Year end

Time to close out 2013 and one of the most appropriate ways to do it is w/via of the biggest memes of the year, here's the Harlem Shake open outcry style:



I don't know who put the vid together but thought it was pretty funny.  The footage was a mix from the movie Floored, some stock footage and also from the PBS movie Open Outcry which, kinda ironically, filmed me learning handsignals in 1999 (I'm on the far left). 

The typical way trading floors closed out the year was tossing up as much paper as they could on the final bell and someone recently uploaded the last 22 minutes of the close from December 31, 1999 in the CBOT bond room.  Was interesting to see how that day was celebrated as I left the prior day to crowd into Times Square to ring in Y2K and wasn't on the floor. 



In the new year I'm planning a couple additional roll outs for the website, in particular a book notes page, but nothing will happen too fast as my primary side project is dropping a new engine into my 79 VW bus.  

Launch

photo credit wikipedia

It's finally time to light this candle, blow the pyrotechnic fasteners and hope that this launch is more Saturn V than Vanguard TV3....the book is finally ready for purchase. 

Rather than wait for everything to be perfect, I wanted to put out the link to the distributor's cart where it can be ordered for $30 plus $4 standard shipping in the US.  Currently we aren't distributing outside the US but we hope to get that worked out later and if you really, really need a copy and live outside the US then email me (tradingpithistory 'at' gmail.com) and I'll see what I can do. 

The printer, iocolor, is also serving as the exclusive distributor so the book can only be purchased here:  iocolor bookstore order link

Also, I should note that the distributor should've already received the books and hopefully today is the day it happens.  No idea why it's taken this long to go from the dock to the facility but it's outta my control.  If you do choose to order the book and have any comments on the ordering process, etc... let me know because iocolor is trying to make the process smoother.

Again, for those who like to read books electronically or live too far away to get a print book, there is an Apple iOS ebook which can be bought in the iTunes store and read on the iBooks app for $8.99:  Apple iTunes order link

We're in the process of doing some website housekeeping as well and hope to do various improvements as it's been years since I've bothered to touchup the main site.  I'm also excited to have recently seen someone else create another trading pit historical project which is a couple weeks from launch but can't share details on it yet.

Book manifesto (such a serious word isn't it?) maybe book statement is better

 (This turned out to be a much longer post than intended)

With the books reaching the dock today, I wanted to elaborate a bit on the process and background of the project to provide additional clarity.

The book is certainly a best effort on behalf of not just myself but the photographer, designer, proofreader, illustrator and printer.  Even for someone with zero interest in the topic, we feel the quality clearly shines through that it is a beautiful book which was created with significant thought and care.  As my first book, there are a couple minor rookie oversights but the strengths far outweigh any weaknesses.  

It was difficult to create because the subject matter was generally previously unrecorded, highly fragmented, at times contradicting and excepting my own personal experience, parts relied upon other's often faulty memories.  I’ve dug deep with unmatched compulsion into the history of trading pit hand signals and approached it seriously to now present an accurate historical record.  The end result in this book is an engaging gallery of over 400+ unique hand signals used across eight primary exchanges, both foreign and domestic, along with a couple chapters describing the history and trading floor functions.

We didn’t bother to approach any publishers with it to maintain complete creative control over the entire process so our vision was realized without diluting it.  For this niche product, we were able to add expensive enhancements like utilizing the high quality printer we wanted, pay $2000 to license a single photo and less for others from Getty Images, etc…. by completely underwriting it myself as it would’ve been uneconomic for a publisher to do the same.

Although I prefer to sip on Lagavulin instead, Pappy Van Winkle had a wonderful quote on his approach to high standards which I shared the same sentiment regarding this book: “We make fine bourbon, at a profit if we can, at a loss if we must, but always fine bourbon.”  

I consume a lot of books myself and realize that the true cost of a book isn’t the price but rather the time it takes to read it.  The worst part in putting this book together was that it kept me from reading other books so I tried to be as mindful whenever possible for the potential reader by keeping the writing efficient and concentrated.  One weakness in retrospect is that I didn’t provide many citations but a quick internet search or look back at the blog will be sufficient in providing any further details.

Something I’ve noticed in reading many book is that there is often an unstated/hidden agenda, predominantly that authors like their story to be the story, accurate or not, and for this book I did my best to not just make it accurate but also account for multiple perspectives.  The majority of trading pit history has been put forth and paid for by the exchanges which has resulted to reflect only positive aspects while neglecting the entire story, so it’s a fresh approach to present this independent viewpoint.  

