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The photo-shopped magazine cover on the left was sent to me by, as I like to say, “my favorite trader in all of Santa Clara County“. He knew that I would appreciate his sentiment in creating the magazine cover.

As for me, I am proud of the traders in my Mentoring Program starting with the aforementioned trader from Silicon Valley.  Each trader is someone who has made a serious commitment to their trading and to the extent that I can help them, I am pleased.

Whether 2011 is a great trading year or a tough year, I do know that the traders in my Mentoring Program will capitalize on whatever the market has to offer.

Wishing you a happy, healthy and prosperous New Year.

To view the contents of this post, you must be authenticated and have the required access level.

To view the contents of this post, you must be authenticated and have the required access level.

To view the contents of this post, you must be authenticated and have the required access level.

To view the contents of this post, you must be authenticated and have the required access level.

To view the contents of this post, you must be authenticated and have the required access level.

There is a whole new language of electronic trading being invented.

Since the May 6th “flash crash” in which the Dow Jones Industrial Average fell 700 points in a matter of minutes, reports of “quote stuffing” and “banging the close” have been in the news.

Much of what happened during the “flash crash” was the result of liquidity in the market for a given stock being split between numerous locations.

Some of what happened was the result of opportunistic traders trying to game the system.

And, some of it was simply much to do about nothing.

In the category of attempting to game the system, “quote stuffing” has to rate at or near the top.

“Quote stuffing” is when a trader enters thousands of orders into the market electronically in order to slow down the market for a given stock in hopes of disrupting the market and, thereby, exacerbating the stock’s fall in price as other traders are prevented from entering orders. The Wall Street Journal reports that at one point during the “flash crash”, orders for Abbott Labs went from 30 per second to over 10,000 in one second with all but 14 orders immediately cancelled.

I do not know the rules in the stock market, but in the futures markets this would have resulted in serious consequences for the traders and the clearing firm involved.

“Banging the close” is another new term meant to describe when a trader puts orders into the market at the very end of the trading day with the intention of pushing the market one way or another. The trader’s purpose in “banging the close” is to make his position look better than it would have looked otherwise. The term “banging the close” may be new, but trying to push the market in a favorable direction at the end of the day predates all of us.

When I traded on the floor, certain traders would try to move the close one way or another to enhance their position.

This practice didn’t have a name, but it did have a face.

The face was that of one of the older grain brokers who would turn bright red as he sold the current future with the intention of pushing the market to a lower closing price so that his cash grain firm could buy grain overnight using a lower price than would have otherwise been possible.

This, however, was not a one-sided trade.  Realizing that the red-faced cash grain trader would be selling the nearby futures contract on the close, other traders would sell the next month out at the beginning of the close. Then, these other traders would buy the nearby month at the lower price from the red-faced trader; thereby, putting on the spread at a slightly better difference than would have otherwise been possible.

My experience seeing traders try to push the close in one direction or another would indicate that, even when pushed higher or lower at the last second on the close, the market will return to where supply and demand dictates when the market reopens the next day.

As to trading stock on various competing marketplaces, I have little personal experience as I have always traded futures.

However, it stands to reason that the “flash crash” was, in part, the unintended consequence of diverse competing stock markets that work well when things are quiet, but lack the depth of liquidity and supervision to handle dramatic increases in volatility.

Futures, on the other hand, have one centralized, well-regulated market for each important contract. When something unprecedented happens, a la the “flash crash”, you stand a better chance of having a predictable outcome in the exchange traded futures markets than you do in the fragmented stock markets.

Wishing you success in your trading,

Copyright © 2010 by Jeff Quinto, all rights reserved

I restarted my golf career, this year, after a ten-year hiatus. 

The last time I played golf with any regularity, the only thing regular was my position as the worst player in whatever group I played. 

I took a few lessons, but I never practiced. 

Finally, after one particularly embarrassing round, I decided that I would never play golf again.

This year, I was invited to join a regular foursome from our neighborhood at the lake that has been playing together every Saturday at 7:05AM at Delbrook Golf Course for twenty-five years. 

I was excited to restart my golf game and vowed to take lessons and to practice. 

For the entire summer, I dutifully played at 7:05AM on Saturday with my friends.  Each week, I would have a smattering of great shots mixed with an otherwise pitiful performance.  On every Saturday, except for one, I had the highest score in our foursome.

At the end of the match each Saturday, I vowed to get serious and practice before the next week, but I never did.  I even vowed to take some lessons, but, once again, I never did.

Without any practice and without any lessons, I remained almost as awful at the end of the summer as at the beginning. 

I know that taking lessons would help me and I am sure that time spent on the practice tee would be rewarded with better performance. 

I realize that I am destined to remain exactly where I am, like it or not, because I will not do anything to help myself.

Struggling traders are often just like that except, in the case of the struggling trader, finding someone to help them is not so easy. 

Certainly, there are all kinds of trading courses available, but after a trader has taken several of these only to find that they are a waste of time and money, he doesn’t know where to look next.

This is where my Electronic Trader Mentoring Program comes to the rescue. 

I help traders get serious about their trading.  I show them how to practice to perfect their trading skills.  I give them the tools and the coaching to move beyond the place where they are to the place in their trading that they deserve to be.

I am not much of a golfer, but I am a damn good futures trading coach. 

My Mentoring program is filled through the first of October, so if you want to get serious in your trading give me a call.

Wishing you success in your trading,

+1-312-685-5333

Jeff@JeffQuinto.com

Copyright © 2010 by Jeff Quinto, all rights reserved