Notes for Chat with Traders, Episode 71

Added on by C. Maoxian.

Episode 71 ... Eric Scott Hunsader (61:57)

  • Started programming in 1984
  • Programming then not offered in college, so he taught himself
  • Bought a book, C Primer Plus by Stephen Prata
  • Had written an oscillator in Lotus 1-2-3 spreadsheet 
  • Still uses C to this day
  • Used to read the Wall Street Journal, fascinated by that world
  • Traded for two and half years, made enough to live and buy more computers
  • Developed a love for writing software
  • Would always second-guess his trading system
  • Focused on writing code and quit trading
  • Used to use floppy disc to archive data
  • Sold that data online (long before the Internet)
  • 1989, Tom Joseph's [of Advanced GET fame] company called Trading Techniques was a data customer, hired Hunsader
  • Had real-time streaming charts using Compaq computer and a cellphone modem brick
  • CQG bought Trading Techniques and Hunsader worked for them
  • Three years later the Internet came along
  • Internet Revolution was obvious to him 
  • CQG cold to Hunsader's idea of internet-based real-time streaming charting application
  • Hunsader left and did it himself, wrote Java application called Livecharts, and desktop application called Qcharts
  • Quote.com saw Hunsader's programs and gave him a bunch of stock for the software
  • Within 18 months to two years went from 0 to 10,000 customers [and I was one of them!]
  • Lycos wanted to buy Quote.com out
  • Hunsader got Lycos stock in the buyout and he sold it all out in two weeks in December 1999 [great timing]
  • Then he founded Nanex in 2000
  • Wanted to design the ideal ticker plant, originally called it "Generation Five," with API on top of it
  • 25,000 hours later he was comfortable releasing it to first customer in 2004, called NxCore feed
  • Data Transmission Network (DTN) his partner then and still is
  • No advertising for his NxCore feed
  • Customers are hedge funds, institutional investors, high frequency traders, even the exchanges themselves
  • Working with the NxCore API is a joy 
  • An experienced programmer can quickly learn to get exactly what he wants from the NxCore feed
  • Other data feed providers normalize the data, NxCore doesn't
  • Data compression, data transmission and graphical interface all the important bits
  • "Serial latency cost" 
  • NxCore collects 20 billion data points per day, a petabyte raw
  • 1000 terabytes is a petabyte
  • Data is stored in triplicate in different locations
  • ARCA first place where he noticed penny up and down step patterns, someone testing something
  • Flash Crash the big event: May 6, 2010 ... SIP got crushed that afternoon
  • SEC couldn't even assemble the data to analyze the Flash Crash
  • Nanex could replay the entire day in real-time given their archived data
  • Analyzed the Flash Crash ... went down a rabbit hole from which he still hasn't emerged
  • ZeroHedge linked to the first analysis they posted about Flash Crash, then it all exploded
  • SIP (Security Information Processor) -- consolidated feed, should be the only feed but exchanges sell direct data feeds independently [the bastards]
  • US stock market has two data feeds, one is faster than the other
  • Reg NMS (PDF) brought high frequency trading into being
  • "Electronic trading brought down costs, high frequency trading brought down ethics"
  • High frequency trading is risk-free arbitrage, only possible since the exchanges sell direct data feeds
  • Exchanges collude with HFT by selling them direct data feed, which is faster
  • HFT has a wink-nod relationship with regulators, fined from time to time, no real change happens
  • HFT would be shut down if the regulators had any ethics
  • If there were a central limit order book, HFT wouldn't exist
  • Regulators wanted competition, multiple exchanges, tie it all together with SIP
  • HFT can front-run orders on one exchange and cancel their orders on another exchange given their faster feeds
  • When you talk about spreads, do you mean the spreads narrowest in a second or widest in a second? Can go from 1% to 1 cent in the space of second
  • "Quote-stuffing" is a term Hunsader coined ... Quote-spam
  • You slow down a data feed by quote-stuffing it ... more network traffic, like a tiny DDOS
  • Retail customers all working off the SIP ... HFT ahead of them
  • All about creating latency through quote-stuffing
  • Put noise into the system in order to slow it down
  • Must maintain latency tables ... must ping and test the limits all the time
  • HFT is theft and market-rigging ... visit the Nanex office for two hours and watch them at work in real-time
  • Everyone is a victim of HFT ... a billion paper cuts
  • You see things now, you think it's a bad tick, but it's actually 1000 trades going off, pennying down and back up in a half second
  • SEC says people shouldn't use stop orders anymore
  • Any retail investor who trades at the open is eaten alive
  • The regulators are corrupt, they get wined and dined by the firms they're going to work for when they leave the regulator
  • SEC gave Hunsader a $750,000 whistleblower award
  • The exchanges are the real culprits for selling a faster data feed for huge prices to HFT
  • Larry Leibowitz (brother of comedian Jon Stewart) is CTO at the NYSE
  • Leibowitz made fun of Hunsader as a conpiracy theorist on stage
  • Bill O'Brien has also argued with Hunsader; O'Brien a smooth talker on TV but just a soundbite bullshit artist, has no facts 
  • Exchanges are SROs (self-regulated organizations) ... means they can't be sued
  • Legal immunity exchanges enjoy has really destroyed things, the root of the problem
  • You need someone knowledgeable and with integrity at the SEC, then HFT will go away
  • Sarao being singled out like that [for the Flash Crash] is terrible
  • Hunsader offered to work at SEC for free, won't create any new rules -- offer met with dead silence
  • At least 500 trades within one second, spikes down and up, no net price change -- mini Flash Crashes happen all day long
  • Suckering people with these "poke plays" [as I call them] ... retail can't take advantage of these because they don't execute at all exchanges
  • These mini Flash Crashes never happened before 2007
  • Anyone with a standing stop order is going to get killed these days
  • Tight spreads being claimed by HFT are bogus given the constant mini Flash Crashes
  • People at IEX have integrity
  • All the exchanges' income comes from selling their faster data feeds to a select few
  • www.nanex.net 
  • Twitter: @nanexllc

