Smog, "Teenage Spaceship"

The RO Report, "Faceroll" Edition

Trader P introduced me to a wonderful new term yesterday and luckily I didn't have to wait too long to use it. I mean, it has something to do with a game called World Of Warcraft, but I'm using it as a synonym for "easy" as in, "trading was so easy today, all you had to do was roll your face across the keyboard to make money."

Of course, that's a lie.

The RO did well today, but it wasn't that easy. In fact, the afternoon long trade was very difficult. I actually bailed at the very lows of the move and had to buy back much higher. Not easy.

Anyway, today was a pretty solid day, despite the FED. FED days almost always suck. It's just one of trading's truisms, so it's nice to see the good numbers. Out of 30 traders today, 22 were gross positive, or 73%. 14 traders made over $1,000 gross, and 1 lost over $1,000 gross. I was #10 of 30.

One note, Trader $ is a new trader to our office. I've decided to stop counting higher with the trader names, (as in Trader 13, Trader 14, etc.) and now I'll go to symbols. Unfortunately, today his symbol is somewhat ironic, given his manservitude, but he'll be okay.

Be sure to check in tomorrow. I'm coming out of the closet, here on the blog.

"Lucky Pierre" - Trader C, $14,736 on 382k shares traded.

2. Trader Z, $11,268 on 340k shares traded.
3. Trader H*, $10,187 on 17,500 shares traded.
4. Trader A, $6,730 on 626k shares traded.
5. Trader N, $4,763 on 82,200 shares traded.

"Chambermaid" - Trader D, -$2,221 on 55,400 shares traded.

2. Trader I, -$737 on 16,000 shares traded.
3. Trader M*, -$544 on 0 shares traded.
4. Trader $, -$537 on 18,600 shares traded.
5. Trader 3, -$447 on 19,762 shares traded.

Team Israel And The Perma-Plebes

The monitors were stacked in a "U" formation; 4 across the bottom, and then 2 high on either side. It was a fortress, a kingdom, and Mr. Green, the little Jewish man staring into them, was the king.

The dull light emanating from them turned his skin a bluish color and reflected off his crisp white shirt. On either side of him were younger men with similar, yet smaller monitor displays; his sons. Together, they ran what came to be known as "Team Israel." Word was that you had to be Jewish to work for these guys, and word was that they were all very good traders.

"Team Israel" sat across from our "team," a ragtag collection of potheads, ex-convicts, foreigners and Ivy Leaguers.

Now, when I used to hear the term "trading desk," romantic visions entered my mind. I pictured oriental rugs underfoot and monitor displays supported by hundreds of pounds of rainforest-harvested lumber. Indeed, I pictured a grand desk, from which well thought-out ideas involving large sums of money were put to test in the marketplace.

I was quickly disabused of this notion by Anvil.

Instead, both Albert and Mr. Green sat in the middle of long makeshift desks that consisted of about 20 pale-grey folding tables placed end to end. Extending to the left and right of each of them were 8 traders. So between the two teams, there were about 34 traders; 17 on one side staring across at the 17 on the other side.

The only thing separating us, besides religion, was the wall of monitors.

The largest monitor formations were found in the middle of the desk, by Albert and Mr. Green. As the profitability and skill of the trader tapered off, so too did the monitor displays. So the best traders were all clustered together at the center of the "desk," while the plebes at the end of the desk, with their two 18-inch monitors, were left to marvel at the circuitry in the middle.

The plebes, over in their shanty-towns, would joke amongst themselves about buying 10,000 shares of Vodaphone. They'd say, "Man, I had 400 shares of IBM and was stopped out a penny below the low point of that move, just before it ripped 9 fucking points." Plebes were often heard complaining about the trading software, or about their commission rates.

Their position sizes were strictly limited... indeed, holding 200 shares of a stock was enough to make many of the "perma-plebes" panic. But still, they'd imagine themselves one day behind a wall of monitors, sitting near the center, glibly glancing over at their personal Bloomberg Terminal while off-handedly discussing the losing positions in their long term accounts.