In my collection of virtually every book regarding the history and function of the trading floors or exchanges, a frequent thing that’s always bugged me is most authors’ agenda (usually as a broker) is to ultimately sell a service or accumulate assets to trade/manage.  I don’t want anything from anyone, trade independently anyways and present the book simply to those who share the captivating interest of trading pit history.  Having tackled this subject on the internet with historical writings on the blog along with operating the advertisement free website gallery for over 5 years reflects my pure interests. 

If anyone disagrees with the presentation then I’m happy to be emailed with where they think I’m wrong and I’ll be happy to cite my reasoning and further sources.  That said, I’ve had people try and tell me something is wrong when I and many of my friends personally utilized the same signals called into question.  My skin is thick like a rhino hide so nothing is taken personal, but I hope if someone is calling me out that they present a strong argument.

Of course one of my primary goals is to collect any further signals which aren’t included in the book currently for inclusion in a potential second print run.  Typically whenever I meet someone who worked on any trading floor, I’ll always ask them for any signals which come to mind.  More often than not, this is the response:

Ex-floor guy: “Oh yeah I know them all”

Ryan: “OK great, I’m trying to collect and record these for historical purposes, can you provide specific examples”

Ex-floor guy: Rattles off the one or two most obvious signals I’ve long had and then can’t remember any more.

Ryan: “OK thanks but if you remember anymore definitely send word.” Never get a followup….

Besides additional signals, some further thought needs to be given on unknown origins of signals within the book.  For instance, I believe the NYMEX month signals were based upon ASL to a certain extent but not enough to change their origin status from unknown in the book on this run.

I’ve thought long and hard why so few who worked on the floor share the same historical interest and have come to realize that hand signals were nothing more than a process which was required to use as part of the job.  To be honest, most of those on the floor wouldn’t differentiate between trading futures or selling plumbing supplies if they could have made the same amount of income.  The funny thing is that it probably cost me a fair bit as my mind would drift on finding the hand signals interesting or psychologically profile others on the floor instead of staying fully focused on the next trade.

The other caveat is if the book is a potential gift, it might not be as well received as imagined because so many ex-floor workers are jaded to the point they might speak higher of their ex-wife than they would of the floor/trading industry.  Part of it is many moved on from the industry, but I heard the best description mentioned by a friend who described his encounters with ex-floor workers and said “when they talk about stories of working on the floor, it's as if life was in color and now that the floor is gone it’s like life is black and white for them.”  I’m just being honest folks and often get the same impression when interacting with others.

A big benefit of self-publishing is not being required to have to sell or market the book, particularly because dealing w/the media (which I’ve never, ever solicited) is often a waste of time.  My thinking is that if people are interested then it’s easy to find and ultimately books are meant to be bought over long periods of time anyways.  For instance the book I’m currently reading was published in 1991 and it’s as fresh as ever.  Long after I’m gone, Trading Pit Hand Signals will be in the Library of Congress for reference and it’s pretty cool to think that someone 50+ years from now could find it useful and interesting.  

The company which handled the printing is going to handle distribution and as of now, we won’t be listing it on Amazon.  I definitely buy a lot of books off of Amazon but the breakdown of getting any return isn’t worth putting this book up there, especially since it’s already priced below cost!  It’s not so much a money thing but the principle of how they operate which really destroys margins for a specialty book to not make it worthwhile.  

In conclusion, presenting the book also serves as a bit of closure for the entire project.  Over the last 5 years, I’ve written and found most of what is out there on trading pit history.  Some history I’ve held back from publicizing for various reasons, mostly because it’s not worth the trouble and hassle that would ensue of bringing it to the surface again.  My interest in capturing further history remains high and will continue but I’m not going to blog about posting minor secondary information as much going forward.  

The distributor’s shopping cart for the book should be working within a handful of days and if you choose to order it ($30 + $4 shipping in US), I hope you enjoy it!  If anyone doesn’t enjoy it then…..I can admit myself that I won’t be giving up trading to become a writer anytime soon.  Next post will be a link to the cart once it’s live….

