I want to become a floor trader! How do I become one? (CBOT, NYSE, CME, NYMEX)

I’ve always been passionate about stocks, commodities, currencies, and trading the financial markets as a whole. One of my aspirations is to become a floor trader.

What’s a floor trader you ask? Well, have a look at this video first:

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(Soybean trading at the Chicago Board of Trade)

These folks trade on the floor of the exchange for their own accounts (contrast with trading through the internet or the phone). Trading on the floor of the exchange = FLOOR TRADERS.

If you look at the video above, trades are carried out based on the outcry system (i.e. traders shouting at each other) as opposed to the electronic system.

I don’t actually intend to become a floor trader indefinitely. I’d just like to experience the outcry system for once, and also, to be able to own a seat on the exchange. Then perhaps, lease the seat out to somebody else.

Anyway, as I’ve hinted above, to be able to trade personally on the exchange, you need to own a seat on the exchange or at least lease a seat from somebody else.

How much do these seats cost? Here are some indicators:

1. At the New York Stock Exchange (NYSE), a seat was sold for USD4 million in 2005.

2. At the Chicago Mercantile Exchange (CME), a seat can be bought for approximately USD1.5 million.


Yup, they are indeed expensive.

Below is a scene from the movie Trading Places, where the outcry system is shown. Watching the scene for the first time made my palms sweat like crazy. Haha 😀

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Here are a few more interesting videos:

1. A movie entitled FLOORED to be released in 2009

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2. Cotton Trading

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3. NYMEX Open Outcry Trading Challenge for Students

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4. Robert Downey Jr. commenting on NYMEX Floor Trading

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Disclaimer: This article is not a specific nor general advice on managing or investing your money. This article does not constitute a recommendation nor does it take into account your investment objectives, financial situation nor particular needs.

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Other related posts:

CFD Trading : An Introduction
CFD Trading/Share Trading : Setting Stop Loss
CFD Trading/Share Trading : Stop Loss in Perspective
CFD Trading/Share Trading : Being Long and Short (Concept of Short Selling)
CFD Trading/Share Trading : Short Selling in Perspective
CFD Trading/Share Trading : The 2% Rule

About nadlique

This blog is about the journey of a 28-year-old Malaysian towards financial freedom. This blog was started back when the blogger was 21 years old. However, his journey towards financial freedom had begun way before that. Materials such as investing, business, entrepreneurship, equities, and real estate are presented. The author also posts his thoughts and observations on life in general.

Comments

  1. You are ambitious. Watching these clips are stressful enough for me…

    GOOD LUCK TO YOU! 😀

  2. I just love the energy that these guys emit. Not to mention, the fast pace environment.

    I especially love the second video clip, the one from the movie Trading Places. Amazing! Hehe.

    Also, if you watch the third video (The movie FLOORED), the trader had stated that there are people who got punched on the pits (the exchange floor). Haha. These money hungry bastards 🙂

  3. Nadlique, you seem like an intelligent person, so take some friendly advice: do not attempt to become a floor trader. I traded coffee at the old CSCE and NYBOT for 21 years. Of the traders who were in the coffee ring when I started, only about 5% were still there 5 years later. Floor trading is no game, and it’s not a movie. It’s a daily street fight. Guys like me survived as long as we did by beating the living shit out of 20-something-year-old guys who made it into the ring, thinking that it would be cool and sexy and a rocket ride to wealth, only to find themselves, within 6 months, literally penniless. And we paid a heavy price ourselves — ulcers, heart attacks, depression, addiction. I walked away from that hell 8 years ago and have never looked back. I took what I learned with me, and I’ve been trading electronically, living well and enjoying life. Take it from me: leave floor trading to those with a death wish.

  4. Hi Jerry,

    I have heard numerous stories as well about how ruthless and how aggressive people can be in the pits.

    Of course, in my case, I think, being a pit trader will only remain a fantasy. I do want to, but practicality wise, I’ll stick to electronic trading.

    Anyway, in your case, did you manage to make any considerable amount of wealth in the pits? 😉

  5. Nadlique:

    Well, after 21 years, yes, I ended up with a lot of money — enough to retire on, at age 45. But I can’t even begin to tell you how many losses — huge losses — I suffered along the way. That’s par for the course, on the floor. After my first 6 months, I’d lost about 70% of my trading capital. I was able to pay my rent only by working as a dishwasher, at night.

