Lewis Borsellino: The Biggest S&P 500 Trader In The World

I'm one of the best Traders ever. Velino had his best single trading day ever in 1987, $1.4 million. That's the mentality of the Floor Trader. I'm executing orders for Goldman Sachs, Solomon Brothers, EF Hutton, Smith Barney, Merrill Lynch.

I actually was going to go to law school, and then, uh, two days after I graduated college, my dad was murdered. 28 years old, making 4 million. Cuz bear in mind that's 4 million at that time, essentially would be like almost 16 to 20 million. The first year I made $4 million; I spent $2 million on booing girls; the second 2 million I just blew it foolishly. You went from going nearly thinking about quitting to then having 10% of the volume of the S&P. So I walk in on that Tuesday afternoon, and I make like 200,000, 300 grand. Wednesday morning, I do the same thing. Thursday morning is the famous trade. I walk into the pit, and the Market opens up; I'm long 300 S&P, and the Market's not moving like 5, 10, 15; it's moving 300, 500,000. I got 300 contracts on. I handed my cards to my clerk; she came back like 15 minutes later. She goes, "I think you made $1.5 million." What? She goes, "You made 1.5 million." I just literally walked out of the pit, went into the bathroom, and threw up, literally, in 13 seconds. When you're a FL Trader, your opinions don't last more than seconds. The key to trading is [Music].

Literally the number one podcast in the trading space, the fastest growing, and that's thanks to every single one of [Music] you. Welcome everyone back to the Words of Wisdom podcast, still the number one podcast in the trading space and the fastest growing, thanks to all of you and our incredible guests. Talking of which, we are joined by a 40-year-plus trading veteran today. It is a complete honor. He was once, uh, 10% of the S&P volume in the trading pits, which is absolutely incredible, and I had a very great opportunity to research him and just watch some of the old interviews that he's done, and I'm truly honored to be with Leis Bor Selina. I hope I said—did I say that right? Yeah, you said it properly. It's absolutely honored to be here with you today, and, um, you know, I'm excited to learn more about your journey and all the experience that you've gathered over the years and the decades of experience, uh, but just to start off with, like, what was it about trading, like how did you find and come across trading?

Yeah, so that's a pretty interesting story. Um, I actually was going to go to law school. I wanted to be a lawyer, uh, graduated college, and then, uh, two days after I graduated college, my dad was murdered, and, uh, I ended up, uh, driving a truck after we buried him. He had a small trucking company. I was driving a truck; I was taking the LSATs, um, going to try to pursue my dream to become a lawyer, and um, I ended up, um, was reading the Wall Street Journal about gold Futures and how gold Futures had risen, and the price of gold had risen, uh, so, uh, ironically, not even ironically, it was for two—is for me—my mother actually was a legal secretary to a gentleman named Mory Kravitz, and Mory Kravitz's partner was Leo Melamed. So you got Mory Kravitz and Leo Melamed, and Mory, um, was probably the foremost authority in the in the world on gold. Um, he went around the exchange floor before gold was even able to trade and asked all the different brokerage firms, "Can I get your gold business if you ever trading gold?" And everybody just said sure because no one ever thought that would happen again. Um, so my mom was their legal secretary. Um, they had left to go to The Exchange. Um, meanwhile, there was a young, uh, attorney out of Notre Dame law school by the name of Jack Sander, and my mom had gotten him—was typing briefs from him and doing different things and chores—and, uh, he went to the Merc. So, um, after my dad died, I went to—I was actually playing handball, right? So handball is a little different than racketball, but back then we used to play handball, you know, we didn't have rackets, and I was playing with a gentleman named Lou Mat, and he had a small trading firm on the floor of the CME, and I told him I wanted to open an account to trade gold Futures, and he said, "Lou, you don't want to do that." He goes, "Why don't you come down here and see what this is about? You're a young kid; you—this is the place to be." And so, uh, the first day I walked on the floor of the exchange and I opened that door, and the energy and the and the emotion and and the the sound of money was in the air, right? The people were just yelling and screaming and running back and forth with all these paper orders, and, uh, I was sold that day, and I I took a job with him being a runner. Um, so that's how I actually got to the floor.

Wow. And it's interesting how you say, like, especially when I speak to a lot of people with your sort of experience, a lot of the time it wasn't something that they had on their radar originally when it comes to trading, and they somehow, whether it's through meeting someone else, some little interest here, then suddenly they find themselves on a floor, and it's, as they always say, the energy that really drew them in.

Yeah, yeah, it's, uh, and and luckily, right, in anybody's career, you have you got your, um, you know, your hard work, dedication, things that you do to to to hone your, uh, skills, but in anybody's life, a little bit of luck has to come in, right? And so, um, I went to I went to the Merc. Um, I was lucky of a couple things: number one, Chicago Futures was the king of the world. I mean, literally, the, you know, the New York, uh, COMEX and New York NYMEX, those exchanges traded Commodities, but they were they were like little babies when it came to the New York, uh, or Chicago commodity exchange. Like you had the Chicago Board of Trade, we had and the Chicago Mercantile Exchange, two biggest exchanges in the world, and when we offered when they started offering Financial Futures, the growth of commodity training worldwide was incredible. Um, still a small game, you know, back in the 80s, you think about it; there was, uh, probably back in the 80s, there was like 450,000 people in the United States owned and traded stocks; commodity Traders were like 40,000, so it's still was a neophyte industry, but I I got there right at the right time in the 80s and the explosion of all the financial futures. Um, but meanwhile, as I was a runner, I went to the to the gold pit with an order, and I I knew my—I kn—I knew Mory since the time I was eight years old. I mean, he was just a fixture in our family, so I tapped him on the shoulder and gave him an order, and he goes, "Hey, kid, what are you doing here?" He talked like this; he was a he was a jovial guy; he was like 5 foot 5. At one time, he was 5 foot 5 by 5 foot 5. In fact, his badge was ZZZ, Z, because when he was talking to you, sometimes he would fall asleep. So, uh, uh, but he goes, "Hey, kid, what are you doing here?" I go, "Well, you know, I got a job as a runner." He goes, "Come back in two weeks, and you're going to be my clerk," and that that was the, you know, you think about the the things that fell into my life, like, you know, I was on my my dad's, um, death was certainly a devastating time for me and my family. Yeah. Um, I I always was trying to pursue my my career as a lawyer, and, um, you know, God shuts down one, uh, one door, door, and another one open, right? And so that's that's how I got started on the floor exchange. I mean, I literally went to college as an economics political science major, so not that could use anything like that on the floor. So, you know, in fact, one of my professor economic professors visiting the floor one day, they tapped me on his shoulder, and he was out there, and I looked at him; I go, "Hey, professor, this is economics 101 in here, and there's no widgets; we're not making widgets; we're making money." But yeah, it was It was a it was, you know, just a, you know, a lucky time, not a lucky time. Well, it was luck that the opportunity came to me, and then I was able to take advantage of it, but the growth of the exchanges was massive over the next 20 years, definitely.

