Chapter 9
The Floor Trader
If global macro is a war to generate alpha, or excess return, and take money out of the markets for clients, then the Chicago pits are the trenches where the battles of price discovery take place. Floor traders on the Chicago Board of Trade (CBOT) or the Chicago Mercantile Exchange (CME, or “MERC”) fight for every pip and point, shaving razor-thin margins off huge volume and taking bets that often last only seconds. It is a physical job whereby ex-athletes in blue, yellow, or red coats jockey around and box each other out to snap hand signals or scream to clerks for best executions.
Yra Harris has been on the floor of the MERC since 1977, which might explain why he looks slightly older than his years. Yet with years comes a wisdom that could only be gleaned from a lifetime in the pits. Unlike other Chicago floor traders, though, Harris distinguished himself in these markets by having a medium-term view and by understanding how world events impact the financial system and the economy, taking him above the fray of the rough-and-tumble Chicago world.
Many traders look at screens their entire lives, giving them a black and white version of price. Pit traders, however, visually see all sides of price action—the buyers, the sellers, the emotion, the energy—such that price becomes multidimensional. For them, price discovery is the market, and they live and die by taking its pulse. Walking on the floor ...
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