Comin in on a Hyundai

photo credit: vesseltracker.com

I know it's hard to believe that such a high quality book could arrive on a ship which shares the name of two mediocre car companies but indeed, the Hyundai Mercury is currently somewhere off the Aleutian Islands and will dock at the port of Tacoma in 4-5 days with the books.  After that it should clear customs and get delivered to the distribution center the week after Thanksgiving.  The distributor's online cart isn't working due to a bug in shipping calculations but once it is then I'll throw a link up. 

The print run is only taking up, in my estimate, about 1.5 to 2 cubic meters which is just a portion of a standard 20 ft container which holds 26-28 cubic meters.  Pretty mindblowing to think of the scale of goods which fit on an entire ship but if you've ever been in a Costco then it's no wonder that magnitude is necessary. 

I think it was mentioned previously but the reason we didn't print onshore in the US was the cost would've been around double what it was to print in China including the shipping (roughly $12-15 in China).  Even if every copy was sold, I'd still lock in a monetary loss of around 40-50% due to other production costs on a low print run but hopefully another print run can be had in the future to cut that.  Right now the suggested retail is $30/book which is reasonable and below other comparable books, because I'm a man of simple needs.

It's been an interesting diversion to engage in physical goods for once as trading futures is so frictionless.  Last year in Singapore while meeting a friend who trades physical grain, he was complaining about the logistics of contracts, shipping, settlements, etc... and his boss who joined us for a beer remarked that my friend wanted everything to be as easy as "selling it to the screen."

Almost here....

Well it's almost here as I heard word that the books are finally getting on a ship in China this weekend to begin the journey east and should arrive on the West Coast of the US at the end of this month.  I was surprised to learn it 'only' takes a couple weeks at sea for container ships to transverse the Pacific and hopefully only a few additional days are necessary to move from dock to distribution facility afterwards. 

Pictured above shows the different sizes that the book will be available w/the print version on the left, the e-book as seen on a regular sized ipad and to the right on an iphone (which I refer to as the "Tijuana Bible" size).

The electronic version is about 99% the same as the print edition but some final adjustments were made to the print book including a slightly different cover design.  Predominantly this book was intended for print and we went to great lengths, including using one of the best printers, to orient it for print.  However, it was important to make an ebook version available for those who prefer to read it that way or don't want to deal w/shipping outside the US so the ebook remains available only on the Apple itunes store and then read on the Apple ibooks app.  (Buying it once allows downloading it to the iphone and ipad, FYI so it's not like to have it on both would require an additional purchase)

Once we tighten up the print availability dates (expected roughly Dec 1st) and open preorders then I'll post something up here on additional details.

London Metals Exchange vid (UK's Telegraph)

End of an era for the London Metal Exchange?

The Telegraph posted the above 2 minute video regarding the future of the London Metals Exchange and noted that it's floor will have it's future 'reviewed' in 2015.  I've written previously about how I don't consider it a standard open outcry trading floor and how a tea party at a retirement home has more action than that floor but figured the above vid was worth posting. 

1995 WSJ article on hand signals

You'll have to click on the image to enlarge the article.

Floor based WSJ reporter Clifton Linton wrote the above 1995 WSJ article on how ubiquitous hand signals were for those who worked around the trading pits in Chicago.  The article also captures how hand signals permeated the lives of floor personnel which lead to uses in other aspects of life, including a comment by a trader's wife who mentions that her husband doesn't talk in his sleep but unconsciously uses hand signals, LOL. 

One note I'll add is that at the end of the article it mentions the bar Cactus which was enough of a trader hangout that it's original domain address was dontdrinkandtrade.com

Amsterdam Exchange

When it gets a little too quiet in the market like today, it's nice to hear the roar of an old trading floor.  The video below is not entirely the same for me however because the lingo is in a different language, not Dutch as trading was done in English on the Amsterdam Exchange, but equity options which are foreign to this futures guy.



Previously I wrote about the Amsterdam Exchange from which a different video is linked and it's surprising that the above video was posted on the official AEX youtube channel as exchanges tend to not showcase their floor based lineage.  LOL at 3:01 when a broker tightens a wide market which is jumped twice by a local.

The Pit - historical reenactment at the CBOT on Sunday

 (pictured above is a snippet of a late 19th century CBOT illustration out of Harper's, can click to enlarge detail)

A historical reenactment based upon elements of Frank Norris' 1903 book The Pit will occur on Sunday, October 20th from 3-4pm at the CBOT building. The presentation is being organized by highly regarded Pocket Guide to Hell tours who continue to recreate significant Chicago historical events, talks and tours.  This weekend's event is being held in conjunction w/the Chicago Architecture Foundation and their effort to spread insight and access to Chicago's architectural treasures.

