It was something I had dreamed of. I couldn’t wait to give someone 80% of everything I made. I had trained for 2 years to be able to give my money up and I relished at the thought of it. What crazy person would think of giving up 80% of every hard earned dollar he made? A new trader.
An 80-20 split was the going rate at the time. If you were a new trader and you didn’t have the money to bankroll yourself to trade then that’s the percentage you give up. You give them 80% of everything you make. They take the risk in exchange for putting up a million dollars in your trading account. As bad as it sounds, the backers were very picky who they would put their million dollars into and it was quite an honor to be chosen.
I had gone the traditional route. Graduated college, become a runner on the options exchange, moved to phone clerk taking orders, and then became a clerk to a trader. Eventually I became a trader. To be honest, I didn’t even ask what the split was when asked if I wanted to trade. I heard the word “trader” and I became excited and a nervous wreck at the same time. A few days later I started doing the math. I made $20K for each $100K I made. Then I had to pay my seat lease, my trading fees, my clearing company, and the rest was mine. All I had to do was make $350,000 and I could take home $50,000 before taxes. Shit
I was so excited, I was about to become a member of THE Chicago Board of Trade. An elite group of men that was one of the largest collection of millionaires under 40 in one building. I too, would be joining their ranks. I went through training and testing. Yes, you have to prove your ability to trade although you would think that if you couldn’t, you wouldn’t last anyway. They had a pretty hefty background check, both personal and financial. Again, I felt honored that they accepted me. I was so proud the day I received my badge. Most people use an acronym of their name but mine TSC was taken so I chose SXC. Shane Cultra with an X in the middle
My first day wasn’t easy. I found out that I wasn’t going to trade in the 10 year note pit, the pit I had worked in all year. I would be trading in the 30 year bond option pit. A pit 10 times the size and much much more aggressive. I was a frickin nervous wreck. The few people that even acknowledged my presence that first week started calling me “Sexy” (SXC). It was rough going that first month.
As the new guy in the pit, I barely got any trades. The only way I could get attention was to be a higher bid or sell at a lower price. It was costing me money just to be part of a trade. If I was the same as everyone else, the paper (the people in the pit with the order from outside) would give the order to their friends. Sometimes they did anyway and I would get pissed because I was willing to pay more. I could get them in trouble by letting the book (the exchange) know that despite my higher bid the broker was filling at a lower number. That would get me further in the doghouse and was exactly what I didn’t need because I relied on these guys for trades, not vice versa.
This new pit, combined with my small share of profits caused a big problem. I started reaching. I was holding trades to long and letting them run. I wasn’t cutting my losses early and I wasn’t taking profits when I should. I was learning a lesson and I knew it. No confidence, no money, and pushing for profits led to bad financial moves. I was trying to make my million quickly so that I could get out of my contract and it worked.
After several months of so so income my boss/investor came down in the pit and fired me. He wasn’t willing to take the risk that I was putting him in with each trade. He wanted me to turn and flip. He didn’t want me taking on big positions and going for the big kill. At the time it was the biggest disappointment of my life. I cried for a week. It turned out to be the turning point in my life. I discussed it with my Father and he was so happy. He just happened to be starting a new nursery and really needed help.
It was perfect timing and although the thoughts of riches were gone, I knew it was all for a reason. I vowed when I left I would come back to trading with my own money. Several years later I realized I didn’t need to go back. I would make my fortune elsewhere. Elsewhere where I didn’t have to give someone 80% of what I make.