And just a touch on a topic there, like my my father actually passed away and was murdered, uh, when I was younger too, and that watching this documentary that you had on on your story, your mother mentioned that when that happened, yourself and your brother said to her that, you know, "We're going to just—we're going to basically get revenge with success; like we're going to become successful as our way of getting back at that situation." Um, how much did that help you in terms of your mindset going into—I know at the time maybe the exchange wasn't there or like the trading route—but just generally with your mindset of pursuing success and elevating yourself? Um, yeah, how much did that help you in your journey?

You know, this is a very interesting question, cuz on reflection, when I, you know, wrote a couple books and I reflect upon my life and I look at different things, you know, I grew up, um, not in a very traditional family, right? Everybody's seen these Italian-M movies and things like that; those kind of people were normal for me; like that was our life, you know, that our friends were our friends; they all did the same thing; all the guys did the same thing; hung out together, you know, Italian Community, but, um, you know, my dad went away to jail when I was in like fourth grade, came home for a little while; I was in seventh grade, won an appeal when I came back, so six years of my life growing up my father was gone, and he was like my best friend, uh, and and my brother's best friend, and and even though he he lived this sort of deviate lifestyle, you know, it's it wasn't the, you know, traditional American Family lifestyle, you know, he did have his principles and morals that he kind of passed down to us, and and one of the things, um, I look at is that I've been dealing with controversy since I've been in fourth grade. Yeah, right. So my point, what I learned in a very early, you know, very early in my life, you learn: move forward, just keep going; you can't dwell on the past; you can only take what life's given you, and you know, you hear those things from life coaches and all these people out there pretending to be life coaches nowadays, and it's funny because when I was on the floor and trading and the world was turning into chaos, like the crash of 87, like, you know, when when the markets were in fast markets and things were, you know, making the markets gate, uh, international news. I mean, we didn't have, you know, in the '80s, we didn't have the internet; that was, you know, democratization of information, right? Where it was instantaneously, like when we when we closed our trading, um, our trading, uh, days out, uh, if we weren't flat, there were no overnight markets, and if there was a, you know, a bombing, a war started, you know, something happened, you couldn't get out of those positions until the market opened up. But so my point was is that when you when you deal with controversy as young as I did and then you go through all the things that happened with my up to the my dad's murder, it was just like, "What can you be in your life?" Well, being a trader, right, is a probably good idea because you you know how to you know how to kind of, um, harvest your emotions; you know how to make sense of what's not sensible, and if you can keep it cool when everybody else is panicking, it becomes a very great personality for, uh, you know, making sound decisions.

Definitely, that's why I want to ask you because it's a very similar thing of handling those emotions, being able to handle setbacks and adversity, which, as you say, like we're not—as Traders—it's not something that is—we're not used to—like the everyday person when it comes to trading just does not understand; we're not designed as human beings to be Traders. I think it's something that you have to develop; sometimes there's certain circumstances that help you to develop that as well, and as you said as well that there's moments where you could say, look, you could say maybe your mindset that allowed you to get into those positions too and how you m fed yourself into those positions that also allowed that look to take place, if you will, and those doors to open. You mentioned being a runner; what does that mean? Like what would that entail that starting position?

Yeah, so on the floor of the exchange, um, let's take a break for a minute there, guys, because I want to tell you about one of our sponsors, Alpha Capital. Now, without our sponsors, it's not possible for us to host such incredible podcasts around the world and get the level of guests that we are getting. So again, thanks to Alpha Capital for sponsoring the podcast. Now, Alpha Capital is one of the best prop firms in the industry, so so far this year alone, they have done over $50 million in payouts, which is absolutely incredible. They have the very best infrastructure in place for longevity, from an in-house broker, so they can offer the very best trading conditions and platforms that all Traders love to use. They're still able to offer services to the US as well, so the US Traders can still trade with them on particular platforms. They have institutional experience, so they know how to manage a platform correctly and have such an incredible team on hand. On top of which, they have both a pro and swing plan, so depending on your style and strategy, you can choose which one is best for you. Now, you can use and get the highest discount available at anywhere using Riz25, so that's R I Z 25 for 25% off all challenges; the links in the description below. So let's get back to the episode. They were different pits, so we call them Trading octagons or trading pits. So there would be the pork belly pit, the cattle pit; there would be the euro dollar pit, the Japanese yen, and D-mark. So every pit was named, and so what would happen was that all the brokerage firms like Merrill Lynch, Goldman Sachs, uh, Smith Barney, EF Hutton, um, local firms would have desks, and clients would call down to the desk on the floor to a clerk and say, "Hey, go buy 20 contracts of S&P futures at the market," all right, and they would write it on a piece of paper; they would fold it, and then that Runner would run it out to the to the designated, uh, pit where the order was supposed to be at, and so that was like your first, uh, introduction to, you know, you were you were part of that; you were part of that chain that got the orders to the um to The Exchange to the to the broker who was going to execute the order.

What was the elevation like from there then? Because obviously you started as a runner, then you said you went to being a clerk, and then from there, eventually, you obviously ended up in the pit trading itself, right?

Yeah, so, um, hopefully, when you become a runner, the next thing is how do I make friends with a broker, and can I get a broker who'll hire me as a clerk? So if I'm a clerk, all those Runners that are coming with the different orders coming to my pit, I grab those orders from them, and then I organize them into what we call the deck, and the deck is simply all the orders that were going. So you got your market price, and then you have all the orders that are below the market price, and then you have your market price and all orders that are above it. So you would then organize all those orders, and then, uh, you put it in the deck, and as the market moved up and down, the broker would execute those orders. Okay, so on the upside of a of a deck, you had what we call sells. So if the market was at 10 and you were trying to sell them at 12, I would have sell orders resting in the pit, and when it got to the 12, uh, strike price, I'd be offering, you know, 10 to 12, 10 to 12, 10 to 12. The only the other thing that was above the market price was what we call buy stops, and buy stops are orders that are put in above the market. So let's just say you're short the market at—your short to Market at 10, and you only want to risk $5 on the trade, so you put a buy stop in at 15. So if the market doesn't go go, uh, lower because you're in pit—that's why you shorted it—and it starts going up, you only wanted to risk that $5 dollar, so the buy stop would be above the market, and so then the broker would executed, and that would be locking in a loss of $5 on that trade. Mhm. So on the downside, you had their buys and your sell stops. So as the market moved in, uh, descending order, you would execute all the buys, and then let's say you were along the market at $10, and you were risk—you wanted to risk five, you would put a sell stop at $5. So if the market moved from 10 down to five, the broker would execute the order, and then you've locked in your loss. So, um, that's the way—very simple—in in a deck, in order FL, it's no no different than all the, uh, electronic domes that you see now; it was just by then it was all collected into into paper.