I got an opportunity to get a peek at the script and it's excellent, entertaining and historically accurate...not to mention much better than anything I could create!  The aim of the event goes beyond Frank Norris' book to also explore Chicago's cornerstone industry of commodities trading which continues to operate without equal.  Various historians and narrators will be on site to enhance the event and it will likely be more boisterous than the actual trading which remains on the CBOT floor.

Part of the fundraising effort was done through hosting a couple Pit the board game tournaments at Chicago bars and the first one I was able to attend was a lot of fun.  The opportunity to take part in supporting the production remains and special edition futures contracts can continue to be obtained.

Nick Leeson ebay items

Nick Leeson teamed up w/an autograph dealer in the UK to offer various signed items listed currently on ebay with some, perhaps all, proceeds going to charity (can't tell clearly from listing).  I couldn't resist buying the above photo where he signed it "Who's Next?" knowing that there is an endless parade of individuals and entities who take on too much risk and are due for their own blow ups.

 Other phrases he signed items with are:
"NEVER AGAIN, THERES ONLY ONE ROGUE TRADER, ONE HELL OF A JOURNEY, WHO'S NEXT, NOBODY WILL FOLLOW THAT, and a very small amount of HOW LONG WILL YOU BE STAYING SIR? SIX AND HALF YEARS! which relates to Nick Leesons sentence!"

Here's a link to a print being offered
Nick Leeson Limited Edition signed autograph print Rogue Trader With Quotes

And also some signed court room sketches which are even a bit fringe for a history buff like myself
Nick Leeson Rogue Trader Signed Autograph Sketches From His Trial

I've remained extremely intrigued w/Leeson's story since I read of it in a TIME magazine during my freshman year of high school at a Kansas coffeeshop and hope to meet him for a pint someday.  (Nick if you're reading, email me!)  It's an unpopular opinion but I've got quite a lot of respect how he has confronted what happened, served his time in prison, beat cancer brought on by the stress of his situation and in general gotten on in life as best as possible.  What happened at Barings was clearly brought upon by his decisions but I can understand some of the circumstances which overwhelm in the markets although clearly nothing remotely on that scale. 

Probably mentioned this previously but I've got a couple Barings SIMEX jackets which were worn by his clerk YVE and his lead filling broker DIN.  

Printer proofs

Printer proofs for the book arrived from China and this is, I believe, the second to last step before final production as it showcases the layout as it'll be printed.  From my understanding once we approve these then we'll get a final set of proofs in a couple weeks which will represent the finished product.

Still no firm date on when it'll be available in print but for those who don't wish to wait, we've made an electronic version available via Apple's itunes bookstore which can only be viewed on the Apple ibooks app (best seen on the ipad).  Since the electronic version was uploaded, we've made some minor changes to the print version but in general the history is the same which is what matters. 

Trading Pit Hand Signals book on Itunes

Jonathan Toews rings the CME bell

Blackhawks captain Jonathan Toews 'opened' the CME today w/a bell ringing ceremony where he also brought the Stanley Cup along to the trading floor. The most important reason he came to the CME though was to seek out more hockey advice from the exchange's Chairman, LOL.

A half-hour into our conversation, Terry Duffy’s phone buzzes. It’s Blackhawks captain Jonathan Toews. The Hawks are down to Detroit, three games to one, and Duffy has some ideas for how Toews can shake free of Red Wings winger Henrik Zetterberg.
“Drop him early,” he says. “Put him on his back.”

- Chicago Grid article June 18, 2013

Blue Hawaii

A lot of trading pit hand signals have origins which were lost to history and ever since I learned the signal for Blue (Year 4) at the CME, I always wondered of it's origin as no one else seemed to know either. 

photo credit wikipedia


Yesterday in Maui I returned the shaka sign to someone and it finally hit me that the same signal is used at the CME for Blue because of the Elvis movie Blue Hawaii.  AMIRITE????  Now if I could only figure out why all the spreads I have on are moving against me. 

photo credit wikipedia

The Queen visits LIFFE trading floor

In early 1992, HRH Queen Elizabeth II visited the LIFFE trading floor and the video of her visit was recently uploaded onto youtube by Chris Dougan (who apparently traded on the LIFFE floor).  It's listed as a four part series but only parts 2, 3 & 4 are uploaded thus far.  In the video the Queen was presented with her personal trading badge "E2R" made of solid silver. 







