Ask mrbaseball about trading for a living

[mrbaseball]

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What returns were expected of you in the various assets?

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Not to lose money! But it depends. As a market maker or spec trader you don't really think in terms of returns. You start each year zeroed out. For certain specific trades (ie arbitrages) you have an idea of what you are shooting for percentagewise but it varies from trade to trade. One trade might have a goal of 10% and another might have a goal of 25%. For example I do one arb where I sell it 10% or more over fair value and buy it back around 4% over fair value. Sometimes it will get as much as 15-20% over fair value where I sell as much as I can. I still don't buy it back until it gets back to around 4% though.

[MrBlue]

How did you get your first job as a market maker?

[mrbaseball]

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How did you get your first job as a market maker?

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I was just finishing up my MBA in Finance and I really wanted to get into trading and particularly options. Since I am from Chicago I went and dropped off resumes and talked to anyone who would listen to me at the CBOE and CBOT. But that's not how I got it. Actually I answered an ad in the newspaper. My first firm was big at the CBOE and were looking to expand into interest options at the CBOT and targeting fresh MBAs so it was just what the doctor ordered.

[MrBlue]

Thanks for sharing.

A friend of mine with BS in CS from a top tier school and a MS in CS from U. Wash w/ 5 yrs of experience at MSFT wants to move back to NYC and become a trader. Does he have a realistic shot? Do you recommend him going to get a MBA?

I've been advised that a quant dev is his best shot but he doesn't want to be a quant.

[whyherro]

This might be a little off topic but what is your opinion on black box algorithmic funds?

[ItalianFX]

Best Trade? Worst Trade?

[CrushinFelt]

Mr. B.

I work for the CME... would you think a product that is equivalent to the VIX for grains (soybeans, corn, and wheat) would be worthwhile to develop? Please say yes!

[mrbaseball]

[ QUOTE ]
Best Trade? Worst Trade?



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Hard to say really? I have had so many trades in so many different situations. The one that strikes as the worst was the very first day of a speculative basket of spreads we decided to try. It took me 6+ months of rigorous backtesting and many meetings with the partnership hierarchy before the greenlight. On the very first day we sold 100 cotton spreads and that trade lost 100K by the close. It was part of a bigger basket though and eventually it became a very profitable strategy before the trade eventually dried up.

Best? Not really sure again but probably not a profitable one. Probably covering options shorts before a volatility explosion back in my market making days and staving off armageddon. The best trades are the ones where you dodge bullets and don't get rolled over.

[mrbaseball]

[ QUOTE ]
This might be a little off topic but what is your opinion on black box algorithmic funds?


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Funds? That's beyond my area of expertise. We do have a few guys who trade black box systems though. I'm not exactly sure what the actual indicators in the box are but I think they do okay. Basically the box trades it but they watch it and overide if the risks get out of line. Basically the black box is a perfectly disciplined but mediocre trader. Perfect discipline is real important though.

[mrbaseball]

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Do you recommend him going to get a MBA?

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I can't really say? I'm not sure what the environment is right now for getting hired. For me the MBA is basically worthless other than the fact it was a door opener. As far as what you learn as an MBA I feel is pretty meaningless to trading.