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�PitNews.com Magazine February �010 ��
Disclaimer: The risk of loss in trading futures, options, stocks, and forex can be substantial. See Page 13 for more information.
In this issue...James Mound: Q & A
07
Editor in Chief:Lan H. Turner
Editor: Scott [email protected]
Managing Editor: Aaron [email protected]
National Sales Manager:Erik Akins
Art Director: Matthew Langenheim
Production Manager: Keegan Garrity
Controller: Joseph Chambers
Webmaster: Jacob Anawalt
Website:http://www.pitnews.com
Email:[email protected]
Off The Wall By: Jack-709
Track ‘n Trade Pro By: Scott Barrie
03 PitGuru.com is a unique website dedi-cated to bringing the wisdom and experience of floor traders to the public...
The cyclical nature of the marketplace is at the crux of much of technical analysis, from indicator length (periodicity), to general timing, seasonality as well as patterns...
Long time Wall contributor, Jack-7, shows us his thoughts and trades when it comes to the Sugar market.
�PitNews.com Magazine February �010
Disclaimer: The risk of loss in trading futures, options, stocks, and forex can be substantial. See Page 13 for more information.
PitGuru.com is a unique website dedicated to bringing the wisdom and experience of floor traders to the public. Through the weekly reports, which are published on both pitguru.com and our very own pitnews.com, the daily
live audio commentaries from the floor, the blogs, Twitter posts and media broadcasts, The Gurus make this a reality for free to registrants. PitGuru Premium takes the con-cept to the next level with SMS text message trade alerts live from the trading floor, daily market commentaries from 4 gurus covering 5 market sectors, and actual email mentoring by the gurus for subscribers! The Gurus even utilize Track ‘n Trade charting software in their analysis each week!
Daniel CroninEnergies and Metals Guru
Daniel Cronin has spent years on the floor of the Nymex and is part of one of the largest energy floor brokerages in the business. His extensive experience stems from not only his Pit background
but also through intense studying and implementation of complex technical analysis and market trading techniques via the mentorship of the now retired Ralph Acampora. Mr. Cronin brings subscribers a rare combination of book smarts and real world trading experience in one of the
Getting to KnowPitGuru.com
�PitNews.com Magazine February �010
Disclaimer: The risk of loss in trading futures, options, stocks, and forex can be substantial. See Page 13 for more information.
most volatile market sectors in the futures industry.Q: What are the benefits of the floor that will disappear
when everything eventually goes electronic?A: I understand that market transparency is a good thing
that will open futures trading to a wider audience, but it will be a real shame when the floor finally goes. Even now it is a ghost town compared to just a few years ago. The crude oil option pit still has a lot of life but go spend a minute in the metals option pit and sometimes you can hear a pin drop.
For me the biggest weapon I had in my trading on the floor was that I was in the center of the action. That meant seeing the volume come in from both big trade houses and speculators. If MF Global came in and bought 10,000 $75 crude calls and there were a ton of locals selling into it I would know there was a good chance these locals needed to buy futures to cover the shorts and that the price was going to run up a bit. Once that hedge was executed there would be little left buying the market unless a bunch of stops got triggered, which the guys on the floor could spot as well. If news came out it ran through the floor like wild fire and we were the center hub for all of it. When the floor dies, this will die with it and the central source for information will go online and get scattered. At PitGuru
we try to maintain that central source for data.
Frank LaMantiaSoon to be Dr. LaMantia,
Financials Guru Frank LaMantia is not only one of the most educated traders on
Wall Street, but also maintains an industry resume of substance and depth. Frank has worked extensively on an Institutional preferred stock syndicate desk, as a govern-ment bond specialist, and as a financial advisor all the while achieving multiple licenses in the finance field. With an extensive and impressive client list (including Citibank, Bear Stearns, Lehman Brothers, AG Edwards, Mesirow, UBS, and numerous Hedge Funds), Mr. LaMantia brings his one-of-a-kind background to his current occupation of full-time trader.
Q: What happens behind the scenes in the financial world that an industry veteran like you knows that others may not be aware of?
A: Well if I tell you then that statement wouldn’t be true anymore, but here is one
interesting behind-the-scenes story few people outside the business know about. The whole IPO side of the stock market is something few outsiders truly understand. There were a lot of hedge funds that were with a firm just to gain access to the IPO world. A number of these customers would only get IPO shares if their trading volume was sub-stantial and, to create a false sense of volume, they would transact a lot of trades and basically churn themselves (trade in and out just to generate trade volume). Basically a hedge fund would eat $3k in slippage and commissions and get 10,000 shares of an IPO and some secondary of-ferings. They would get rated on an index by the brokerage and that index would determine the volume of IPO shares they would receive. Your index level would even be further manipulated by the amount of time you stay in the IPO after it launches, which is tantamount to saying you can’t exit the trade for a period, say maybe 30 days, or your index score would be hurt for future IPO shares you might get. This whole side of the industry was a great example of the inner workings of the stock world that few outsiders understand. This was manipulation of the system at its finest and everyone helped the process in one way or the other, while the stock firms structured the system to push volume and stickiness of their IPO offerings. Anyone on the inside would figure that the IPO would stick for about 30 days and then sell volume would come in if the profit level held above the pre-offer price point.