For further reading on the Queen's visit and LIFFE in general, I'd again suggest to read Day One Trader by John Sussex who recounts of his career on LIFFE including the day of the above video. 

Montreal Exchange

Vintage 1994 promotional video which was edited to show the floor in pretty hectic action.  When I saw the floor in 1999 (I think or 98) it was incredibly quiet so this vid is nice to see what it once was.

Traders by William Brashler

Moving from highbrow to lowbrow but still set within the long bond pit, my reading stack shrank to finally allow the opportunity to read former WSJ reporter William Brashler's fictional novel Traders. Before my take on it, here is the 1989 review from the Chicago Tribune. 

I felt that the book was pretty good, although it was a guilty pleasure reading it because I almost never read fiction.  The storyline stretched belief at some points but was generally solid and the various subplots also kept me picking the book up at every opportunity.  Since Brashler spent a long time around the trading floor in his role as a journalist, the characters and dialogue were incredibly realistic (too realistic almost) to the point I felt transformed back to the CBOT floor in the 1980s occasionally.  My primary critique is that the characters, particularly the protagonist, should've been a bit older in age to be more believable.  The book also gets pretty lewd at some points but hey it was the 80s and I figure there's more reality in some of the stories than most would realize (back then "blocker" didn't mean a block trade apparently, LOL). 

Traders is a great book to add to your stack and someday it'll make a great read when you're in the mood for a book on trading but one that requires zero thinking.

Dao of Capital

photos via: daoofcapital.com

In the soon to be released Dao of Capital, author Mark Spitznagel relates in the first chapter of his great personal story of learning to speculate under the tutelage of an older, folksy pit trader at the CBOT.  It's clear how much respect the author has for his mentor, 50+ year CBOT member Everett Klipp, and one great thing about the trading floor was how that sentiment is shared by many others (particularly myself) for their trading mentors.  

The first chapter is available via link here and although it takes highbrow diversions into Daoism and Austrian economics (the main subjects of the book), it's worth reading in it's entirety to not miss how he relates what he learned as a trader in the 30yr bond pit during the 1990s.  Today I did a skim during the trading day and upon a reread after the mkt close, it was clear how much was missed by simply doing a light reading initially.  This is a book which clearly requires no distractions while reading to get the most out of it and is great for summer markets when minds aren't left baked after a volatile trading day.  

The strategy which Klipp taught was, as the author wrote, very simplistic and while continually sound in theory, it's difficult to implement in futures anymore without getting deep into the HFT arms race, the extent which is well illustrated in another new book, Architects of Electronic Trading.  The reason being that getting trades electronically now is like prison sex, the kind you get you don't want and the kind you want you don't get.  However, it was/is an approach and the beautiful thing about the markets is that everyone can define their own way to play the game.  I personally disagree w/the strict approach of the "Alpha School" and have always thought a directional bias is important to combine w/market making strategies.  As much as I'd like to hammer on this tanget, it's not history related so I'll stop. 

The entire book is released in a week and a half so it'll be great to continue reading once the preorder I put in for today ships. 

For my own attempt at folksy/Daoist wisdom to share in these slow August markets:  it's better to be out of the market wishing you were in than in the market wishing you were out. 

Ethics classes

One result of the FBI sting was that traders were required to attend ethics classes at the exchanges because I guess enough people didn't have the moral compass to know between right and wrong (shocking). 

This 1990 NYT article describes it a bit further Traders to Get Ethics Classes

But to add a little visual for those who'd like a refresher, a CBOT member of that era dug out some old videos he found and uploaded them recently to youtube.  The first couple videos are incredibly dry but the third is worth embedding because it has some great vintage footage of the bond room rockin!  The third vid also focuses entirely on sexual harassment which isn't too surprising that a third of the ethics education had to deal w/preventing that.

CBOT Floor Ethics Training from 1999 (1 of 3)

 CBOT Floor Ethics Training from 1999 (2 of 3)



At the CME, there was also an ethics class I remember taking as a clerk which was taught by older members.  The only thing I can recall of it was that we were warned of taking 'freebies' of any trades or favors because, in the loudest voice the member teaching it could muster, "BECAUSE THEN THEY'LL HAVE YOU HOOKED AND YOU WON'T BE ABLE TO SAY NO!"  For those that grew up in the 80s/90s will remember that the D.A.R.E. program also preached the same thing, free drugs to get you hooked.  Turns out I never saw free drugs or free trades, guess it took looking for them first. 