To make the jump from being a "perma-plebe" to a "trading king" was difficult, if not impossible, because it not only meant having to transform one's personality, it also meant a king would have to fall to free up some space in the center. No, it was much more likely that a plebe would slide off the end of the desk and go back to his bullshit job recommending mutual funds to under-informed retirees.

He'd show up again one day to visit the desk during his half-hour lunchbreak, extolling the virtues of a steady paycheck...

Anyway, desk space was at a total premium. The monitors were so tightly packed that if somehow the dude next to you haggled or traded his way to an extra monitor upgrade, you were screwed. Your space, already tight and infringed upon, was now very infringed upon. Personal items were lost forever amidst the tangle of wires that ran under the tables. A rumor that was often discussed and never dismissed as a total falsehood, was that Mr. Green had lost a single Armani shoe to the unforgiving cables.

You see, for a trader, screen real estate is very important. The more you can fit onto your screens, the more you can conceivably watch. The more you can watch, the more opportunities you can find. The more opportunities you can find and exploit, the more money you can make.

Anyway, viewing the disparity in the monitor setups was my first indication that I had to negotiate not only for my commission rates, but also for how many monitors I would get and what software services I could use.

I shuffled in and found my seat at the end of the desk, next to a man who was sitting at the edge of his seat and speaking to his monitors in some forgotten Eastern European language. He seemed to be threatening his monitors, under his breath.

The market wasn't even open yet.

Squeeze, "Another Nail For My Heart"

Haven't gone to the 80s in awhile.

The RO Report, "Metaphor" Edition

Today, the market was many things. And it caused a few of us to search for metaphors, to explain it all...

One might say, for example, that the market was like a dog tied to a stake in a backyard. That was mine...

"Trader MV," not a member of the RO, but someone I speak with each day offered the following... "The market was like a patient etherized upon a table; heavy, lifeless and hard to move." Not bad.

Another trader who shall remain unidentified (you'll soon realize why) opined that the market was "like an alright chick u bring home who's pretty drunk and u know u can fuck her. but the second she steps in the door she vomits on ure new northface fleece that's sitting on ure dining room table. and then ure like, 'i wonder if i can still fuck her.'" Questionable, indeed.

Perhaps the market was like a mouse, spinning endlessly on it's little mousewheel. Trying to run as fast as it can, and getting nowhere fast. That was Trader A's neat metaphor. A little gay, but harmless enough.

And finally, I'll leave you with a metaphor from one of our Manservants... Trader E, who said that the market was like "a cock to the face."

In other words, today sucked. Now, for the numbers...

Out of 29 traders today, 17 were gross positive, or 62%. 3 traders made over $1,000 gross and 6 traders lost over $1,000 gross. A mess. I was #9 of 29. I'm happy to be green.

History post dropping tomorrow.

"Lucky Pierre" - Trader H*, $3,626 on 17,800 shares traded.

2. Trader Z, $2,304 on 45,060 shares traded.
3. Trader B, $2,290 on 162k shares traded.
4. Trader I, $884 on 30,200 shares traded.
5. Trader 7, $696 on 10,000 shares traded.

"Chambermaid" - Trader N, -$2,874 on 84,800 shares traded.

2. Trader V, -$2,366 on 53,400 shares traded.
3. Trader F, -$2,127 on 33,000 shares traded.
4. Trader 10*, -$1,482 on 0 shares traded.
5. Trader E, -$1,200 on 19,800 shares traded.



Brian's take.

Michael Marcus: Market Wizard

So, this will be the first book club post... it's very sloppy, but I wanted to get it up anyway.

The book I'm currently reading is a trading classic, Market Wizards, and the first chapter discusses the futures trader Michael Marcus.

Now, you could argue that Market Wizards is a bit like watching 1970s porn. Why would you do it? People didn't "shave" back then for chrissakes and the sound editing was awful. But Michael Marcus wasn't a porn star and the market hasn't changed nearly as much as the porn industry has.

Anyway, I'm not going to summarize the chapter or anything, because that would be boring. Instead, I'll just point out the things I found interesting.

