S&P E-MINI: DOING THE WORK TO MAKE THE MONEY

MrTopStep.com

Last fall I received an e-mail from someone I had never met. I get a lot of e-mails, but this one stuck out. The e-mail came from a father whose son in college loves to trade the markets. One might say he was "born to trade." It was a sincere e-mail about his son's achievements and hard work, the very same hard work that the Pit Bull, Marty Schwartz, taught me years ago. His rule: "You can't make the money if you don't do the work."

I have always done my best to help people get jobs on the floor and in our industry. Several have done quite well. In one instance I helped a guy get a job with Johnny Musso (ex-Bears player) in the bond pit and a few years later the guy walked right past me on his way to the parking lot and his new Ferrari. Another success story was a summer intern from Ireland who came to the floor and within days was putting orders into the S&P futures and option pits. I wrote a letter for him and a week after he left Chicago I got a call from Microsoft Dublin, where I helped him get his first job. Another guy, Ben, went on to run Lehman's FX operation and then ended up at Morgan Stanley setting up a large sales desk. Yes, there have been many success stories, but today's is a young college student who has not only done the work but is putting his money where his mouth is, in the markets!

Times have changed: Years ago the big hedge funds and banks cared less about what small retail traders were doing -- after all, they always lost. When the S&P was running buy and sell stops it was usually the retail getting whipped around, but in today's new world trading order these young system traders are exactly what the big funds and banks want to know about.

Andrew Hawkins: After a few introductory e-mails I got to meet Andrew when he came to visit me on the CME floor over the holidays. I think it's important to say that there are no guarantees when it comes to trading but your chances improve as your knowledge expands. Andrew has done the work and has been successfully trading for 3 years.

I am Andrew Hawkins. Born and raised in West Palm Beach and currently a senior at Embry-Riddle Aeronautical University in sunny Daytona Beach, Florida. Since adolescence I have had an array of interests; varying from being a national paintball champion to a world class racing driver. Although all of that has given me a great deal of experience and culture a constant passion of mine that has followed me through the years is mathematics, along with its application to trading and finance. Presently, I am pursuing a Bachelor of Science in Computational Mathematics while also applying a great deal of focus on quantitative analysis. The analysis I am currently involved in includes determining correlation in regard to past market events to better predict future trends. Techniques like least squares polynomial fitting and quadratic interpolation are used frequently. A vast range of statistical tools help draw correlation and optimize these techniques. I have been trading and analyzing markets for about five years. After graduating I will be coming to the floor in Chicago and under the guidance of the legend Danny I will be trading. Before then I will be participating in the CME Group Commodity Trading Challenge. I am confident that the analysis I have done will allow for a winning strategy in the competition.

I am trying to keep nontechnical but that is a challenge for me. I haven't written an entertaining story in a while. It is still in progress, and I am augmenting what you have written as well.

This is where it's at, guys. I have confidence in Andrew because of his passion and hard work. The new traders of today are showing up to the marketplace with "new" tools, tools that will more than likely end up at a big trading firm.

Danny Riley is a 34-year veteran of the trading floor. He has helped run one of the largest S&P desks on the floor of the CME Group since 1985.

Our view:
The S&P futures have closed lower 3 out of the last 4 days. Yesterday's 13.3-handle drop offset last Friday's 13.4-handle rally. Our view has always been the same, that eventually the ESH will pull back but we think it's still too early to be calling tops. Has smart money been taking some profits off the table? Sure they have, but that doesn't mean the rally is over. We lean to selling the early rally and buying weakness. As always, keep an eye on the 10-handle rule and please use stops.

  • It's 7 a.m. and the ESH is trading 1499.25, up 5.75 handles; crude is up 63 cents at 96.80; and the euro is up 17 pips at 1.3540.
  • In Asia, 10 out of 11 markets closed lower (Shanghai Comp. +0.20%, Hang Seng -2.27%)
  • In Europe, 7 out of 11 markets quoted are trading higher (CAC +1.12%, DAX +0.34%)
  • Today's headline: "S&P Futures Higher Ahead of Home Prices and ISM"
  • Total volume: 1.74mil ESH and 12.5 k SPH traded
  • Fair value: S&P +7.94, NASDAQ +12.82
  • Economic calendar: Federal Reserve Gov. Elizabeth Duke speech on community banking to the Southeastern Bank Management and Directors Conference in Duluth, Ga.; Redbook; and the ISN non-mfg. index

Mr Top Step Closing Print Video: https://mr-topstep.com/index.php/multimedia/video/latest/closing-print-2-4-2013
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