"Peter Vogel" trading card

An interesting piece of memorabilia in my collection is the trading card of Peter Vogel which was the alias of FBI special agent Dietrich Volk during the undercover sting in the pits during the late 1980s.  When news of the sting was announced, a fellow trader in the same pit grabbed some of his cards as a memento and that's how I ended up with this one.   A few years ago I posted a bit more detail on the sting and the link to it is here:    FBI Operation Sourmash and Operation Hedge Clipper

I'll go ahead and repost the photo though which shows VOGL in the lower left corner standing in the pit

General Wainwright at the CBOT

click to enlarge

The exchanges always made a tradition of inviting military officers to the trading floor and pictured above is when the CBOT was honored to host General Jonathan Wainwright in 1949.   General Wainwright was the commander of Allied forces in the Philippines and surrendered to Japan at Corregidor due to overwhelming circumstances.  If any of you visit the Philippines, I highly reccomend a visit to Corregidor to see the massive fortifications and tunnels which the US and then Japanese built on the island.  

General Wainwright served as the highest ranking POW in that theatre and subsequently received the Medal of Honor for his service.  Upon return to the US he received quite a reception as shown below in the youtube vid but also managed to enjoy a well deserved cigar in the CBOT pits!

Final closing bell of the KCBT June 29, 2013

Like the 1960s, if you remember it then you weren't there.

There's a pretty ridiculous auction going on in London of five Andreas Gursky photos today, the five photos have a combined estimate to be auctioned at 2.5-3.4 million GBP! 

artdaily.org has a good summary of the auction
Most important collection of Gursky "Stock Exchanges" to be offered at Sotheby's London

and the official Sotheby's listing is here
Andreas Gursky Stock Exchanges A Private Collection

It's kinda funny because when I started at the CBOT as a phone clerk, the managing director made comments that I "should be on the other side."  Obviously 14 years later it's apparent that he should've meant the other side of the visitor's gallery shooting photos of trading floors rather than the trading side grinding out ticks, assuming risk to the shirt on my back and being a 33 yr/old man w/the insides of a 90 yr/old due to stress.  Let me reiterate what this auction is offering, five photos of trading floors for five million dollars!

In regards to the Blackhawks Cup win

One thing I meant to point out earlier is that the opening montage has the Blackhawks skating through the remnants of the CME trading pits as the exchange was the lead sponsor throughout the year.  As great as the video is on youtube, it's exponentially better on the pregame jumbotron in the dead of winter at the Madhouse on Madison.  Although Texas is home now, I still keep Blackhawks season tickets which make the trips back up to Chicago during winter tolerable.

Last week of trading on KCBT floor

photocredit: kansascity.com

The KCBT trading pits will close permanently this upcoming Friday and put an end to the trading floor which has existed in some form or another in Kansas City since 1856.  This exchange holds a lot of memories for me as I started there as a clerk literally 15 years ago to the date it's shutting down and for sure I'm going be there for the final bell.   Hopefully the Peanut stocked enough booze for the crowd afterwards.

Pretty amazing that with KCBT closing there's only two open outcry futures trading floors left in the world, in Chicago and New York (I don't consider the LME to be a proper one).

Trading Places background detail

photocredit IMDB

Hard to believe that the movie Trading Places is 30 years old this year!  A COMEX clerk from the era wrote in to share a little background on the filming,

"NYBOT/ICE likes to claim the movie was filmed there because it was about
orange juice but in fact it was made in the gold pit on Comex. All four NY
exchanges shared space at 4 World Trade Center and the gold pit was the
biggest at the time. Comex badges are green and you can see them predominate
in the live action footage and on all the actors. As a reference, the
Cotton/OJ badges were orange, the Coffee, Sugar, Cocoa badges were light
blue, the Nymex yellow and those who had seats on all four were gold. In the
film you can see a booth number which was in the Comex quadrant and several
Comex officials were thanked in the credits."

The picture below illustrates his points

photocredit: oddculture.com

MATIF colors

click to enlarge

Last week I was briefly in Paris and I remembered to finally post this photo which former MATIF member Fabien Danis submitted a while ago.  The photo is of a shirt printed up by someone on the floor which illustrated all the jacket colors of each trading firm, as modeled by Bart Simpson. 