First of all, the dude lost consistently for the first couple of years.  I thought of Dr. Suess, sending his books out to like 60 publishers and getting rejected by them all before becoming a huge success.  

The moral is, if you love something, keep trying.  However, don't expect it to be easy. 

I mean, the guy lost a lot of money... money he borrowed from his Mom even. And things didn't really turn around for Mr. Marcus until the market hit a wild inflationary run in the mid 70s.  I thought that was interesting too... the market always has active periods.  Like, take September to December for example of 2008.  The RO cleaned up, made loot.  Periods like that are what you have to take advantage of.  There are lots of dry spells where you can lose your ass if you're not careful... a good trader needs to take advantage of opportunity when it is present.  And don't discount luck.

Marcus kept trying, took advantage of a good market, gained confidence, and became successful.

But he didn't do it all on his own.  He had a legendary trading mentor, Ed Seykota (Rudy, you still out there?) who helped him early on.  However, despite that, he said the following, which I agree with:

You also have to follow your own light.  Because I have so many friends who are talented traders, I often have to remind myself that if I try to trade their way, or on their ideas, I am going to lose.  Every trader has strengths and weaknesses.  Some are good holders of winners, but may hold their losers a little too long.  Others may cut their winners a little short, but are quick to take their losses.  As long as you stick to your own style, you get the good and the bad in your own approach.  When you try to incorporate someone else's style, you often wind up with the worst of both styles.  I've done that a lot.

He also claimed that trend following systems were "doomed to mediocrity."  He said this sometime in the 80s I guess.  Clearly, trend following systems haven't gone away.  I think the thing about this that I want to highlight is that the market changes less than our relation to it.

Another thing, and this I point out for my friends who have been successful, he mentions how he was an awful investor.  I can't tell you how many trading friends I've seen make a lot of money and then squander it on bad investments, including me.  Look, if you're a good trader and have made a lot of money, don't lose respect for that money.  Save it.  You'll need it someday.  Don't go investing in bullshit.

Now, it's not like you get many exact trading rules from Market Wizards.  It's really more a book about personalities and fun trading stories.  However, I did find one rule that you can take out of the Marcus interview.  It applies to all time frames and is especially important in our current market.

You absolutely want to put down a [short] bet when a market acts terribly relative to everything else.  When the news is wonderful and a market can't go up, then you want to be sure to be short.

Also, I thought the following was right on when asked about what makes a good trader...

His objectivity. A good trader can't be rigid. If you can find somebody who is really open to seeing anything, then you have found the raw ingredient of a good trader.

Finally, in a touch of psychology that Trader X and Attitude Trader would enjoy, Marcus claims that, "in the end, losing begets losing. When you start losing, it touches off negative elements in your psychology; it leads to pessimism."

So, this is why I like Market Wizards. I mean, Michael Marcus traded the commodity markets in the 1970s yet you can still find lots of wisdom in this interview that pertain to trading the stock market today. In fact, you can take this wisdom and apply it to any market you trade.

Next Tuesday, I'll "discuss" the Bruce Kovner interview.  Carry on.

Mick Jagger & David Bowie, "Dancing In The Streets"

Really, this just about sums up my day.

If you were a fan of the Stones in the 60s this really should have been the moment when you said, "Okay, these guys are done forever." I mean, just watch 30 seconds of this video. What was Mick Jagger thinking? An awful classic.

The RO Report, "Extinction" Edition

I bet things were going pretty well for the Dinosaurs right before the meteor hit. I bet they didn't even see it coming.

Well, today was kind of like that for me. The meteor was FAS. Ironically enough, this was the same stock I profiled as a "good trade" earlier today.

I got blasted fighting the market between 1:30 and 2 as FAS cratered in my face. I blew out 20 cents from the bottom. I had a lot. Painful? Yes. However, I feel okay. I'm not losing my mind or anything, I feel money is coming. A setback to be sure, but I'm gonna go over it all tonight and master it.