Matthew PierceGrains Guru Matthew Pierce has
real hands-on experience within the industry in addition to his floor trading expertise and top-notch education at the University of Illinois College of Agriculture. Matthew has literally cul-
tivated the perfect professional career as a grain expert by working with the industry’s most recognizable companies such as Cargill, LaSalle Group, Conagra, Walsh Trading Inc. and many more. In addition to trading on the floor of the Chicago Board of Trade, Mr. Pierce writes what many in the business believe to be the best kept secret industry trading reports available anywhere.
�PitNews.com Magazine February �010
Disclaimer: The risk of loss in trading futures, options, stocks, and forex can be substantial. See Page 13 for more information.
Q: You have sometimes been referred to as the ‘grain insider’. How did you earn such a title?
A: Years ago I was linked up with a very well connected trader and he shared those connects with me. Now I have customers and key connections all over the world – coun-tries like Ukraine, Russia, South Africa, Nigeria, Thailand, Argentina, Uruguay, Brazil, Venezuela, Columbia and many others. They give me intel and I share with them what I know and it works out to be a great reciprocating relationship. I can get info on anything from delayed ship-ments at the ports in Brazil, or crop damage in Argentina. Sometimes I might get a scoop on Russia buying a bunch of soybeans or a large hedge firm coming in to buy corn puts to hedge a hefty physical delivery coming up. On many things I would get maybe 15-20 minutes lead time compared to the rest of the guys on the floor and certain key news events I am maybe an hour or two ahead of the game. This access to information is the key ingredient to my success and my ability to service clients. The floor is dog-eat-dog and the best in breed is the one that is ahead of the information and knows what to do with it when they get it. When I do the audio commentaries and trade alerts on PitGuru this information is often the basis for my recommendations and market updates. I think of it as doing my part in disseminating and distributing the criti-cal information in the grains business that few people get a chance to find out ahead of the pack.
Jurgens BauerSofts Guru Jurgens Bauer owns
and operates his own order execution firm on the ICE trading floor. He has been a member since 1987. His firm, Jurgens Bauer and Associates, special-izes in executing option orders for a wide array of customers and a variety of industry participants, including
individual speculators, funds and members of the trade. While Jurgens has been an active member of the trading community he has also spent time since 2000 working at raising awareness of environmental commodities, educat-ing industry professionals on emissions trading, brokering transactions between private counter parties and develop-ing SO2 and NOx contracts for the NYMEX.
Q: It has long been told that you started the cotton options pit - how does something like that happen?
A: Well I worked for a big trader back in the day and he wanted to create option
open interest so I worked with the CSCE (coffee, sugar & cocoa exchange) and opened an option pit right next to the futures pit for cotton. At first I would have to create interest so I would offer an option at 60 and bid 58 then offer it at 59 then bid 59 and at one point I would bid 60 and offer 59! That meant anyone who understood anything could say, “bought and sold” and clear instant ar-bitrage, but back then to start interest you had to hand out great opportunities to those willing to do volume. Then I recruited some guys from the futures pit and before you knew it there was volume and interest. Keep in mind that an options pit is not only a speculative investment but can be a vehicle for hedging exposed futures (and vice versa) so it opened the door to expanded trade in cotton both on the futures end and on the options end. This is really how all new pits would start and the ones that made it were the ones with real interest - otherwise they fizzled out.
The cyclical nature of the marketplace is at the crux of much of technical analysis, from indicator length (periodicity), to general timing, seasonality as well as patterns. John Ehlers and Ric Way’s method of extracting
the markets cycle is excellent, however many traders tend to be more visual, less empirical, and rely more upon their own instincts as well as visual representation of the market. Track ‘n Trade Pro is the answer to these traders.
Track ‘n Trade Pro can be suitable to both types of traders. For the empirical trader, Track ‘n Trade Pro comes complete with over a quarter of a century of contract by contract futures data as well as the
ability to make daily, weekly or monthly continuous contract charts and data - the High Finance version has similar Equities and Forex data - as well as the ability to export the data seamlessly to other various programs, such as Microsoft Excel or any other program which accepts ASCII, or TXT data. For the visually based trader Track ‘n Trade Pro, and its sister program High Finance, charts are available for visual inspection. More visually based traders will delight in the “DAY COUNTER” tool in Track ‘n Trade Pro, which displays not only the number of trading days between two points, but also the actual number of calendar days (Figure 1).