The Bourse de Commerce where the old MATIF trading floor was located is currently undergoing continued renovations and has largely lost it's purpose ever since the exchange went electronic.   The interior and exterior are gorgeous (except for the homeless people sleeping on the steps this last visit (no, I didn't ask which pit they filled orders in)) and the only trading venues which could compare in ornate beauty are the prior CBOT buildings.

April 14, 2000

click photo to enlarge

All the people in the photo didn't realize it at the time but that day of Friday April 14, 2000 was the day the stock market's tech bubble ended.  To get an idea of how wild the move was, here's a news story from that day

NEW YORK (CNNfn) - U.S. stocks plummeted Friday, capping off five days of stunning losses that handed the Nasdaq composite index its worst weekly performance of all time and the Dow Jones industrial average its steepest one-session point loss in history.

 The Dow tumbled more than 600 points, trouncing the previous record and triggering circuit breakers at the New York Stock Exchange. The sell-off gave the Nasdaq its biggest point loss of all time, topping the last No. 1 plunge set just five days ago.  But the statistical standout could be this: the Nasdaq fell more than 25 percent this week, trouncing the 19 percent fall that began Oct. 21, 1987, Black Monday.

The Nasdaq composite index shed 355.61 points, or over 9 percent, to 3,321.17, its biggest one-day decline on record. At one point during the trading session, the Nasdaq was down 411 points. The index lost over 1,000 points this week and is now off more than 34 percent from its record high set March 10 - well beyond the 20 percent decline Wall Street sees as the beginning of a bear market.

I'm in the photo in the blue jacket in back on the phone which was in the midst of my 9 month order desk stint at Nomura before moving to start trading under a group of locals at the Merc.  In front of me were the two guys on headsets doing Dow/S&P arb (7 Dow to 2 S&Ps I think it was then) and to my left in the black and red were the guys at Shatkin, behind Paine Webber in the green jacket.  A lot of great and sometimes funny memories come back from finding this photo.  The guy on my right headed the desk and he was a great, aggressive broker.  What always cracked me up was when some institutional desk would call up and ask what's going on but if he didn't know, he'd feed them the biggest line of BS like "yeah First Chicago's index arb has been coming in buying dips while Goldman has been consistent sellers and locals are following their lead so the pit is short at the moment."  Right after hanging up he'd flash a big grin my way and tell me that I should never tell them I don't know something and make up flows if so cause it's all BS anyways.  LOL

Book proofs

The print version of Trading Pit Hand Signals is getting closer as I just received the physical proofs from the printer and will have to review and make a couple adjustments before moving closer to production.  What's really exciting about the print version is that we're working with iocolor based in Seattle!

While most might not recognize the name iocolor, some of their work is likely familiar.  In recent years, iocolor did the printing for Modernist Cuisine which is the most visually stunning book I've ever seen.  It's been a lot of fun to read of early posts in that project's blog on how the book creation process unfolded with the same printer and I'm really thrilled to get the print version moving along.

For anyone who loves reading, I can testify that creating a book is easily one of the most rewarding things you could ever do.  The process thus far has had some frustrating moments and distractions but it'll be hard to find another project as enjoyable as making this book. 

My best guess remains that the print version will be available around Labor Day in early September and likely be priced roughly $25 whereas the electronic version is available now for $8.99 in Apple's itunes store.

Ibooks launch

To celebrate World Book Day yesterday, the book Trading Pit Hand Signals finally launched in Apple's Ibooks store!  It was certainly a long time coming to get to the point that the book could be presented publicly and we're working on increasing distribution. Sales are authorized for 51 countries which include most of the Americas, Europe and Oceania but Asia such as Singapore/HK is not able to purchase right now. 

Here is the link to the Ibooks store and once downloaded, my suggestion is to read it with the ipad turned sideways so both pages are displayed simultaneously:
https://itunes.apple.com/us/book/trading-pit-hand-signals/id639785084?mt=11

The decision was made to initially launch through Ibooks because it's the best platform to maintain the original design of what will be a physical print book.  The e-book marketplace is extremely fragmented and there are vast differences between rival platforms.  Complicating this further is that this book is a 'fixed format' book (think coffee table style or children's illustrated book) which requires an e-book platform to show it exactly as it would appear in physical print form as opposed to "fluid format" (think novel) that is largely text and can shift as necessary on various platforms. 