Unfortunately, you know the policy around here... I lose money, I have to post bad music. I lost big money today... so prepare for a truly awful song to drop later.

On the bright side, the RO had a decent day. Nothing great, but solid numbers. Out of 29 traders, 19 were gross positive, or 66%. 5 traders made over $1,000 gross and 2 lost over $1,000 gross. I was Chambermaid, hopefully for the first and last time.

"Lucky Pierre" - Trader Z, $2,576 on 113k shares traded.

2. Trader 10*, $2,301 on 400 shares traded.
3. Trader F, $1,870 on 64,800 shares traded.
4. Trader 9*, $1,757 on 300 shares traded.
5. Trader N, $1,512 on 114k shares traded.

"Chambermaid" - Trader S, -$5,814 on 88,600 shares traded.

2. Trader B, -$4,533 on 217k shares traded.
3. Trader 6*, -$941 on 0 shares traded.
4. Trader V, -$884 on 69,200 shares traded.
5. Trader T, -$802 on 11,000 shares traded.

A Dry Joke, Courtesy Of Dinosaur Trader

I put peanut butter in a mouse trap this weekend. Five mice died from salmonella poisoning.

A Trade In FAS

I started Friday in a very bearish frame of mind. I ended Friday marveling at the market's resilience.

Accordingly, I began Friday getting short developing markets via purchasing EEV, the double short emerging markets ETF. I focused on EEV early because I saw that Brazil and Russia were getting pounded. I have no idea if that's a valid reason to purchase EEV. Anyway, the point is that this trade nearly killed me. I lost a decent amount in it and was forced to reconsider my bearish mindset.

A trading buddy/thorn in my side pointed out that SPY had held 80 support. At around 11am, when we vaulted through SPY 82 on some bogus news about unemployment benefits no longer being taxed (HAH!) he advised getting long. However, how could I buy into that spike? So I decided to wait for a pullback.



Above you see a chart for SPY, which is what I was following to time my entries and exits. After that initial large spike, the market consolidated and tightened up, and SPY set up for a triple-top break just after 1pm. However, I only had a very small SPY position. Instead, I focused my long efforts on FAS (triple financial long... HAHA!) because I noticed it was breaking the downtrend on the 60-min graph. See below.



I was hoping for a more explosive break. But whatever, what made this trade good for me was the way I held and purchased on pullbacks. As long as uptrend didn't break, my plan was to continue adding on dips. My thought was that as long as it broke above the 60 min downtrend and held, that I was safe to add with the overall market rising. So I purchased FAS between the prices of $8.44 and $8.80, building a position of 5,000 shares which I exited an an average profit of 17 cents per share. So I made about $800 on the trade.

I actually got very lucky, as the trade came within a penny of my "pain threshold." But I'll take it... I can't tell you how many times in my career that I've been stopped out a penny or two below my level only to see the stock reverse and go in my favor.

Long time readers know about my early struggles with the hybrid market. My old trading strategy of trading many stocks at once, is somewhat dead because the market is just too fast and illiquid in many stocks now for my taste. I used to take many trades and just "cut losers and let winners run." It's just much more difficult to do this with any precision now given the liquidity issues on the hybrid. Stocks will trade through levels on a 100 share trade, and then shoot right back above it like it never mattered. So, going forward, I'll be looking to put on more trades like FAS, in which I pick a direction for the market and build into one to five names.

That's not to say you still can't trade many stocks at once. I know a few guys who do this very well. However, in order to do so, you need to widen your stop loss levels. I'm not really comfortable with that. When I learned to trade (10 years ago in March, sheesh) losing a quarter point on a trade was a big deal. Now a quarter point is static. But for me, old habits die hard... and so I've had to reduce my exposure to static... it was stressing me out too much.

But hey, if in a month the market rewards trading 25 stocks at a time again, I'll try and be there.

Bartiromo Interviews Prince Alwaleed

This is great.

(h/t "the Fly")

Meanwhile, a lone voice cries out that Dennis Kneale Is Not An Idiot.