Yeah, yeah, paper. How many—how much room for error must there have been though, back in those—back in with all this paper, with all the—from the desk getting the the orders to the runner, sending it to the pit; it's all on paper, all these transactions.

Yeah, there was—there's all kinds—that's an interesting story there. I mean, there's all kinds of different ARs. Like, for example, the phone clerk could have taken the order, and the guy said, "Buy 20," and he wrote it down as a sell, right? Um, so that error can happen. Um, the the the clerk could bring it to the wrong pit, and then they can't execute it in that pit; they got to finally finally get it back to the other one, and then, um, the the runner gets it to the pit, and the guy will put it into the deck, and the broker could execute it wrongly. What if he had a buy and he did to sell? So that that's the communication errors that could happen. But actually in the pit when you were trading and you were standing with a bunch of people, everybody had different symbols. My symbol was LBJ, um, because I grew up in the in the 60s, and LBJ—my my initials were Lewis John Porcelin, LJB—but you want—you want sort of initials or acronyms that people are going to remember. So I had LBJ because of the president, so everybody kind of knew who Linda Bird Johnson was, but I used that as my acronym, LBJ, and there were other people have POW and WOW and ZAP and HULK and, you know, uh, MMM and ZZZ and HAT. Um, there were a lot of different Aces; there were a lot of different, uh, you know, symbols. So now you're in the pit, and you're you're trying to buy from, um, let's say you're you're, uh, standing across me, and I'm—I go, "You're offering 10 at 10," and I go, "Buy 10," and the guy to you is offering 10 of 10, and he thinks I traded with you—him, right? So you both check to trade with me, but me—you—me and you are checking—looking at each other—checking the trade, but it's still the the hand signals were the same—was, "Hey, I bought 10; I bought 10." I'm writing it down—sold you—and you go, "I sold you 10." Yeah, right? I didn't realize the guy next to him was thinking that I was communicating with him. So the next day, now you have an out trade, so you and you've got a—I've got a client who thinks he bought the market at 10, all right, which he did; I executed the trade with you, and then next day this broker and to the your right, my left, is out to sell me 10 of 10, and I don't know it, right? Well, imagine if the market is at, um, at $15; it moved up overnight, and he's looking for his buys at 10, right? Well, I got the buys at 10; this guy—guys—is out to sell me 10 of 10, and the market's at 15; we don't know it; that's a winning out trade; we would say to him—I would say, "I didn't know it, so let's just split it; I take five, and you get rid of five, and we make $5 together." But let's just say the market was at 10, and it opens up at five, and that broker that I did not trade with is out to sell me 10 of 10; now we got a losing out trade. Mhm. Right? And that's when all the arguments start.

I can imagine.

Yeah, whose fault was it? It was your fault; my fault; no, you know. So, you know, the general, you know, when you have 500-P people standing in the busiest pit in the world, and the market is moving, um, you know, a matter of seconds and milliseconds every day, it's some out trades were just a part of the game.

I can imagine. In terms of personality though, because as you mentioned, like you're having these same mistakes, you have to handle those; you have to work out who was—who was at fault, who wasn't; you probably have to fight your case to try and make it so that it wasn't your fault, etc. But just generally trading within those pits and that environment, as you just—the the day that door opened and all that Energy's there, how important is it having a certain personality to be able to handle the pressure, the emotions, and the the chaos, if you will, of the floor?

Well, you know, it looks like chaos to the outside world, but it's really organized chaos, right? Everything had a had a put two different—two different, um, mindsets, right? If you were a kind of person that knew that you weren't very good at Trading, so you could have a job just executing orders and making brokerage commissions from the The Brokerage from from executing their orders and assuming that risk of executing the orders, and there could be out trades, right? Um, when I was recruiting traders that work for me and were backing them, I kind of look for—I used to look for people that were—I don't want to say this negatively—but less less cereal but more about discipline, like so dividual—on athletes, College athletes, people like that, because they knew what it took to have the discipline to train their body; now I just had to teach them how to train their mind when it comes to trading, right? So, um, for example, you know, you got to be able to trade with a stop. Like I said, you—if you've got a plan—I want to buy it at 10; if it goes up to 15, I want to get out; if it goes down to five, I need to get out. Well, a lot of times what happens that people freeze; they put a position on, you know, um, I I always, uh, used to have a little saying: do you—how do you turn a day trader into a scalper or into a—how do you turn a day trader, um, into a into a position Trader? Right? Let the market go against him, right? So if he buys him at 10, he thinks, "Well, I love him at 10; let me buy him at eight," and he loves him at eight; he goes, "Let me buy him at six," then all of a sudden they're down to two, and he's lost all his money, and he's got to puke out of his position, and the market turns around goes the other way, right? So, you know, that was that was a story that happened all the time, right? People just didn't—they lost their discipline and

If you lose your discipline, you know I used to have this little saying: if you lose your discipline, your ass is going to foul right. And you know one of my rules would be: don’t shoot your—don’t shoot your whole out in one day. You always want to be able to come back and trade the next day. Um, so when it came to trading, a different mindset—you got to be the kind of guy who can, guy or person who can make a decision, stick to the plan. If it—if it goes against you, take your loss and go on to the next trade. And you know, you know it’s all kind of cliché now because everybody says the same thing, but back in 1980, when I wrote the 10 rules of com—of trading, the—you know, the—the rules I wrote were: hey, learn from your losers. You learn more from your losers than you do from your winners, right? So you got to be able to, um, take rejection. Think—think about the fact when you’re wrong, the Market’s rejecting you, saying you—you literally have not made, you know, a good decision, it’s—and it’s turned into a loss. So what happens a lot when I was back in Traders is that they would get paralyzed. They—they make five losing trades in a world—in a row, you know, they’re—uh, you know, they become toast. If they become toast, they’re never going to be a good Trader. If they can’t put the past behind them and move on, then they’re going to be paralyzed by their decisions they made in the past, right?

