I am reading an excellent book about the late 1800's and the demise of the bison in America. Common to the 1860s were the buffalo hunters, many of whom would go out and take down 50 to 100 buffalo at a time, as many as they could skin in a day.The animals, short of site and strong of smell, would nose into the wind, and a sharpshooter could lay out dozens before the herd would break, never smelling danger if they were bulleted in the right order. Mostly cows, which had finer coats.
Money from shipping the hides East would provide the hunters and their crews with a stake for the tables in Hays or Kansas City. One dollar on a fast turn to be gambled at something more.
Reading the book, I am reminded of part of my past, a one year stint on the floor of the Chicago Board of Trade, my college for finance. In the early 1990's, the 30 year bond pit was the biggest trading arena in the world. 8 steps around a circle the size of a bullfighting ring, a very clear hierarchy established by your position and status on or proxmity to the top tier. The 1000 lot traders stood where they wanted, with brokers making clear way and obvious lines of site to the big prop traders who would take the other side of their orders. It is, by far, the most Darwinian environment I have ever been a part of - the strongest, most aggressive, and the fastest of mind rose above their peers.
To understand this space, imagine 500 people jammed in like sardines, all wearing wildly patterned lab-like coats with large plastic badges clearly visible for all to see - your acronym was the code by which you were tracked in a trade. I sold 300 contracts to YNG, I am into MCL for 500. All transactions engaged by a standardized set of hand signals and invariably a screamed confirmation. Written on paper cards in those years, handed to your trade checker who would race around the pit to find the opposing checker, praying like hell that everyone was literally on the same page. It was sheer madness, a highly orechestrated dance with fortunes at stake.
The pits were busy early and late on most days, around the release of government data that moved the markets. The big traders, the Tom Baldwins of the world, would only come in when there was a strong ebb and flow of orders - when Goldman Sachs et al were laying off cash trades in orders that added to billions. Floor traders made the markets, scalping a tick or two here and there, and making and losing millions in a day. At the end they typically went home flat, neither long nor short the market.
When the big guys were out, sitting their plush offices, off to the bar for a drink or to a local hotel for a nooner with one of their ring hungry clerks, the pit dwellers would work their way up to a higher step. They would literally step up, take on bigger trades, emulate the posture and aggressiveness of their seniors, like adolescent bulls sparring before the rut. To bring this story back, these young amibious traders were often Turks who had been blown out of their stake in the past, gone out and worked two or three real jobs for months to put together 20 grand and then back to the gambling hall of the bond pit to take their shot once more. Boom to bust, an expensive tuition paid more than a few times on average. No different than the buffalo hunters of a century past.
One story stuck in my mind, it speaks to the utter ruthlessness of this sea of predators that were the scalpers. I remember a day watching Baldwin come into the pit a half hour after lunch, when it was a mere trickle of liquidity. There was a kid who I had watched step up earlier that day, and who had been consistently making a move over the last weeks - he had beaten up a few smaller traders along the way, and made no friends in the process. As far as I could tell, he hadn't had any interaction with Baldwin before that early afternoon. They didn't exactly trade in the same flow, this kid was a ten lot trader.
Here he was in a dead calm market, and he'd put on a position that was bigger than he was comfortable with; I watched Baldwin sitting on the sidelines taking it all in, taking the measure of who was in for what and where the market was. As soon as this fellow took the top step and put on this 100 contract position, I watched Baldwin step in, bid the market three ticks away from the position this kid had, and quickly proceed to move the market a half point with a huge bid. As soon as the young overly ambitious trader coughed up his short and bought back the position, Baldwin sold the market off and walked away. In a few short minutes, the kid was taken down, his hard won stake blown out. He sat there stunned, not unlike a buffalo with a bullet through it's lungs, not yet aware that it was dead in its tracks.