The Coolest Guy in the RoomIt is the hardest game in the world, but it’s also the best game in
the world.
Q: What makes stock trading and futures trading so different?
A: Volatility. Think about this: The Russell 2000 is trading at
around 730 and it represents$70,300 worth of stocks, but you’re
only going to need a couple thousand dollars to buy the contract.
So for$2,000, you can buy$70,000 worth of stock. It’s very highly
leveraged. It is traded by the best of the best, and their objective
is to take your money, and they’re very good at it. I tell new
traders it’s like deciding you’re going to play football and lining up
against a professional team your very first day. They’re going to
kill you.
Q: What about the physical differences between the two mar-
kets? The fact that stocks have a Level 2 with various market makers
displaying a variety of bids and asks, whereas futures are traded
through a central anonymous book?
A: It’s been a while since I traded stocks and looked at Level 2.
There are probably fewer games played with futures. However,
that doesn’t mean that there aren’t plenty of games played.
Q: The anonymity of the book makes it advantageous to trade,
because it hides your own order flow. But it also makes it extraor-
dinarily difficult to read the true directionality of the instrument,
wouldn’t you say?
A: I think that’s true. The other thing is, I hate for people to try
to read too much into what we’re seeing in the book. If I were a
couple hundred contracts into a trade, and I wanted to sell them,
I certainly wouldn’t put them out for sale and show them. I would
try and hide what I’m doing, and I think that’s true of all the really