Did you ever have to like coach them—coach people into that sort of mindset, or was it something that you would try and find naturally and then work, you know, build on that versus trying to help people accelerate their tra—so when we had Borcel trading, um, what we did is that we had three analysts that we paid to do all the market research, right? We had some people that were Gan experts; we had some people that were uh reversal experts; then we, you know, had people were technical anal experts. And that there was like 10 of us that would sit in a room, and then we would call the—the uh analyst in, and they would give us their—for their prediction for the market for that day. We did this every day, and um, so we all had out, you know, where it was a buy, where it was a sell, what we think the Market’s going to do, what numbers are coming out today—we got unemployment, CPI, whatever could affect the market—that was their analyst’s jobs, right? And they would come in independently. And so what we were looking for was consensus with the three different analysts with three different disciplines, right? So then we would then internalize it—well, out of those 10 Traders, right, maybe three of them were really good, maybe three of them were average, maybe three of them were terrible. But at the end of the six months, we knew the terrible guys, and we—we washed them out. We brought in new guys. But at the end of the day, um, you know, those are kind of things that, you know, people think that, you know, you just—you—people don’t understand that when you’re trading, especially you’re talking to your retail people, they really are—you know, they’re lost. You know, they want to learn how to become a technician; they want to become an analyst; they want to learn so on. So it’s kind of hard for somebody to do that part-time, right? This is something that you—you know, dedicate your life to; it’s 24/7 about information. So—so if you’re not the kind of person that can make some losing trades and move on, you’re not going to be very good at trading.

Was that something that you learned very quickly when coming into trading? For sure. I mean, you know, uh, I used—it was the best business in the world—was instant gratification. M, you made a trade, from you—you made ,000, it was in your account the next day, W, right? And then when you lost for the day, it was out of your account the next day, so instant loss. You know, I used to call it the, you know, it was like a one-minute—every trade was like a one-minute uh—uh business plan. Yeah, but—yeah, I mean, and scalpers and—and Traders that are just trying to take advantage of the—of the market fluctuations for the day are completely different than, you know, people that are, you know, creating hedge funds and creating, um, you know, ETFs or U—or anything that has to do with the market. But um, certainly when the S&P 500 was created, it became—it took a while for all the fund managers to understand how—how to use it. Mhm. And—so in the beginning, it was terribly inefficient, and by the time I left, it was very efficient.

So what were the—the pros and cons of that though? Because a lot of people would hear inefficient and think, “Oh, that’s no good, you know, can’t use that,” but then there would also be some pros too that I imagine, especially being in the—well, the pros were: when it was inefficient, the guys on the floor made a ton of money for us, uh, but the—the cons were: there really weren’t any cons. I mean, it’s just people learning by their mistakes, and you know, then—then, you know, uh, hedge fund managers—let’s just assume they were doing A&P—you know, a SPO or S&P 500 Index—and they were long all the stocks, and the Market’s up 6% in the first quarter, and they’re worried about the second quarter. They could literally go into the Futures market, sell their position out, be short Futures, long the stocks, and be Market neutral, right? So things like that started—um, evolving where fund managers were using it professionally, right? And when you’re on the floor and you’re a retail Trader in this space, you’re really, really, really just providing liquidity for the—the institutional guys to execute their orders. And what happens is that when they have a big order, they throw the market out of equilibrium. And so let’s just say, you know, they come in and they buy a thousand lot, they move the market from $10 to $17. The guys that short against that—that institutional guys are hoping the market move back to around—you know, back to $10 because that was equilibrium at the point. So those are the kind of traders that are, you know, providing liquidity for the institutional Traders. So you got to remember that you’re—you’re trading against the institutional traders who are—have long-term goals and different strategies applied in the market.

I always find it fascinating when speaking to more professional Traders and—and people who have that wealth of experience, because you hear about more—Alo different roles in terms of having analysis, having then the trader, having the say risk Department, etc., versus the average retail Traders trying to fulfill all those roles in one. Yeah. And then as you mentioned as well, a lot of the time you have to dedicate your life to—you have to be full-time essentially to really build these skill sets. And I think that’s where it’s really interesting because most Traders are always rushing—retail Traders—they’re always trying to rush this—to become a successful Trader—to have freedom, etc. And I do believe there’s a very big misconception when it comes to trading because yes, it can grant you Freedom—you can live life on your terms, etc.—cool, but that freedom doesn’t look like you wake up and just do whatever you want all day. You still—the discipline of what trading requires to pres—present that life is: you essentially replace your job, wherever that may be, with the job of trading, which, if anything, could probably be more stressful, be more heartache because of the ups and downs that comes with it. But at the end of the day, for those who are dedicated, the reward is—is there, um, but it’s understanding that it’s going to take a lot. Like when you hear of say Traders trying to become a professional—full-time Trad—I say professional, but full-time retail Trader within the space of 12 to 24 months, for example—like, what does that make you think after, you know, having all the experience that you have and—and have seen the space grow and evolve in the way it has over the years as well?

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I had two types of Traders: I had Floor Traders and upst—upster Traders, um, so it’s the same thing literally. I had a rule of thumb: if I could get a Trader to break even after one year—broke even, covered his commissions—he had a good chance of making it as a Trader, right? If they—if it—so meaning one year of being in the—in the market, buying and selling every day, putting your losses in, putting your winners, and doing all your research, right? There’s a—we—what we used to call it was: ready, aim, fire. Ready was: let’s do our research; aim: okay, these are the targets we’re looking for; Market gster: fire—put the order in, right? And then at that point, then you manage the risk; then you have to have a stop, and so on. So you have to go through that process thousands of times—thousands of times before you become number one, comfortable with it; number two, to understand what it’s going to take to turn out profits every day, right? We—us—I used to have a rule about guys that traded on the floor or traded upstairs, and they said, “I made money every day for a year.” I go, “Show me a guy who makes every money every day for a year, two years, three years, and that’s the guy who’s going to get indicted because he’s got Insight information,” right? Um, so—um, you know, it—it’s really about money management and—and going through that routine day in day out, and like I said, it’s less cerebral—you know, the research is cerebral—but at the end of the day, the execution part of it is just robotic, mhm, right? And this is—you know, this used to be the—the big—uh, sort of argument between computerized Traders and discretionary Traders, right? And I used to look at the computerized Traders and say, “Yeah, I got it, until you’re—until you’re—uh, program doesn’t—is not—you know, you know, spits out like 10 non-profitable trades, and then you’re in there—optimizing,” right? So my point is is that whatever your philosophy ends up being—more computerized, more—you know, discretionary—you got to do that day in day out and hone your discipline to be able to stay with your systems, right? And that—that’s a—that’s a difficult situation. And—and things have changed dramatically from when I traded. I mean, we had all the information—when all the order flow is going through the exchange and then into a pit—we had all the information, right? So I always like to tell people, you know, you got to understand that we were the original high-frequency Traders. So literally what we would do is we’d be standing in the pit, and we could see the order flows coming in; we try to get in front of the order flow, right? And you got—you see all these Brokers buying and—and—and the market’s at 10, now it’s at 12, now it’s at 15. Well, let’s just say I assumed, you know, I saw the order flow coming in, so I bought the 12s and I bought the 13s, and now the guy—the—the order fulfiller filling that—that Institution order is bid it up to 15. So I, you know, I bought 20 contracts at between 12 and 13, and I turn around and say, “Sold,” and sell them 20 at 15. Well, I make, you know, literally three and two dollar profit on those exchanges, and if I could do that, you know, 10, 15 times a day, I’m making myself three to $5,000 a day, you know? And the other thing about retail Traders is they’ve got to—they’re going to have to understand that where their risk tolerance is, right? There’s some guys that can trade one and two lots, okay, and they make the best decision—decisions ever. As soon as you kick them up to a five lot or a 10 lot and you increase that risk, their judgment gets U skewed. And—and what happens is that the two things that you cannot measure about trading is that, you know, everyone has a different propensity for greed, right? And risk. And so when—when you—when the smaller Trader steps up to be a bigger Trader, can he handle that—that risk? Because now when he loses, he’s not losing $200, he’s losing $2,000, right? So that’s another thing that—that—um—uh retail Traders need to learn that—it’s—that’s going to be a—you got to understand—I used to call it one of my rules was: know yourself, know what you’re comfortable with, cuz if you try to—to get outside your comfort zone, you’re going to make bad decisions.

