Hello Sophisticated Spenders!
Sorry for making you wait for part 2 of this series.
If you haven’t read part 1, please stop here and read it…now!
Being a day trader was like being a part of a different culture.
Our office was on the 16th floor in Downtown Chicago overlooking Lake Michigan. There were 4 rows of long continuous desks and we were side by side. We each had 2 computer screens, a Bloomberg terminal (for charts and news) and a phone.
The phone was there for announcements. Our boss’s voice would bellow out of the speaker with info or you’d get a personal invite to his office (not a good thing).
I’d arrive at the office at approx 8 AM ET (7 am Chicago time).
You HAD to be in place for the “number.”
There were monthly economic indicators that made the market move like crazy.
Unemployment, GDP, Inflation, Trade Deficit, Retail Sales, bombings and etc.
How the market moves:
I am going to try to not confuse you, but it’s crazy confusing.
What you normally see on TV at the bottom of the screen on CNN is a ticker tape. And sometimes a stock’s symbol is called it’s ticker.
So naturally a tick is “any movement up or down in the price of a security.” (Investopedia)
The price of a tick varies with each traded commodity (click here to see an outdated looking chart).
Each tick in my world was a $10 movement.
“Lots” are the number of units you are actually trading.
I traded the EURUSD which is the price of the Euro expressed in US Dollars. Right now that number is 1.12620 which means 1 Euro = 1.12620 dollars.
Now that we have all of the technical stuff out of the way I’ll tell you about…
My typical day:
When I first started working I only traded 1 lot. So I’d get to my desk and peruse the Bloomberg terminal or we’d all crowd around one person’s terminal and speculate about what we thought would happen when the “number” was announced. Will unemployment be higher, lower, or exactly as predicted? We’d look at charts to see if we should bet that the prices are gonna go up or down based on every single possibility.
When it was time on the number, the room is quiet. We are all focused, staring at our screens with our fingers on the mouse ready to hit that button. Our boss comes on the loud speaker to announce the number so that we can be in place to jump right into the market after the announcement. Then boom!
The market moves FAST!
I’ll use today as an example.
Jobless Claims was announced at 8:30 AM ET
The prediction was 265,000
The actual number was 260,000
Here’s how the marked moved in that one minute!
In one minute the marked swung from 1.12560 to 1.12839.
That’s a swing of 0.00279
This is where I’m gonna get the math wrong because it’s still a little cloudy.
Each decimal represents a $10 move.
So if I would have been fast enough to have bought at the bottom and sold at the very top, I would have made $2,790 in 1 trade.
Wait, there’s more…
If I were SUPER fast, I would have sold an extra share while at the top and bought it back at the bottom and made another $2,790 for 2 total trips that equaled $5,580.
Had I been with the company and proven myself to have been a stellar trader, I would not have had a measly lot size of just 1. I would have had 100 lots and I would have made $558,000 in that 1 minute!
Yes, over a half a million dollars in 1 minute.
That happens all of the time in world of day trading.
That’s why a seat on the board is so expensive.
That’s why day traders scream and shout and break things when they are on the wrong side of that trade. Or they get pissed when they don’t get in at the right time or they don’t get out at the right time.
Look at what happened 2 minutes later…
pretty much nothing.
The day is pretty much over.
The adrenaline rush is gone.
You’re either crazy rich or fired!
The people who are still here are the ones who lost money and are trying to “win it back.”
Which brings me to…
The day I was fired…
And you’re gonna have to wait till part 3 to hear all about that day 🙂