By: Scott Barrie
Track ‘n Trade
Pro
What YouNeed toKnow
Track ‘n Trade Pro also has the ability to show the moving average convergence divergence indicator (MACD) in many formats (Figure 2). The MACD indicator also shows the cyclical nature of the market as the indicator by its very definition detrends longer term trends from shorter term trends. As such, the astute and dedicated speculator can
�PitNews.com Magazine February �010
Disclaimer: The risk of loss in trading futures, options, stocks, and forex can be substantial. See Page 13 for more information.
study his/her markets of interest and learn the basic precoc-ity of the cycles which effect pricing. In addition to the MACD, Track n Trade Pro can also show traders Fibonacci Date cycles, Gann Arcs, as well as a plethora of other useful indicators which help to decode the mystery of the mistress of the markets.
FIGURE 2
FIGURE 1
This Month’s Off the Wall Chart comes from Jack-7:
Pulled off the wall From:The Pitnews.com ForumsVisit The Wall at:Forums at: http://thewall.pitnews.com
The Wall is PitNews.com’s trading forum, found on the web at http://thewall.pitnews.com or from the tab link on the front page of PitNews.com. Each month, we highlight a chart submitted by one of our users.
Get into the action! Start posting on
The Wall, and maybe you’ll see your
article or chart highlighted here in our
next issue of PitNews.com Magazine!
http://thewall.pitnews.com
Long time Wall contributor, Jack-7, shows us his thoughts and trades when it comes to the Sugar market.
“Sold 2 bought back 1, open order to buy back other @ 12. Last 5 weeks prior to expiration I cancel buy back and keep all premium. Last month prior to expiration is when premium decays with time fastest. ”
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GENERAL DISCLAIMER: THE DATA CONTAINED HEREIN IS BELIEVED TO BE RELIABLE BUT CANNOT BE GUARANTEED AS TO RELIABIL-ITY, ACCURACY, OR COMPLETENESS; AND, AS SUCH IS SUBJECT TO CHANGE WITHOUT NOTICE. PITNEWS.COM, ITS EMPLOYEES AND CONTRACTORS WILL NOT BE RESPONSIBLE FOR ANYTHING WHICH MAY RESULT FROM RELIANCE ON THIS DATA OR THE OPINIONS EXPRESSED HEREIN. THE OPINIONS EXPRESSED HEREIN ARE NOT NECESSARILY THOSE OF PITNEWS.COM, ITS EMPLOYEES OR AFFILIATES.
DISCLOSURE OF RISK: THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL; THEREFORE, ONLY GENUINE RISK FUNDS SHOULD BE USED. SPECULATIVE VEHICLES SUCH AS FUTURES, OPTIONS, AND FOREX MAY NOT BE SUITABLE INVEST-MENTS FOR ALL INDIVIDUALS, AND INDIVIDUALS SHOULD CAREFULLY CONSIDER THEIR FINANCIAL CONDI-TION IN DECIDING WHETHER TO TRADE. OPTION TRADERS SHOULD BE AWARE THAT THE EXERCISE OF A LONG OPTION WOULD RESULT IN A FUTURES POSITION.
SEASONAL DISCLAIMER: SEASONAL TENDENCIES ARE A COMPOSITE OF SOME OF THE MOST CONSISTENT COMMODITY FUTURES SEA-SONALS THAT HAVE OCCURRED IN THE PAST 15 YEARS. THERE ARE USUALLY UNDERLYING, FUNDAMENTAL CIRCUMSTANCES THAT OCCUR ANNUALLY THAT TEND TO CAUSE THE FUTURES MARKETS TO REACT IN SIMI-LAR DIRECTIONAL MANNER DURING A CERTAIN CALENDAR YEAR. EVEN IF A SEASONAL TENDENCY OCCURS IN THE FUTURE, IT MAY NOT RESULT IN A PROFITABLE TRANSACTION AS FEES AND THE TIMING OF THE ENTRY AND LIQUIDATION MAY IMPACT ON THE RESULTS. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT HAS IN THE PAST, OR WILL IN THE FUTURE, ACHIEVE PROFITS USING THESE RECOMMENDATIONS. NO REP-RESENTATION IS BEING MADE THAT PRICE PATTERNS WILL RECUR IN THE FUTURE.
HYPOTHETICAL PERFORMANCE: RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTA-TION IS BEING MADE THAT ANY ACCOUNT WILL, OR IS LIKELY TO, ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PER-FORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRAD-ING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM, IN SPITE OF TRADING LOSSES, ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FAC-TORS RELATED TO THE MARKETS, IN GENERAL, OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFOR-MANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.