Low, "Words"

The RO Report, "Mettle" Edition

Seriously, why shouldn't the market be dropping? The banks are destroyed. People are taking dudes who live on boats and store grains seriously... but still, the market is hanging in there.

I went bearish when the SPY cut through 85 like butter. However, if we open Monday, blow through 84 and test 85 again, I'll start to wonder about the short side.

I'm surprised by this mild strength. Of course, it's kind of lame to think we're doing well just because we're not cascading lower, but I think that just points out how negative sentiment is right now. It feels like the world should be ending, but it isn't... yet.

The RO had an impressive amount of traders in the green today, but no one made big size. Out of 31 traders, 24 were gross positive, or 77%. 8 traders made over $1,000 gross and 1 trader lost over $1,000 gross. Pretty solid. I was #7 of 31.

Have a great weekend. Next week this blog will be chock full of posts.

"Lucky Pierre" - Trader D, $9,083 on 162k shares traded.

2. Trader H*, $5,770 on 8,800 shares traded.
3. Trader F, $3,328 on 94,100 shares traded.
4. Trader E, $2,872 on 32,600 shares traded.
5. Trader M*, $2,470 on 0 shares traded.

"Chambermaid" - Trader B, -$9,952 on 549k shares traded.

2. Trader P, -$789 on 80,400 shares traded.
3. Trader I, -$636 on 62,000 shares traded.
4. Trader 12, -$90 on 15,400 shares traded.
5. Trader 3, -$41 on 26,800 shares traded.

(Note, Trader 12 found the RO through this blog. Wish him well.)



Click here for Brian's take.

Linkday

- Which 3 traders from the RO are pictured here?

John Thain spent 1.2 million to redecorate his fucking office. Here's a list of some of the more egregious items. How about $35k for a toilet?

Exclusive footage of "the Fly" at his block party in Staten Island.

Ray parses the new Neil Young song in which he takes shots at Wall Street. Is Neil Young a hypocrite though or what? I mean, here he is cashing in on the bailout while complaining about rich dudes...

New conspiracy theory... despite loads of anecdotal evidence, Americans aren't dumb. Instead, Europeans just set up pictures on the Internet of dumb Europeans and call them Americans.

The HCPG guys are posting to their blog again. Like animals, actually... Here they post a transcript of a recent Warren Buffett interview. They wish "out loud," that there were more men in the world like Buffett. My guess, they really just wish there were more men in the world...

Howard complains about the cost of the Obama inauguration and draws my ire. Actually, Howard, it had nothing to do with the inauguration thing... I just hate the phrase "Color me ____"

More ire was drawn this week when Henry Blodgett described his plan to save the NY Times. James Surowiecki disagreed. Actually, I'm just posting this link because I want to be hired by the New Yorker. Quick, everyone click on James Surowiecki name NOW! Okay, Mr. Surowiecki, now that I have your attention... SAVE ME! I'm a stock trader but I want to live on a farm in Maine and write about the dawn and the sound that loons make swimming on dark empty ponds. Email me dude. Thx.

But look, if Surowiecki won't help me out, perhaps Jon Stewart will. In fact, if I had a half hour to live and the choice between watching The Daily Show or reading The New Yorker, I'd pick watching The Daily Show. Okay, quick! Everyone click on Jon Stewart's name NOW! Mr. Stewart, how's it going? Look, SAVE ME! I'm a stock trader, I run a third-tier blog, but what I really want to do is live in NYC and poke fun at politicians that I hate! Email me dude. Thx.

A neat list of where all that TARP money went.

Rick Sanchez tears "Joe the Plumber" a new one.

But before you start thinking I like Rick Sanchez, let me share with you one of my favorite video clips ever... "Do it!"

You're a racist.

Diane Sawyer got a little wasted at the inauguration.

I am a member of the Wolfpak, I admit...

Trader X is revamping his blogroll. In an effort to "guilt him" into including me on his, I will link him here.

Okay, that's it. I know I engaged in lots of "third-tier" behavior this week (especially in this post, sheesh!) and didn't write one history or around the house piece and I apologize. Just know that next week will be the best week ever here. I already have an around the house post set to go for Thursday and a history post nearly complete for Wednesday.