Tramps Like Us

Added on by C. Maoxian.

Terrible video and audio quality, but this cover of an already great song makes it that much greater. Love that outfit too. 

They might not have been known as the greatest live band on earth, but they should be remembered for the raw energy they created. A wonderful tribute to a great artist.

TV Shows Watched -- Frontier

Added on by C. Maoxian.

Another Netflix original series ... six 45-minute episodes so not too great a time commitment ... and it wasn't terrible. I'm not usually big on "period" pieces, but the fur trade / history of the Hudson's Bay Company does interest me. One episode did have a gay porn vibe with the half-naked hero hung by his bound hands and tortured ... not that I've ever seen gay porn, but that's what I've been told it's like, by a friend, a very distant friend. 

My screencaps with comments below: 

Notes for Chat with Traders, Episode 62

Added on by C. Maoxian.

Episode 62 ... @chigrl (41:02) [recorded May 2016]

  • International relations major, Middle East focus
  • Sold medical supplies, "medical grade plastics," hated it, was living in Newport Beach
  • Quit job, moved to Chicago [what year was this?]
  • Knocked on every possible door
  • Begged for first job at a boiler room, later shut down by NFA
  • Nobody wanted to hire a woman
  • Making 200 calls a day trying to get Mom and Pop to part with 10 grand to trade options [laughing]
  • Her Dad was a commodities trader
  • Wanted to learn the industry from the inside out
  • Went from working as broker to working on trading floor
  • Clerked for Fed Funds trader
  • Moved to grains floor, was head of trading desk, when Fed Funds went to zero
  • Then moved to bonds floor
  • First ticket she ever wrote she wrote backwards, ended up being a 30K winner
  • Left the floor in 2012, started trading for prop firm, got funded
  • Being a prop trader forces you not to do "stupid shit" ... someone is watching you
  • She is an intraday, technical trader, but also has fundamental knowledge of oil market
  • She has a system, makes the same trade over and over again
  • Your worst enemy is your own head
  • If you have a system where you always take the trade, can take your head out of the equation 
  • Rotation levels, Fibonacci, volume profile, footprint -- these are what she uses
  • Fell in love with oil market, has traded for ten years straight
  • Doesn't trade crude during Asia hours ... too illiquid, a 50 lot can move the market
  • Crude is a "manic" market ... trades fast 
  • She's a market junkie ... 120 hour work week in front of the screens
  • After ten years of trading, you can "go with your gut" ... but not at the beginning
  • Government websites, esp. EIA, full of good information
  • Follow her Twitter stream since she tweets all the best information
  • [She has a smoker's laugh ... wonder if she smokes?]
  • Supply-demand drives the oil market, it's simple
  • Day traders trade what's in front of them, not the macro view
  • Twitter is invaluable, there are experienced traders on there, only dicks don't reply to your questions
  • Start with a mini contract
  • Have to find a system that works for you
  • Don't be afraid to lose money in the beginning
  • Successful traders don't care if you have two followers, they'll answer your questions
  • Key skill good traders have: patience, they wait for the market to come to them, they don't overtrade
  • She has a swing trading account and a day trading account, separately
  • Twitter: @chigrl

Trying To Turn My Black Nights Blue

Added on by C. Maoxian.