We do have a Kindle version ready to go but are withholding it for the time being because there are many platform issues which could be confusing for consumers.  For instance, a fixed format book can only be read on the Kindle Fire device and not on earlier versions of the Kindle device or the iphone, ipad or android Kindle apps.  There are a few other issues we have with putting it on Kindle so unless there are huge requests for it, we'll most likely not be doing so. 

The print version is in the works but it won't be delivered for a few months in my estimate.  We're currently working w/an amazing print house but I'm not going to leak details until things move along further.  Although we intended to keep everything onshore regarding printing, the pricing difference is so vast that the prepress will be done in the US and then transferred to China for the actual printing. 

Hopefully everyone enjoys the book because I do feel it's an accurate and honest portrayal of trading pit hand signals and how the futures pits functioned.  My aim was to keep it light and readable rather than descending into more academic details than necessary although the book is based upon an obsessive amount of roughly 400 hand signals used to trade! 

Besides this posting there won't be much done to promote it as speaking w/bloggers or journalists is generally a waste of time, so if you like it tell a friend.  The list price on Ibooks is 8.99 and w/a 70% cut, that works to just over six bucks back my way so I look at it as people just buying me a beer or two when they like the book.  Except for the impossibility of it becoming a New York Times bestseller, there is zero chance of me recouping the investment into it but you can't put a price on satisfaction.

When I get a bit more time I'll share some further thoughts on the book industry appears from a novice's perspective but in the meantime I hope everyone enjoys the book!

Trading Pit Hand Signals - the book

In a rushed way last week I did leak the cover of my upcoming book; Trading Pit Hand Signals, and w/a little more time now I can explain about the delay in distributing it.  Pretty good cover though, eh????

The book has been finished for a while but a lot of issues have arisen w/the digital conversion causing delays.  Without describing the entire e-book industry, there are basically two formats: .epub files which are industry standard and .kf8 which is Kindle's proprietary format and thus we've been working on two file creations.  The other factor which has been a huge headache is the difference between fixed or fluid formats and while attempts have been made to go w/a fluid format, it seems like the digital version will have to be fixed format in order to retain the proper design.  Of course I could always upload it on .pdf immediately but am holding out for proper e-book formatting.

Most e-books are ugly and look like simple Word documents but we're sticking to far higher standards with our creation.  I'm currently under the assumption that I'll get a fixed format version to distribute within two weeks, so we shall see.....

As for a print version, that process hasn't even begun!

CBOT hand signals circa 1998

Shown below is a 1998 pamphlet from the CBOT on trading pit hand signals I recently obtained.  It provides a deeper and more updated version of their earlier 1995 handout which I posted years ago. 

   CBOT Hand Signals

Billion Dollar Day

Although this goes beyond 'trading pit history' I'll go ahead and post it because there is a lot of parallels to how the old currency markets used to function and pit trading. 

On a single day in 1985, the BBC filmed a documentary of three currency traders, two of whom were bank prop traders in London and Hong Kong while the other was a hedge fund manager in New York.  The documentary makes for a very entertaining 30 minutes to see how much has changed in the past 28 years of trading. 

Trading pit paintings

A fair amount of trading pit paintings have been done over the years but virtually all I've seen were created by outside observers that treated the trading floor as simply another subject.  One exception can be found in the paintings of Collin C. Palmer who expressed his perspective as a CME and CBOT floor trader to create some of his paintings as shown below.  Click on each photo to enlarge for detail

BBC radio on origins of LIFFE

Thanks to Mark G. for passing along this 30 minute BBC radio episode which explored the origins of LIFFE.  Here's the synopsis from the link,

In this episode of In Living Memory, Chris Ledgard meets the men who set it up. He talks to traders who were there on day one, to journalists who covered the early weeks, and to one of the financial wizards employed to explain how it worked. And, he asks, is there any connection between this kind of speculation and some of the disastrous financial events of recent times?

It's not possible to embed the audio so click the link here.

*Book update - yeah more continued delays regarding the file conversion to .epub and .kf8 files and it now has to be farmed out to a specialized conversion house to get the formatting right. I've learned how that electronic books are really simple for plain vanilla designs/graphics but digitizing what's almost the equivalent of a coffee table book in the right format is an entirely different story.