Don't miss them. Because soon, when I'm a writer for The New Yorker/The Daily Show, you'll be able to say you knew me back when I was "third-tier."

Animal Collective, "My Girls"

The RO Report, "Confusion" Edition

I think today was pretty difficult.

Sure we had a nice dive this morning, but I had a tough time padding my account during it. Instead, it gave me a nice short bias going into the afternoon which nearly killed me around 2pm when the market squeezed hard.

After two days of nice clean trending closes, today was a rude awakening. Just more proof that you constantly have to switch up your game. What worked yesterday doesn't necessarily work today.

So I don't have a great read on the market going forward. I look at the SPY chart and feel like we're forming a bear flag and will soon break 80, but enough smart people see some bullish divergences that it's giving me pause. Hopefully tomorrow clarifies the picture a bit. I'd like to go into the weekend with my sanity and my finances intact.

Anyway, it was a mixed day in the RO. Trader B nearly reversed all of his gains from yesterday, which couldn't have been pleasant, and no one really cleaned up.

The best you can say about the RO performance today is that most people managed to stay somewhat green. Out of 31 traders today, 21 were gross positive, or 68%. 8 traders made over $1,000 gross, and 4 lost over $1,000 gross. I was #13 of 31. Underperforming, but happy to come out of the day alive.

"Chambermaid" - Trader B, -$35,070 on 635k shares traded.

2. Trader 9*, -$2,072 on 7,100 shares traded.
3. Trader I, -$1,236 on 3,000 shares traded.
4. Trader 6*, -$1,105 on 300 shares traded.
5. Trader O, -$776 on 31,600 shares traded.

"Lucky Pierre" - Trader F, $3,284 on 63,100 shares traded.

2. Trader D, $2,905 on 131k shares traded.
3. Trader A, $2,126 on 258k shares traded.
4. Trader Z, $2,032 on 329k shares traded.
5. Trader J, $1,909 on 75,000 shares traded.

Aflac In Pain

Look for the Aflac duck at your local Chinese restaurant soon!

"Cubicle Boss"

This video is hilarious. Again, another reason to be a trader, no deranged boss.

Pixies, "Head On"

The RO Report, "We're BACK!" Edition

After a few choppy weeks to begin the year, it appears that the good times are back.

The RO kicked ass today, demolishing all other prop firms in the process. Take a look around you tomorrow when you go to trade at your "third-tier" shop. See those guys? A bunch of losers they are. We've got all the winners over here... it's almost unfair.

Of course, it helps that the market broke out at around 1:30 and never looked back. Nice clean closes these past couple of days, reminiscent of the autumn. We were afraid they were gone forever. I'm sure some of the guys in your office did okay too...

Anyway, you know how I like to talk about perspective. If you got some perspective these last couple of weeks, cherish it... If you've made a little money these last couple of days, respect it...

Always remember that your job isn't only to make money, but to be in control of your emotions and expectations. The good times come and go, as do the bad. Always remember, this too will pass... so, after that speech, we will humbly accept (granted, I talked a little smack) these gains and see what tomorrow brings.

Out of 29 traders today, 25 were gross positive, or 86%. 17 traders made over $1,000 gross and only 2 lost over $1,000. Nice, solid numbers. I was #12 of 29. Underperforming, but okay with that, since I had some awful overnight positions that I had to overcome.

"Lucky Pierre" - Trader B, $40,983 on 911k shares traded.

2. Trader Z, $27,577 on 380k shares traded.
3. Trader F, $16,770 on 262k shares traded.
4. Trader C, $11,165 on 405k shares traded.
5. Trader N, $9,409 on 166k shares traded.

"Chambermaid" - Trader 7, -$2,293 on 32,000 shares traded.

2. Trader D, -$2,024 on 286k shares traded.
3. Trader I, -$676 on 12,200 shares traded.
4. Trader T, -$127 on 7,600 shares traded.
5. Trader U*, $2 on 0 shares traded.

Brian's take...