Trader because I’m selling in 20 he’s seven bid okay seven bid seven for 275 all right and slowly getting hitting out but I sell him 20 and because he’s a broker he pays 8 to me on the balance okay I get better trades when I trade larger if he’s s for 100 you sell one he’s not going to buy 99 from you at eight it just doesn’t happen the larger you trade the quicker you can get your size up the better you are and remember this too okay you’re a scalper what is a scalper all a scalper is is somebody that stands next to some Brokers okay and you say okay you’re nice and you’re nice and you’re Brokers but guess what I can fill your orders better than you okay and over the course of the year I’m GNA make a whole lot of money because I feel your orders better than you f now what does that mean okay the Market’s six bit at seven you’re a you’re a scalper okay this broker buys 50 from you at 7 because he has an order to buy 50 a little while maybe you buy 50 at 6 now if he had nothing else to worry about but that 50 lot order and knew the market as well as you did he wouldn’t have paid seven he just pleased he paid six okay so what you do is you feel his orders better than he does the bond pit more so than any other pit in history okay has Brokers that have huge Decks that have incredible size to move now they give their they give their customers good fill they give their customers fills if the offer and Fs at the bid like they’re supposed to and a lot of times they give them better fills than that okay but they have so much to do that they can’t squeeze every order so they by 107 6 500 by 107 but it stays 7 sell now bigger 7 sell bigger sell bigger 7 sellers bigger S Sellers and the local that he bought 100 from buys 106 doesn’t seem like much one trade $3,100 600 Grand a year okay multiply that times two trades a day that’s not a bad limit okay all we are as scalpers is we are competing with Brokers to fill their orders better than they can fill them now if I’m competing with you and you’re a 100 lot broker and I’m a one lot scalper I really can’t do a job with people I can’t okay but if you’re a 100 lot broker and I’m 100 lot scal I can fill your orders as good as you can and still make enough to have a wonderful house wonderful car put money away from my kids