Andy Fairweather Low still crowing 50 years on ... great song, esp. for those who rely on the bottle to get through the night. 

Filmed for BBC Radio Scotland's The Jazz House at the CCA in Glasgow For more from BBC Music at Celtic Connections visit http://www.bbc.co.uk/celticconnections

Dirty Dozen, Long Only Portfolio, End of September 2017

Added on by C. Maoxian.

One change this month, getting long Amgen (AMGN) tomorrow (Oct. 2). Why sell it at $139 last November only to buy back at $186 this October? Good question ... and the reason why buy and hold (and forget about it) is so compelling. But look at the exits on Chipotle and Gilead and Starbucks and Twitter ... I don't always get it so wrong. 

20170930 dirty dozen.jpg

Movies Watched -- Hell or High Water

Added on by C. Maoxian.

102 minute running time. [SPOILERS]

Inexplicably has a 96% Fresh rating from "Top Critics" at Rotten Tomatoes, which caused me to borrow it from the local Redbox, to my chagrin. Mumble, mumble, couldn't understand half the dialogue and for some reason the subtitles were disabled on my disc.

Has a weird No Country For Old Men copycat vibe (that was a *great* movie), but it just doesn't work. Jeff Bridges plays Tommy Lee Jones, but he's mumbling worse than ever, even worse than his Texas Marshal role in True Grit. He has a half-Mexican, half-Injun partner whom he insults endlessly ... don't worry, the "half-breed" has his head blown off in the end.

Two scrawny brothers ... old Ma dies with family ranch in hock to EVIL banksters and back taxes ... one brother recently released after a ten year stretch in jail (though not for killin' his Pa) ... non-felon brother gets the bright idea to start robbin' banks across west Texas to pay off them EVIL banksters and the gubmint, and dumb criminal brother is game.

Scenes of these desolate, shitty towns and FAST CASH billboards (hint hint) ... oh, and the movie starts off with graffiti on the side of a house that says, "Three tours in I-raq but no bailout for folks like me," or something along those lines. Ya know, subtle.

Badly done poker scene where criminal brother splashes the pot with a bet -- I winced. And you can't exchange more than X dollars at the casino without having your tax ID attached to it. 

They keep burying cars that are worth more than the bank drawer cash they're stealin', but I guess they're stolen cars. Old Jeff Bridges mumbling and stumbling after them across the vast expanse of west Texas. Jeff will forever be The Dude, he isn't going to shake that no matter how much he mumbles and stumbles. 

Surly ex-wife of the non-felon brother, ya know, once a purty girl but run-down by her shitty life ... it isn't clear what he's done to earn such derision from his ex- and boys (one, a fatty with glasses, only get a glimpse of him at the end) ... maybe it was explained and I didn't hear it (possible), but I doubt it.  Did I mention that this brother is a dead ringer for Josh Brolin's kid brother? 

Dumbest part of all is there's Crude Earl or Natty under the ranch, and old Ma could've leased it to Chevron decades ago and been pumpin' out $50,000 worth every month since then ... but nah, scrawny cows were the way to go. And the boys couldn't have done the lease at any time before her death, just cuz. 

Ends with Bridges and Brolin's little brother exchanging mumbled threats across a bare lawn, pfffffft. Only saving grace here is the movie stopped short of the sacred 100 minute mark.

Ah, I see now that the kid who wrote it also did Sicario, which I didn't like either

There were some funny bits, and some clever bits of dialogue in the little I could understand, but damn, this movie is NOT recommended. Let me go find some critics who agree and paste their stuff below ... only able to find ONE! Crazy, what a bunch of hacks. 

Peter Sobczynski: "it's somewhat less than the sum of its parts ... [the writer] appears to have elected to raid the Cormac McCarthy playbook in order to employ the celebrated author’s sparse and laconic tone wherever possible ...  it tries so hard to emulate the likes of 'No Country for Old Men' at times that you can feel it practically straining from the effort without quite pulling it off" ... and the key paragraph in its entirety, with which I agree:

"It’s frustrating that 'Hell or High Water' contains so many good things that just don’t coalesce into a fully satisfying moviegoing experience [He means movie but needed more syllables]. The story as a whole is a little too derivative for its own good and not even the strong elements are quite able to compensate for that. Of course, seeing as how even vaguely competent films have been so few and far between as of late, some viewers may be a little more willing to overlook its flaws—to wildly paraphrase one of the key lines from 'No Country for Old Men,' 'If it ain’t a good movie, it’ll do till the good movie gets here.' [SAD] If only it had spent a little more time trying to find its own voice and a little less overtly trying to ape the styles of its influences, 'Hell or High Water' might have been as good of a movie as it wishes it was."