Mental strength and discipline are crucial for success in trading, requiring traders to remain calm and unflappable in stressful market situations.
The blow-up in natural gas trading involving Brian Hunter highlights the ruthless nature of trading and the importance of risk management in high-stakes environments.
Experienced traders can simplify complex ideas and react to market movements to execute successful trades, emphasizing the value of learning from seasoned professionals.
Deep dives
Jimmy Jude's Experience in the Trading Pit
In episode 241 of the Chat with Traders podcast, Aaron and Tessa have a candid conversation with Jimmy Jude, a veteran trader from the early 90s. Jimmy shares stories from the CME's Eurodollar trading pit, emphasizing the power struggles, major risks, and invaluable lessons learned from his peers. He recalls witnessing chaotic events, like an eight billion dollar blow-up in natural gas while trading on the Nymex floor. Despite the raw and colorful nature of his stories, Jimmy also discusses his current trading approach, focusing on trading the VIX curve, structures, and Emini futures.
Roger Carlton and the Quintessential Floor Trading Prop Firm
First Continental Trading, a quintessential floor trading prop firm in Chicago, was owned by Roger Carlton. Jimmy started his trading career as a clerk for this firm in the early 90s. First Continental, along with other big firms, was controlled by wealthy individuals who had made their fortunes in the pit or the markets. Jimmy explains how he stumbled into trading due to the recession and quickly realized the fast-paced, multitasking nature of trading suited his active mind. He reflects on the mentally unorthodox personalities prevalent in the trading community.
Blow-Ups, Risk-Taking, and the Intense Trading Atmosphere
Jimmy recalls a couple of blow-ups he experienced during his career. The first blow-up occurred due to his inexperience and ignorance in selling options. He learned the hard way that selling options can be high-risk if not approached with caution. The second blow-up, known as the millennial fly, happened due to complex market dynamics and poor timing. Despite these setbacks, Jimmy's trading philosophy evolved, and he emphasizes the importance of reacting to market movements, learning from experienced traders, and simplifying complex ideas to execute successful trades. He also shares his insights on trading the VIX curve and how smaller retail traders can play the volatility game.
Importance of Mental Strength and Discipline in Trading
One key insight from the podcast episode emphasizes the importance of mental strength and discipline in trading. It highlights the story of Chadam, a trader known for his laid-back and disciplined approach despite being a pot smoking degenerate. The episode emphasizes the need for traders to be smart, knowledgeable, and disciplined, while also having the ability to remain calm and unflappable in stressful market situations.
The Chaotic Event of Brian Hunter's Blow-Up in Natural Gas Trading
Another significant point covered in the podcast episode is the chaotic event surrounding Brian Hunter's blow-up in natural gas trading. The episode recounts the devastating loss of eight billion dollars by Hunter and his firm, Amaranth. It highlights the intense competition between Hunter and John Arnold, showcasing how one individual can lose such a massive amount of money while another trader brutally exploits the situation. This event serves as a reminder of the ruthless nature of trading and the importance of risk management in such high-stakes environments.
This episode consists of an extremely raw and unfiltered interview with veteran derivatives trader and self-proclaimed Merc Jerk, Jimmy Jude.
As we rewind to the early 90’s, Jimmy relives the rough 'n tumble of CME’s Eurodollar options pit. Telling of power struggles, immense risk taking, and wisdoms gained from his peers.
Jimmy also recounts some of the more notable—and chaotic—events he’s witnessed, such as; being front row to an $8-billion blow up in Nat Gas, when trading on the NYMEX floor.
Then to finish, I ask Jimmy a few things about his way of trading nowadays; working structures on the VIX curve and E-mini futures.
