Only the Paranoid Survive

Only the Paranoid Survive - Andy Grove

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I get pretty nostalgic around November 1st as it was 16 years ago I loaded everything I owned into my car and drove to Chicago to start working at the CBOT and CME after just over a year at the KCBT.  Years ago on the TGV between Bordeaux and Paris, I wrote a little backstory on the lead up to getting a start in Chicago, linked here.  A couple other coincidences occur w/this date such as getting my own P/L from the locals who originally backed me, going fully independent years later and also weathering the MF Global debacle.  Trading days have however changed, open outcry at the Board of Trade has been replaced by my 14 month old daughter crying out, bored of dad….and occasionally giving me a huge scare by walking off w/the wireless mouse from my trading rig when she wanders in and I’m not looking.

It’s also around this time of year when the annual FIA expo occurs and for the past decade and half, I’ve tried to visit annually.  The professional trading industry doesn’t have other broad industry gatherings besides this expo, so it’s rare to otherwise take a concentrated pulse of the trading biz outside of the FIA show.   A while back, I  discussed w/a friend about how much the FIA expo has changed from initially being about exchanges, brokers and software analytics vendors in the early 2000s to what’s now a tech oriented showcase of FPGAs, laser/microwave transmitters and fiber lines.  Citing one of our mutually favorite books, he reminded me of the line from Andy Grove’s Only the Paranoid Survive about how, “the trade shows seem weird” when industry inflection points occur and it was certainly true.  That point has certainly long passed, but even though I’ve traded on Globex since 2001, the pace of technological change which occurred is astounding when recalling it all.

Trading skills atrophy at an astounding rate in even the best of circumstances, so with the massive technological shift, anyone who stepped away from trading the past decade and missed the subtle shifts, both the FIA show and watching markets must look like absolute science fiction now.  Even in days of open outcry, the market shifts leave one set of skills irrelevant to another era which is why I’ve keep this website focused on historical stuff and never on “how to” trade.  One of my favorite hockey ads from a decade ago illustrates it well:

One other humorous thing that comes to mind is how the technical transition of the industry also really changed the employee dynamics compared to how it used to be.  Because anything tech oriented needs to be approached in a team manner, the remaining prop firms really provide a lot of perks and benefits to attract and retain talent.  Without question, raw intelligence of those involved in trading has taken a quantum leap as a result of the industry coddling employees in comparison to what can really only be described as previously neglecting junior traders like junkyard dogs.

Anyone that wanted to trade under the “old school” system had to endure a much harsher road to determine their commitment.  In my own case to get backed by a couple locals, I left a job paying $3k/month for their $1800/month (which was hard even at age 20) to clerk on the floor for many months then worked 14 hour night shifts for many more months, until getting on a badge and put into the pit.  Nothing beyond the bare minimum was provided and it was all just for a chance to trade, on a profit split of about 50% of course.  No contract, no handshake, no actual commitment beside a loose verbal agreement.  All the guys that I worked for came up the exact same way and it appears that I’m among the last of that generation to have entered trading that way.  However, it’s my intention to keep serving proof as the trader version of the infinite monkey theorem for a long time forward.

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