ONE OF THE BEST TIMES IN HISTORY TO BE A TRADER/INVESTOR IS RIGHT NOW
Hey there you savvy trader,
In my early years at the Chicago Board of Trade (CBOT), I used to lament that I was born just five years too late to get in on the 1980’s financial boom that made pit traders filthy rich. “Missed it by that much,” as Maxwell Smart would say. And just like that Get Smart reference from the 60s, a lot has changed in the markets since the 80s.
Our Fathers’ Stock Market
The old boys club of the CBOT was once home to the most millionaires per square foot in the world. Back when a million was serious money.
That’s because the market insiders and fatcats enjoyed a massive trading edge in the pits before electronic efficiency, a.k.a. – tech, democratized trading.
“Outsiders,” (regular customers like us) had to call their broker with an order to buy or sell, and this set off a chain of events. The broker called the trading floor and I ran, yes physically ran, to the corresponding station to find the person wearing the correctly colored jacket. This person would then execute the trade. With the order filled, the endorsed paper was thrown on the floor. Another runner would find it, return it to the broker’s desk who called the customer back with the price.
It was fast. It was furious. It was organized chaos.
It was not efficient.
Now that entire process has been streamlined. Those ridiculously long order times are now dwarfed by the milliseconds of current computer trades.
The antiquated inefficiency for outsiders almost ensured that floor traders had huge time advantages to react to news and events. This led to decades and decades of ridiculous riches for the exchange members.
I cut my teeth in this environment.
Fresh faced and right out of college, I was picked out of a crowd, because of my height, as a runner making $2.75 an hour. Learning the business from the bottom, I worked with Ivy league grads and street wise guys who didn’t finish high school…Your address didn’t matter, trading was a skill only taught by doing it back then.
Over time, I progressed to trading on my own, but the technology creep was always nipping at my heels. Markets were beginning to operate nearly 24 hours a day, though you still couldn’t place a protective stop overnight. You had to watch foreign market moves instead of sleeping…
Floor traders don’t really trade, they scalp buying at the bid and selling at the offer to make a tick. Multiply $31.25 in Treasury Bonds by dozens and dozens of trades and it was very lucrative each day.
The baddest of these Bond traders, and I mean that in a good way, had a thousand contracts or more at a time, seeing swings of tens of millions in mere minutes…the legendary Tom Baldwin, the Michael Jordan of trading for my era, has a monstrous estate up the road from my beach house today.
The Fintech Revolution
Then, the financial market’s slow, but eventual embrace of technology literally changed the game, creating the hybrid of financial technology, or fintech.
These electronic markets essentially eliminated the need for floor trader “liquidity” and all of a sudden anyone, anywhere, anytime could trade at the click of a button.
Endless opportunities are now at our fingertips. Stocks, futures, options…up, down, volatility and time decay strategies make NOW the best time in history to be a trader!!!
You no longer have to be in the boy’s club to get ahead. No barriers to entry exist, as all orders are equal, and instant. No matter who you are.
This is no longer our dads’ stock market. Today’s market now runs on fintech.
The institutional traders still exist, and we’re still the “outsiders.” But now, we have the power of tech in our hands.
In addition, commission costs have largely been eliminated and most markets now have very very tight spreads – meaning you can execute your trading plan with precision. You can strategically get in thousands of shares, contracts or options, and when it’s time to get out, exit buyers are standing by as well.
The glory days of pit trading are done and more glamorous in retrospect than screaming and sweating for hours in an animal-like pen environment for table scraps…
It’s like classic cars. They’re beautiful to look at, but do you really want to drive every day without power steering, and anti-lock brakes?
Trading, which is investing with a plan, is the greatest business to be in, especially now. Amazing opportunities abound, and you can decide when you want to take advantage for yourself and your family.
It doesn’t matter if it is near a holiday, earnings season, upcoming election, rising rates, deflation or inflation, money can be made by anyone with the right skills for success.
Now if you’re looking for someone to show you the ropes, and how to leverage these amazing tools for maximum opportunities…I’d love to help.
If you want to learn more about how I find the opportunities in this wild market click here to catch my free LIVE event tomorrow January 12, at 1 pm ET where I reveal Warren Buffet’s secret trading strategy!
Happy trading,
Alan Knuckman