Do you feel like everyone has a limit—that there’s just a certain limit that you can’t train Beyond—you can’t read a certain book about or learn to get past—like every human being just has a limit that the risk tolerance just gets too out of whack? So it’s a real good limit test is uh when you have a position on and you feel like you’re going to throw up—maybe it’s too big. Definitely. Yeah, but yeah, you know, um, there—there’s different training. I—I used to—I used to in the day—I used to compareed to all these Bank Traders—you know, all they trade hundreds of million dollars of—yeah, well, they had the bank’s money, you know, and they had the book behind them, and they had all these different things. I was on the floor trading my own money against Goldman Sachs, right? So—um, it’s a little—it’s a little different, right? When it comes to uh, you know, who’s—who’s laying the risk out and you know who has to assume that risk.

What do you think it was for yourself then to be able to handle that much risk? You know, like I said, um, I was able to uh become Mor’s clerk, um, and literally—I tell the story all the time—I was there for a year, a year and a half, and I wasn’t making any money. I was making money filling orders, but I wasn’t making money trading, and then I would have an out trade, and I was getting very distraught thinking about leaving. Wow. And then—I don’t know—whole jar, but do you remember the Falcon Islands? When the Falcon Islands uh—this would be like mid-80s, 1985 or so—I’m trying to think, maybe 83, so U—the—the Falcon Islands decided they were going to succeed from—or they got—they got attacked by Grenada, and then they—they were going to succeed from British—the British Empire, and then they sent ships down there. Well, gold rallied like 55—$50, $60 in like three days, MH, because of the—threat of a war, right? And then—they made a—they—they made an announcement during the day that uh—no, that the strips are turning around and they’re going to surrender—there’s not going to be a war—and then gold dropped like $80 in about two minutes. So I was filling orders in the gold pit at the time, and—and when you used to fill orders, you know, you’d be in there, you know, trade with, you know, 30, 40, 50 guys, and then the Market’s in a fast market, so that means the tape goes to fast, so the order flow is not coming out. And so what would happen is that I would fill orders with the different people, and I would—I would write on the order who I did—I would just put the guy in the price and stick it in my pocket. So I did my pockets—literally, I had probably 50 orders in each pocket, and my clerk had—so now the market slows down and we’re—and I’m verifying all my trades with different people. The guy next to me—his name was Mike Manini—his badge was MMM—and I look at him and I go, “Hey, I sold you uh, you know, 25 contracts on the low.” He goes—he shakes his head—and I go, “What do you mean?” He goes, “No, I sold you 25.” So we had what we call a sell—sell, MH, and the market was 50, went down to the low, and then it rallied back because they said they didn’t surrender, and then war is on. And so now him and I had what we called a sell—sell, mhm. So the way we resolved it was: he bought mine, I bought his—the market was already $50 higher—and I made $75,000 on that trade. Wow. He made 775,000 on that trade. Now the S&P—S&P pit opens up—I’m, you know, in that year I’ve got, you know, like a 100 Grand in my account, and I got a year and a half of experience. I go into the S&P pit, and now I’m killing it—like I know what I’m doing—I’m not making mistakes—um, I start building a deck like we had in the goal pit, and then—the S&P pit just exploded.

Well, talking of exploded, then there was one point where you were responsible for 10% of the volume, if I’m not mistaken. Yeah, that was for—for what I used to trade and my customers. So I was—I was—um, executing orders for Goldman Sachs, Solomon Brothers, uh, EF Hutton, uh, Smith Barney, Merrill Lynch, um, Mori, and I put together a pretty big deck, and all the big local firms. And at that point, I was, you know, I had a—a client here in New York—York that was—Solomon Brothers—and they were gigantic—and the guy here that was in charge of that company was a guy named—he was a partner—was uh Stanley Shop Corn, and he loved the way I filled my orders. And uh, so I got that, and then that—that went all the way to 1987, 86, and then 1986, the—The Merc—um, literally uh Outlawed dual trading in the S&P pit—it was the only Commodities future ever to Outlaw dual trading, W. So I gave up the deck and I just became a Trader in ‘87. Wow. But to think about that turn of events though—we just go back—like you went from going nearly thinking about quitting, yeah, to then having 10% of the volume of the S&P. Yeah, you—and—and like I said, think about retail Traders—they got to go through that process all the time, right? Well, what I was very—really, really comfortable with after a year and a half was buying—you know, if I got an order to buy a thousand, I bought a thousand; if I got an order to sell a th—I sold a thousand, right? So I got really good at executing orders, so I was really good in the process of buying and selling, so it just became normal where I kind of disguised what I was buying and selling for myself in the order flow—that’s another reason the bigger order for—of the—the bigger uh players and the like Solomon Brothers, Goldman—that they had Traders—they didn’t want him to know it was them, so they would just say, “Lewis, you know, buy a thousand, give up yourself.” So I would just say, “It’s me.” The next day we would have a what they call an out trade—was uh just called the house out—where you make a switch of the clearing firms. Okay. But uh, yeah, that—the fact that I was executing so many orders just made me very comfortable with numbers, you know, big numbers.

