My days as a big trader

Early in my career on the floor, I wanted to be a big trader.

The big traders on the floor were respected and all of the new traders, like me, wanted to be like them. I thought the path to success was based on trading huge positions. I figured that dazzling swings in equity were just part of the price of success.

In the first video in my upcoming CME three-part video series, I talk about a time when my clients and I had the largest speculative position in July corn.

To describe the enormous size of our position for the video, I calculated how much grain it took to fill a train car and, then, how many train cars it would take to deliver all of the July corn we were short.

Astoundingly, it would have taken 3,900 train cars filled with corn to deliver the corn we were short. If those same 3,900 cars were placed end to end, it would create a train 43 miles long.

No wonder I lost so much sleep.

I was a big trader, for sure. But, even though I did not lose my shirt, it became apparent to me that the money in trading came, not from the wild swings caused by my oversized positions, but from consistently making a reasonable return day after day.

In reality, being too big a trader means that you will spend your life alternatively sipping Champagne or perched on the window sill.

That is no way to live your life.

The emotional toll of making and losing outsized amounts of money is too great. If you want to trade for a living and have a normal life, you need to find strategies that bring consistency to your trading.

The fact is that futures contracts have unbelievable leverage and spectacular volatility. You can make a wonderful living trading relatively few contracts and concentrating on finding strategies that provide consistent returns.

In my Electronic Trader Mentoring Program, we concentrate on developing trading strategies that provide consistent returns; take only a small amount of risk per trade and per day; and, importantly, we work to exploit the market when we are being rewarded.

One more story about my trying to be a big trader.



After the close on one particularly bad day during the period we were short all the July Corn, I decided to visit my banker to ask him to loan me money to make my margin call for the next morning.

Before I went to see him, I stopped off at home and to put on a clean shirt. I had read somewhere that a clean, starched white shirt made you look confident. This time, of all times, I needed to look confident.

When I arrived at the bank, I was ushered into the banker's office. I sat down across from my banker, looking confident in my new clean white shirt.

The banker looked at me for a moment and, then, asked if I was planning to do anything stupid.

Anything stupid - what did he mean?

Then, it hit me, my clean shirt and confident look had not fooled him. He was asking if I was thinking of doing something desperate. I told him that I was not.

After I had explained my situation in detail, he told me to go home, call my partners and customers to get the money they owed me; and he would advance the money I needed for my margin call the next morning.

In the end, all of my partners and customers paid what they owed and I learned a valuable lesson. I did not need to be a big trader. In fact, being a big trader, in my experience, is vastly overrated.

My goal from that day until this has been to work toward consistency.

I help traders find consistency in my Electronic Trader Mentoring Program.

You can contact me at Jeff@JeffQuinto.com to talk about taking your trading to the next level.

Wishing you success in your trading, Jeff

Copyright © 2009 by Jeff Quinto
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