September 1, 2014
Dear Clients and Friends, Do you know what makes a “market”? A market is made by two or more people coming together and agreeing upon a set of conditions, such as price, quality and delivery date. The same rules apply for tomato’s, chocolate bars, automobiles and stocks.
In my 30+ years of trading at the Chicago Board Options Exchange, there were hundreds of traders in the pit shouting and waving their arms, while thousands of investors, speculators, pension managers simultaneously used brokers to haggled over price and quantity between 8:30 AM and 3:15 PM CST.
Every person had a different opinion on the ultimate outcome of the trade. Each transaction created something called price discovery. As traders we became experts in posturing, acting, shouting, whining, teasing, swearing, punching, biting, faking and bluffing until we made a trade.
But you didn’t know the outcome until after you made it…. To read the entire Labor Day 2014 issue of Fear and Envy, click here……