The Eric Bolling Diaries: Life in the Pits

Did you read Part One of The Eric Bolling Diaries?

A Trader is Born

Ready for more?

There are many ways to skin a cat on the Street...traders approach things much differently than investors

What is your time frame?

Players on the Street are opinionated. Quants think they hold all the keys...Value investors mock their growth stock counterparts...analysts deride traders. Technicians ignore fundamentalists. They meet every day in the markets and place their chips. It can get a little hairy.

And split second decisions need to be made when you are trading size

Freezing up in the pits can be deadly ...

“For every winner there’s a loser. All these clichés work. But down there they’re not clichés,” Zawaski says about the trading pits, adding that fear is a constant on each of Chicago’s three exchanges. “I saw one guy about a year ago, froze on some order. Lost about a million dollars. A million bucks, just like that.” He snaps his fingers. “He froze. He froze for an hour. Once he missed [the trade] he realized, ‘I’m in shit. I’m in trouble.’”
Tom Baldwin/Hedging Stress

You better bring a little swagger to the game...if you don’t you are likely to get run over

Nobody wants to end up as roadkill.

Eric Bolling has figured out what works for him…

This is the second installment of our series…

The Eric Bolling Diaries

Part Two: Life in the Pits

Traders and market pundits often talk about the role of ego in trading...there is an old saying “no one is bigger than the market” How do you feel about this?

Generally, most of the good traders I know are confident people. I think you need the attitude “I am going to be right with this trade” to enter them. Then, you need the ability to say “hey, I was wrong” to get out the bad ones.  And, that ability to say you are wrong and get out is the secret to making money. The problem is...you can’t teach that. That is why trading with charts helps you get out when you are wrong...even if you can’t admit it.

What did it take to get you started in the business?

I remember thinking...I really love this trading floor (CBOT) and the idea of being a professional trader but had absolutely no way of coming up with the $50,000 treasury bill deposit required at the time.

Why did you leave the pits in Chicago to come to New York?

I was only a summer runner in Chicago. I was trying to play baseball at the time and the 1:30 closes allowed me some flexibility.

How much money do traders need to get started?

I am not sure what the minimum is to be a floor trader. I think anyone can start trading with whatever they have.  Just be aware that you can, and probably will, lose it. At least the first time around. So if you understand that trading is a two-way street, it will better prepare you for the one thing that torpedoes new traders...unexpected losses.

What contracts did you first trade?

My first trades were in the crude oil pit...I traded the Gulf war a a relative rookie, and what an experience that was. I only wish I had a few more years experience under my belt by then.

Do you trade mostly from the long side?

Some traders trade well from one side (long or short). I have been called a pit bull because I do much better in bull markets.

Were you profitable trading from day one?

Yes. Like I have said many times, I think being an athlete helped me become successful early on. Sports teach you to sink or swim quickly or someone else will take your spot or shot.

Are you willing to carry big positions overnight or do you go home flat most of the time?

I have never been a go home flat guy...I envied the idea of going home flat and relaxing in front of the television or going out to dinner carrying only a small position. I have always traded multiple markets and carry pretty substantial risk overnight. It makes for restless sleep...

The market junkies reading this might find it interesting that we are conducting this interview at 3 AM EST

Money never sleeps

What was your first big winning trade?

It was in the first Gulf war.  James Baker (Secretary of State/1991) was in Iraq to speak with Saddam’s regime and trying to cool the hostilities. We had troops massed along the Iraq/Kuwait border. It was a scary time.

Scary indeed. The energy pit must have been tense.

The oil market was limit down at $22.50ish...I was watching the Dow Jones ticker and saw the famous Baker quote “Regrettably” and every market on earth turned on a dime. I saw absolute panic in the eyes of the executing brokers in the pit...the first thing I did was buy oil $1.50 higher at around $24.00.

Nice move

It was bedlam...I don’t know why I did it, but it turned out to be one the best trades of my career....Oil futures shot up over $6 a contract in the blink of an eye.

Holy mother lode!  How important is gut feel in the pits? Do you always try to know who is on the other side of the trade?

For me its 50% gut and 50% charts...in a perfect world all trades would have a positive feel and good charts...I have found my gut gets me in...and the charts let me know when to get out.

I was lucky enough to work in the S&P pit at the Chicago Merc (CME-NYSE) and saw some crazy stuff...can you give us a few war stories?

I have seen it all...fist fights, heart attacks, guys passing out from huge losses. Stress, hangovers...you name it, I have seen it.  During the first Gulf war it was really nuts.  I once saw a guy run from the gasoline pit to the crude pit and on the way his wig got knocked off.  He was so panicked to get his leg down on the spread he did not care about the wig...he just stuffed it in his pocket!

Do you still enjoy stepping into the pit as much today as you did early on in your trading career?

All that adrenaline never goes away. It ebbs and flows with the volatility of the market but I LOVE the pits...I hope they stick around for a while.

How well do you handle a losing streak?

Not well

Classic!  Neither does our mascot. What do you do to re-charge your batteries...how long of a break will you take?

I really enjoy getting away for a long weekend with my family. But there has to be a casino or I go absolutely nuts....

Wednesday night (1/10/07) on Fast Money you challenged Cramer to a little wager...there will be no loser in this trade with $50,000 going to the charity of the winner’s choice. Was it a joke or is the bet really on?

The charity bet is on!! I like Jim, but don’t come into my house and try to drink my wine! Not without a fight.

There are no free passes on Fast Money. Henry Blodget might want to take note. He will be on tonight...that should be interesting.

Thanks for squeezing us in...at 3 AM no less...you are certainly the busiest guy on the Street

We will be back soon for Part Three of The Eric Bolling Diaries:

Swinging for the Fences

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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. Eric Bolling has long positions in NMX and ICE. StockJockey has no positions in any securities mentioned.

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