So would it be a case where in your mind you’re—you’re focusing more on the—the buys and sells, the contracts versus dollar amounts and profit amounts? And yeah, it was all about making sure I’m—you’re doing your buys, your sells, and making it uh executable—making it so that there wasn’t a problem. So one of the things that I was attributed at the Merc that nobody liked in the beginning but then everybody did it was: I—I had all this risk, right? And I’m trading with all these different people, and I’m getting orders coming in. And so sometimes it was really physically impossible because what the rules of the exchange said was that I had to look at you—we had to acknowledge each other—we had to write down the five things on the—on the uh—on—on the trading card. So if I was the buyer, you were the seller, I would have—the buy that said, “Bought 10 from you,” let’s say your badge was AKA, and then I put AKA, and then you would say you’re Merrill Lynch, I would put down the number 560 and the price, and then he have to put on your card, “I sold TLBJ—these Goldman Sachs—here’s the price,” and then we had what we call a BR—was a time bracket—like every 15 minutes there was a time bracket—those are the—was it one, two, three, four, five things that had to go on a trading card, right? And we had to—we had to acknowledge this together. Well, imagine when the Market’s moving, you know, fast markets, then I don’t have that much time—all I could say is, “I bought 10—price,” that’s it. So I would take it and put it in my pocket. What I did then was I hired a clerk to go around and check all my—double check all my trades, so I didn’t have out trades. Yeah. And then, you know, some guys fought it to the end and say uh, you know, my clerk would go to check the trade, and they would, “Don’t bother me—he should be checking the trade with me,” you know? And then I would go up to the guys, “Listen, if you don’t check the trades with my guys and we ever have an out trade, you’re—you’re going to eat it—not me.” Six months later, everybody had an out. I created a whole new job on the floor—out trade CL—that verified traits. So that—that did a lot to—excuse me—that did a lot to—um, literally—um, keep out trades to a minimum, you know? Because you—you could find right out—right during the day—right? You didn’t have to wait till the next day and some catastrophic event happening, um, and that would, you know, could—could uh literally—um, change your trading career. I mean, there—there were—there were some gigantic out trades in the millions of dollars while I was down there. I could imagine. I can only imagine. So then you’ve helped to sort of try and remedy that by creating a role which would—and verify in the moment, on the day, yeah, versus just leaving—everybody did it then. Literally, I would say within six months everybody had a trade Checker. Well, well, it’s necessary though, as you said, once you’re trading that sort of size and—and as you say the markets are moving so fast, trying to note down all those things yourself while trying to continue to trade—and that Trader—actually, that trade Checker became an extension of your—you—and if you had a good one, and the other guys had good ones, they knew each other—they literally knew, “Hey, I—you know, I got a 10 lot with Lewis”—boom, boom, boom, boom—they—they would reconcile it. How important would be like maintaining good relationships be as part—

Of pit trading, with the "who" as part of pit trading, like having those maintaining those relationships because you're trading with each other every single day. Yeah, yeah, you know, um, when I was filling orders, I never would try to lay away what we call "local," right? So if I had a big order and I started bidding the market up, let's say I had a couple thousand to buy, and you you hit me like on a 10 lot, I would ignore you, and then he would I so and I would just shake my head. You know, I don't want you to sell me a 10 lot, and then I'm going to race the market up another 200 points. Yeah, so we had this like symbiotic relationship with everybody in the pit, right? Our goal was to provide liquidity for the institutional traders, and we did, and hopefully we could make some, uh, like I said, provide liquidity and then make some money off of the, off the uh, the institutional artists that came into the pit. You know, you know, of course, personalities are what they are, and um, so there were some people you got along with better than others, but uh, most likely mostly people respected each other. We respected each other for what we did, and we're all there trying to make money. We weren't trying to, you know, hurt anybody. You shouldn't try to hurt anybody.

So, in terms of maintaining those relationships, were there ever moments where things do get heated and and things get a bit out of control? I can imagine. Are you asking that because you already know those things? I've heard I've heard rumors. I've heard rumors of uh, you had uh, not only for the 10% of the S&P and obviously being a phenomenal trader, but also having a reputation on the floor. Yeah, I did, uh, and I, I not something I'm proud of, but I did have the most fines on the floor for what they called "undo force." So, uh, you know, being the bigger big, you know, one of the biggest traders in the pit, um, I would turn markets sometimes, right? And I would go, you know, half bid 70 bid 80 bid. And if you make those bids and people are offering them, and now there's 500 people in the pit, you should get all those contracts. Well, there were what I used to call the the "bottom feeders," the shark feed, you know, they they used to, you know, I would turn the market, no one thinking the market's going higher, you know, a lot of people used to follow me, right? So, um, and I see somebody sell this guy a five lot when I turned the market, that, to me, that was not right. So I would go up to that person and strongly suggest that they don't ever do that to me again, right? Yeah, there were times to where, you know, you know, other people got in fights and pushing and shoving. Uh, the number one thing was where you could stand because the higher, more elevation you had in the pit, um, you had better line of sight. People were all always jostling for, you know, places to stand. You know, people get their like 5:30 in the morning, the market's open, and have a card and standing on the floor in their spot so they could have that spot. Um, so it was very physical, very, uh, uh, you know, it's all about sight, being seen, and yes, I did have uh, uh a lot of different uh fines for that, but uh, you know, that came with part of the territory, being the bigger trader and so on. But uh, it's funny because I would be playing golf with guys sometimes, and uh, guy go, um, you know, I, I, um, what do you do? I go, I, I trade S&Ps on the floor, you know, S&Ps. So I go, yeah, I know him. He stands in the pit with me. And uh, the guy who was playing golf with would meet the trader and say, hey, I met this guy who's the nicest guy in the world, this guy L.S. Borsellino. And he goes, what, you met Lewis? He goes, you met Joey? Joey's my brother. He goes, no, I met Lewis, played golf with him, what a great guy. He goes, well, you shouldn't be standing in the pit with him. But then that's what the job demands, I guess. Yeah, you know, I look, I wasn't there to make friends, I was there to make money, right? And so, um, you know, there was a, you know, unwritten law. And it was funny, cuz like the the the smaller traders gave, um, sort of gave respect to the bigger traders and allow, so like there were times that I take a 100 lot down from somebody, there'd be like three or four guys around me say, Lou, can I have two? Can I have five? Can I have three? And I would go, yeah, yeah, yeah, don't worry about it, and and I would give it to him, you know, uh, but you know, um, there, they're being definitely a hierarchy in the trading world. One, you know, how much volume were you doing? Two, how good were you? You know, people respected you. One of the things they had to know was that if I made a trade with you, it was good, meaning I wasn't going to back out of a trade. I mean, in the early days before they had what we call "dupe cards," um, there were guys sometimes who make a trade with you in the pit, and if it went their way, they just ripped the card up and say, I never traded with you, right? So, but you weed those people out, you know.

