Trading Reality Read Free

‘and they’re getting worse.’ Etienne, standing next to Bob, bridled.
    Bob frowned, but he was listening. ‘Of course they’re a mess! The market’s shot to hell.’
    I pointed to the computer. ‘With this system, I can see what the firm’s long and short positions are. And they make no sense.’
    ‘What do you mean?’ growled Bob.
    ‘For example, one trader is busy buying German government bonds, while another is happily selling German eurobonds. It’s crazy. Sure the government bonds are cheap, but the eurobonds are cheaper.’ I had overlaid a colour scheme that shaded the buildings blue if Harrison was long, and red if we were short. This had highlighted some ridiculous trading in the hour and a half following Greenspan’s announcement.
    Bob looked to Etienne. ‘Well?’
    Etienne looked confused and angry. He knew I was right, but he wasn’t going to admit it. He recovered swiftly. ‘This thing is dangerous, Bob. In a market like this the best thing to do is to sell anything you can as quickly as you can. You can’t afford to spend time mucking around with fancy machines. If the market falls again tomorrow, those positions Greg and Mark have put on will be a problem. A big problem.’ Bob was watching him thoughtfully. ‘Nothing can beat a good trader’s gut-feel, Bob. You know that.’
    I was about to open my mouth to protest. With the trades we had constructed we should have been all right if the market moved either way. Then I saw Bob’s face, and kept quiet.
    ‘I sure hope you’re not just pissing away more money, kid,’ growled Bob, and he stalked off.
    I re-entered Bondscape’s world. Over the next hour or so, I picked out a couple more trades to put on. Eventually, the landscape stopped shifting, indicating that the market had calmed down, and I took off the headset and stretched. ‘How much are we down now?’ I asked Ed.
    It took him a few minutes to do the calculations. ‘Still two point one million,’ he said, glumly.
    I rubbed my face with my hands. Shit! It took a long time to earn two million dollars, and it had only taken an afternoon to lose it. Why oh why hadn’t I hedged my positions that morning?
    Greg came over and leaned against the desk. ‘How much did you drop?’
    I winced. ‘Over two mill. And you?’
    ‘A touch more. But I’ll get it back. I’m long two hundred twenty of the Novie twenty-ones.’
    ‘Jesus! I hope you know what you’re doing.’
    ‘I do,’ said Greg with a relaxed smile. ‘Thanks to that machine of yours. Was Bob impressed?’
    ‘Not really,’ I said. ‘I think he prefers gut-feel to rational thought. I hope to God those trades we put on work.’
    ‘Don’t worry,’ said Greg, ‘they will.’ With that he went back to his desk to tidy up.
    ‘Are you OK, Ed?’ I asked.
    Ed nodded. He still had a scared look in his eye, but he had coped well.
    ‘That was a tough day,’ I said. ‘You did well.’
    He smiled, and returned to the paper trail of our afternoon’s trading.
    I stood up, and looked around the huge trading room. There were nearly two hundred trading desks in eight long rows. Bonds, foreign exchange and equities were all traded from the same room. There were no windows, although the walls were lined with a series of glass meeting rooms. At the end of a turbulent day, the floor looked as though a hurricane had hit it. Desks were cluttered with screens, computers, phones and intercoms, and there were bits of paper everywhere. Chairs were pushed haphazardly between the rows of desks, and traders were milling about, stretching, looking for a cup of coffee, chatting.
    I headed over to the exit on the far side of the room. I walked past the equity group. Harrison Brothers was mostly known for its expertise in the bond markets, but it felt it had to have a presence in equities. The small group sat underneath a giant ticker-board, like an electronic frieze, giving constant updates on the prices of the thousands of stocks quoted on