Why Chicago has so many traders and why are they so rich? (Clinton: appointed, insurance)

[koctail]

I know lots of traders and I can't figure out why they earn so much money? They don't manage people or build widgets. Their work seems more like a glorified bank teller, i.e facilitating transactions which they have no part in. One guy said he earned a million dollars in a month. Most I know earn couple hundred thousand a year. This just seems unreal. It's more than Obama makes and even some CEO's. Do I need to quit my job and become a trader?

[marothisu]

Can't tell if serious....this is not a Chicago thing.

[Vlajos]

Originally Posted by marothisu

Can't tell if serious....this is not a Chicago thing.

I think he/she is serious.

[chet everett]

There is wide range of income between those that make their living engaged in any of the activities broadly known as "trading" through any of the various financial exchanges with a presence in Chicago. On the "trailing edge" there are many people that LOOSE more on just a few transactions than most Americans make all year. If such folks are literally "playing with their own bankroll" once they are wiped out they are unlikely to ever find a way back. At the other end of the spectrum there are a tiny handful of folks with the rare combination of skill, level headed personality and wisdom to separate luck from knowledge that literally can ride the wave of success into hundreds of millions -- people like Ken Griffin or Richard Driehaus are examples of this ultra select group. In between there are quite a few people that have consistently earned annual incomes of in the hundreds of thousands of dollar, with a roughly normal distribution of folks that occasionally earn in the millions for a number of years and those that plunk along with some years just under a hundred grand and some just over that. The variability is often due to factors that are not completely under the control of any individual and forces many many many folks to explore other ways to use their knowledge of "what once worked" into everything like "helping" others learn about the whole range of financial products that could potentially be profitably traded often in some media related way (think Najarian) , to working as part of financially oriented firms.

If you do not have access to abig pile of cash (or a family that will front you a big pile of cash, or pals that trust you to spread around the big pile of cash they have managed to get other to invest for them...) there are not a whole of quick ways into this world. You can try to earn a MS in financial engineering, but thus tends to a mathemiatically intensive / computer science-y route they may require relocation to NY or other financial centers depending on the needs of the firm that is impressed by your skills...

A fairly good indication of someone that is NOT going to have a long, successfully career in Chicago's financial markets is "flashiness" -- unlike the guys that live for a "big score" in London or NY the culture among Chicago's revered traders is notoriously low key: it is relatively common for folks to actively work to ruin show boaters. Driving a "regular" BMW or Mercedes-Benz generally will not due negative attention but guys who go in for Lambroghini or other "super cars" have an unfortunate tendency to have a high number of positions "go against them". Of course with more animosity than in the days of open outcry trading pits now that electronic trading systems are the norm it may be less the tightly knit old schools are actively working against such ostentatious guys and more that having that much of would should "working capital" tied up in a car limits the flexibilty that traders need to maneuver around markets increasing dominated by machines that "think" hundreds of thousands times faster than even the most facile human... A corollary to this is anyone that boasts they "made $xxx,xxxx last month" is at extreme risk to LOOSE $x,xxx,xxx next month!

[thegrid]

the globalist capitalist system is a casino.

they are in with the house. the rest of us are stupidly putting tokens into their machines.

[LGERMAN]

On the flip side - I once worked as a Network/Telecommunications engineer at a downtown financial institution. As a rule, all transactions are recorded on the system. There were times when copies of recordings were requested to settle disputes and make sure numbers that are verbally quoted are correct. I had couple cases where a trader requested a recording for a particular time but he didn't give me the correct station number where he was sitting at the time of the transaction and I had to sift through multiple recordings before I found his. While sifting through some of the recordings I heard some of these high money traders discussing their personal finances and they had the same kind of issues like making sure checks cleared and I am down to my last 50 bucks before I get paid) that some of us run into from time to time.

[lenniel]

I find it humorous when someone says "how does this person make so much money... their job looks easy, they don't have to work hard", etc, etc.

If something were easy, everyone would be doing it.

Some people are just smarter than others, are willing to take more risks than others.

[cubssoxfan]

^^ Definitely! You need to understand global economies, global finance and global politics mixed in with knowing human nature. Knowing what will drive market highs and lows is essential. There is a ton of risk, but as we know- the greater the risk, the greater the potential reward.

[chet everett]

These days few jobs that pay well involve any kind of back-breaking manual labor or risks to one's life save something like a bomb disposal technician or nuclear plant welder. Instead most lucrative jobs require a combination of uncommon skills and a special kind of mindset -- there have been posts from folks that have tried to learn various technical disciplines likecomputer programming or the sciences but if they do not have the mindset that is needed to succeed in those environments they have been disappointed/ are laid off / passed over.

Similarly the post from LGerman illustrates the too common reality that plaques too many would-be financial traders -- if your lifestyle gets twisted into something that consumes your whole paycheck and more you really cannot expect to have the working capital needed to really make a long term success of such an endeavor.

Another excellent point that lenniel makes is that the reason that "not everyone is doing it" is complex -- sure you can go to a bookstore and literally buy stacks of books like "futures and options for dummies" "foriegn currency trading for idiots" or "the complete idiots guide to commodity trading". With a little luck you might even pull a Hillary Clinton and allegedly turn $10,000 into $100,000 without insider help once , but unless you embed yourself in the culture of the markets, play nice with those that could destroy you, and learn the subtle ways to plan for a graceful exit before the next set of changes wipes out the unconnected traders it is not really a viable long term career. Oh sure, there are guys (and women) that manage a desk for Oscar Mayer, Kraft, Cargill or ADM to ensure their pipleine of corn / beans / pork belllies flows from farm to factory but those who do that are every bit the corporate slave as somebody stuck in a cube for some faceless credit card company or insurance business.

[emips1517]

Originally Posted by thegrid

the globalist capitalist system is a casino.

they are in with the house. the rest of us are stupidly putting tokens into their machines.

Yep, typical view of someone who doesn't know what they are talking about.