Um, I'll tell you what, think think about this: hundreds of billions of dollars were trading hands every day, okay, without a lawyer, right? It was a handshake. Your word is your bond. You make your trade and you go from there, right? So I love what you're saying there because it really gives an insight into what I would imagine most people don't really understand. Like we look at old videos of the pits, we see the the, as as we would say, chaos, and we would say, oh wow, that must be absolutely insane to be part of, absolutely also incredible in ways too. But as you already suggested, it's more organized chaos, especially when you're involved, right? It's, it's there's an order to things, but then we get to learn about the hierarchy, we get to learn about the levels of respect that traders will have with each other, also the people who may try and cut corners, like we, the deeper levels that us as retail traders really wouldn't see behind the curtain, but it's really insightful to to learn about. Yeah, so you know, think about how efficient it was, right? And here's, here's, here's the things that I, if I can give, may put it in a little um point of reference for you. So let's say you run a business, okay, and you're doing business with this guy over here, and you're making a good profit with that as a customer, and um, somebody goes in there and undercuts you and takes that customer away, you're angry at that spot, but you really, you go, well, you know, that's part of doing business. And then when you really get angry is when you see what it does to your, your, your P&L a month or two months from then. When you're on the floor and somebody misses you on a trade and you can't get out or get in, you know, right away, hey, that you missing me on that trade cost me $10,000 immediately. So it's instant loss and instant gratification with that kind of a high-stake pressure on people. It didn't bring the best out of people in all the time, right? At the end of the day, you know, money is the root of all evil, right? So, um, it was it's different, right? So you know, I, you know, I've started several businesses and done a lot of things, but the things that really bother you in business end up affecting your bottom line a month or two months. Now, in trading, it's, it's right there. I mean, you're looking at that person, and the person just cost you $110,000. So it's a different, uh, you know, especially floor trading. Uh, retail trading, you're going to get mad at the the order, the screen, you're, it's going to be the your order entry system didn't work. I put the order in, you're gonna get mad, right? And then you're gonna miss a trade, and then you're gonna run the risk of overtrading, all right? You know, you used to have a a bunch of different rules about overtrading and trading, you know, but um, yeah, it's uh, you know, you, you'll find out because if you're trying to, you know, if you're trying to leave your business, right, here's another analogy I just make. So let's say you work for somebody and you're making $50 an hour, okay, and you work all week, you work out two weeks, and then you get your paycheck, right? Well, let's just assume the business, uh, you know, it, they didn't make any profit for that month, right? But you still got your paycheck, right? So that risk is on the owner of the business. So think about trading. I used to tell people this is the only only thing that you could work all month and not have any profits, m-h. Right? That becomes like, I was fortunate, cuz I was a floor trader. I, I probably, I think over from 1981 to 2003, maybe had two or three losing months, right? Um, and and then you know, there were times where I would, you know, maybe go three or four days where I'd been making money, and I'd wake up in the middle of the night, you know, and cold sweat going, and I lost it. I lost it, you know. But you know, those are the kind of things that, you know, that happen. I mean, because literally you, you are your business. I mean, um, I, in my height, you know, when I was trading the most, I had, you know, I was making a couple million dollars a year, and I had one employee, I had two employees, you know, you know, I've started businesses where I've had 800 employees. Wow, right? So, um, different risk, different mindset, you know, um, and and different sets of pressure, pressure in terms of the trading side.

When you mentioned that you went from, say, having that losing period where you thought about quitting and then obviously started to really perform well, yeah, and started to really believe in yourself and and what your, your capabilities were as a trader, especially in the pits, what was your mindset like though as you started, you know, through that process in terms of your mindset being like, um, you know, were you confident in yourself, or you just kind of going with the motions, or were you confident that, okay, I've got this now? Because as you just mentioned, there, there were moments where you might have not made money for a few days and then suddenly think, okay, I've lost it. Yeah, well, tell tell us about that sort of roller coaster of the mindset and trading. Let's take a break for a minute there, guys, cuz I want to tell you about the best trading tool on the market, TradeZella. The reason why TradeZella is the number one trading tool that every trader needs is because you can do back testing, automated journaling, trade replay, in-depth analytics, and so much more. And the greatest part about TradeZella is that it's all automated. All you have to do is connect your MT4 and MT5, it will pull all your data onto the dashboard. You can add playbooks, you can just add notes, you can add images from your trades, and you can get the insights that is necessary for you to progress as a trader. Now, TradeZella is for absolutely everyone, whether you're a crypto trader, whether you're a Forex trader, whether you trade prop firms, it is for absolutely everyone. And that is why B thousands of traders have signed up using my link here through the podcast. Make sure you use the code Riz10, the 10% off your monthly subscription, or W for 20% off your yearly subscription. The link is in the description below, and let's get back to the episode.