    But I learned a lot from the veteran traders, and the most important thing I learned is how to lose, moreover, how to LOVE losing. I know it sounds weird and goes against the “winner” mentality we worship, but it worked for me. You learn very little from winning. Indeed, a streak of lucky wins will do nothing but reinforce bad habits that will eventually break you.

    Floor trading, as you probably realize, is a dying enterprise. For good and ill, the pits and the rings are going electronic and will never go back to open outcry.

    If you’re bound and determined to experience the floor, I’d look into maybe leasing a seat on the Kansas City Board of Trade or the Minneapolis Grain Exchange — the two exchanges with “affordable” seat prices. You might be able to arrange a short-term lease with a member, so you can get a taste of what the floor is like. Also, these exchanges are small and not nearly as lethal as the Chicago and New York exchanges.

    If I were you, though, I’d stick to perfecting an electronic system. Making money is what counts, and you can make much more of it, a lot easier, that way than on the floor.

    Good luck to you!

  6. Listen….I was very lucky and spent the first 5 years of my career as a floor trader in New York on the NYMEX and NYBOT exchanges. The money was great and it was exciting but like the other guy said there was a heavy price to be paid in other areas of your life. Even the ‘toughest” and “craziest” traders were usually in private very stressed and unhappy people who had gained addictions and medical issues along with their money. I can be a very exciting place to start, but the speed it takes to completely burnout is amazingly fast. I actually kind of find a movie like “floored” to be annoying in trying to romanticize what was really a big daily street fight that ended all too badly both financially and health-wise for most people who took part in it…..stick to the electronic stuff, its not easy by any stretch either but you’ll have your sanity along with your profits.

  7. Indeed Jimbo.

    Come to think of it, even through electronic trading, I get stressed out and frustrated. Imagine if it was in the pit. I’d get mental.

  8. 1977 Rockford Boylan High [The One Most likely to fail] Factory worker for 10 years to pay way threw college and save $10,000.00. Started as a runner Never forget day one 1987 Black Monday. All Hell breaks loss. months later 5 year Note Futures pit opens for the first time ever at CBOT Received Permit to trade . Then months later 2 Year Note Futures pit opens for the first time ever. A One lot in the 2 year note futures pit value at $200,000.00 As 100 lots trade over my head and finding few would trade 1-5 lots even when bidding into an offer. Finding a Rule one must trade even a one lot when bidding into a offer or visa versa. I then made a 100 copies of that rule and placed them in every pocket in my smok. Most smoks had 8 pockets. Broker offer 500 with no takers. I yelled I’ll by 2 lots. I was pushed away and laughed at. Pulling out a copy of the rule yelling I’ll buy 2 lots. pulling the paper out of my hands and tearing it up then pushing me back. I heard a roar of laughter. Again pulling out a copy and again the broker tearing it up. Again and again the whole pit now watching. Then it happened. Broker saying to me 2 lots you happy. 2 lots went to 5 lots then to 10 lots to 50 lots to 100 lots then 500 lots. Selling all investment in 2007 Retires early 2008 At 49 years old. Take the sh-t do not give up Good guys do not always finish last. Thank God

  9. Traders commits to me when I started.

    Want to make a small fortune? Start with a big one
    .
    Best way to become rich? Marry it.

    Trade big and be right. ‘

    Better to be lucky then smart

    After a big losing day go buy something expensive.

  10. As a veteran of the wheat pit, I mourn the demise of the pits. I spent the best years of my life there, made the best friends, heard it all, and saw it all in the pit.

    Jeff

  11. Lots of interesting info about the pits. I really want to experience it, but really don’t know where to start. I wouldn’t have enough cash or experience to afford my own seat so how would I secure a job as a runner hoping to work my way up??

    You have to start somewhere right??

  12. Hey Nadlique, so what are you doing to get there?

  13. Hey guys, I see here all stock exchange gurus. So I’m from uzbekistan and no chance to get in nyse or other stuffs…what exchanges offer electronic trading? Please reply me to my email, i would be very thankful: apex_man[at]mail.ru
    (i dont have experience trading at stock exchanges, i just trade at forex)

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