Yeah, so uh, it, it, you know, it's like I said, it's instant loss, instant gratification. Um, there was there's no, no better feeling than making a great trade. No, no better feeling. I don't, I don't care what people tell you, right? Um, and there's no better feeling of the independence of being a trader, right? I mean, I grew up, I raised, between my wife and I raised seven kids. Wow. I was the football coach, the baseball coach. I was that. I mean, it, it gave us a freedom, you know, two vacations a year, you know, as SP skiing, uh, doing all those things, private jets, and and my kids, you know, grew up in a life that was, you know, second to none, you know. But uh, it, you know, that, that mindset, uh, once you got it, it's like, you know, it's a big ego, and you gotta, and I also said one of my R rules was if you lose, you know, if you lose your head, your ass will follow, right? So you, that's one of the things that, the market's the only thing that humbles everybody. Yeah, right. It was funny because we could have kids who basically barely got out of high school making a million dollars a year because they got into the pit, they learned how to put themselves in a good position, and they were able to scalp back and forth every day, right? Then I had guys that were Harvard, MBA, standing in the pit that struggled with it because they were, they were taught to be more opinionated, like, I think this is where the market's going to go, I'm going to buy it here, I'm going to get out here. And like I said before, two things you can't, you cannot chart fear, greed. Everybody has different fear and greed. So, um, it's a, it's a, once you have that swagger and you're in the environment, um, you know, there, you know, I, I originally started out, I'm gonna make $500, $500 a day, then I went to, I'm gonna make a $1,000 a day, then I went to $2,500 a day, and then it was, I'm gonna make as much as I can any day, right? And um, you, my typical, uh, my, my typical uh ritual was I traded in the morning to about 10:30 central time, you know, opening to about 2 hours and came back in the afternoon, uh, because the market tended in the, in the middle tended to uh just kind of float, right? So that was my typical thing. Then towards my end of my career, um, my goal was to make 5,000 a day. If I made 5,000, I left. But uh, you know, it's uh, you know, in, in 1987, in the crash, um, I made over $4 million, and I was 28 years old, and it was like, you know, you're on top of the world, and I became a genius because everybody in the world was calling me up saying, hey, I got this great investment for you with your money and my brains, you know, we can make more money, and I'm like, you know, why can't we just use my brains, you know? But uh, yeah, you know, it's just, um, I, I'll tell you what, it's, it's, it's the highest, highest and lowest lows. Yeah, highest highs and lowest lows, right? And you got to be able to deal with that fluctuation, definitely. And that fluctuation, I think, can get pretty wild as well when those higher highs are like you say, $4 million at 28 years old. Yeah, and then were there low, low moments after that, for example, that came well? And and that was '87, '88. It made 150 grand because the market dried up, you know, that's the worst thing when you have market crashes in different things like 20, like you know, when you think of the '87 crash, you think about the currency devaluation in the 90s, um, you think about um, 2000, the dot-com, right? When liquidity dries up, it's hard, right? And then we used to have a, we used to have like an untold story on the, on the floor, and and even anybody Wall Street people tell you when the Democrats are in, it's a party, everybody's spending money and things are going crazy, right? You know, when Reagan got in and he stabilized the markets, we were all there looking at ourselves because there was no volatility, right? So you know, we want to, if you're day trading, you want, you want market chaos, you want uh, the ability, uh, you want liquidity, you want uh, um, market volatility. That's how you make money, definitely.

When you were 28 years old making 4 million, because bear in mind that's 4 million at that time, because I did a quick research before I came here, yeah, and then 4 million at that time is essentially, it's almost like a 5x, so essentially it would be like almost 16 to 20 million, yeah, in today's money, yeah, which is absolutely insane. It was insane. I, you know, I did some good things, you know, I bought memberships, I bought real estate, I did things like that, um, you know, we used to have this funny saying in the pit, right, uh, all the guys, you know, we were single, too. You're you're single guys. I go, yeah, the first year I made $4 million, I spent $2 million on uh booze and girls. The second two million, I just, you know, blew it foolishly, man. I guess when you're making money like that, even though it's not like, let's say, easy, but it's like, um, it could feel, I imagine, like wildfire in a sense, because you're not actually seeing it, but you're trading it. Yeah, um, it must be feel like that, it must feel so easy, then, very euphoric. Yeah, very euphoric. But you know, I, and the key to that is staying grounded, right? If you don't stay grounded, um, you know, a lot of guys I saw went down deep, deep rabbit holes with drugs and things like that. I fortunately I didn't have that, any of those habits, like booze, drugs, I didn't have any of that, um, always kind of stayed grounded, you know, kept my physical body in shape and things like that, so I could, you know, you know, um, I don't know if you, anybody who's ever played any organized sports, especially a higher level, right? You know, there's practice day, and then there's game day, right? And then there's even practice intensity, but because you're trying to duplicate what it's going to be like on game day, but it's not game day, mhm, right? So when you're a trader, it's game day every day, right? And if you don't learn to control those motions and do the things of physical stuff, those um, the the endorsements that are released, good and bad, are going to get you, the flight and flee is in constant play, that flight and flee response, which will do, like towards the end of my career, I would, I would just pull in the building and get tension headaches, really. Yeah, so uh, it's, it, it's that's a real stress that puts a real toll on your body. So one thing I was going to ask you actually in regards to that, going back just quickly before we get into that, was more so into, um, you know, what was the mindset like for a lot of traders, because you went past obviously '87 and '88, you, you continued to trade, but I can imagine there were traders who are in that euphoric feeling, you know, making the, say, millions of dollars, tens of millions, obviously in today's money, for example, then the next year it's all dried up, the the whole market's changed, and they won't be able to then progress beyond that point.

Well, there's a sad commentary on that, right? Because the reason I left is that towards the late 90s, um, you know, all these electronic markets opened up. I, in fact, I remember I was in Jack Sanders's office when they, what they, when they announced uh the launch of 24/7 trading, which at the time it was going to be called PMT, which was post-market trading. You know, we all laughed at it, we didn't know what it was, but I did. And Jack said, what do you think about this? I said, I go, what do I think about what? That you're going to do 24/7 trading on a computer at night? He goes, yeah. I go, how long is it before it takes over the pits, right? I knew, I knew right there, as soon as it became electronic, then we were very, very, we were going to be um eliminated. Yeah. Well, now that was like early 90s, right? It took 10, 13 years, 15 years. I think there's only now one pit left there, and the are the option pits, and then the option pits are the only thing where you can't totally electronic like, because you got to execute different strike prices at once, so only brokers can do it. But um, I saw the writing on the wall in like the late 90s, and my book, I said that we're going to be gone. I, I predicted two things: floor traders would be gone, and the board and the the Merc and the board were going to merge, um, and and um, it did. I mean, literally, uh, what happened when we lost our edge in the S&P pit, it's half the order flow was going into the e-minis, so that we didn't have um 100% pure information, I want order flow, because some of was on the screen, some of was the bit. How'd that make you feel at the time, so seeing and forecasting in the future of like, essentially, everything that my edge and everything that I'm doing and have built so far is going to be fading away? Yeah, so uh, anxious. So I did a couple things, um, I don't know, how far you got into the documentary, but one of the things I did was I started a company with uh two people, Jerry Putam and this guy and margin and Stuart Townsin, and we started the first NASDAQ stock trading room in Chicago, which was going to be the, what's called the, so Bandits, um, which is very well documented now. We went to a 9-year litigation um behind my back when we were partners, they just started, they started Archipelago, and then Archipelago became um, and let's say we started the company in '96, 1996, in 1997 or 1998, we had a dispute. I sued him and said, look, just give me my information, just give me the the show, show me how much money make, what this is, so on. They never disclosed Archipelago to me. So, um, then Goldman Sachs bought Archipelago, as everybody knows, and then Archipelago became ARCA, and they merged with the New York Stock Exchange within a 10-year period. Uh, I sued Jerry Putam and margin, I sued Archipelago, Goldman Sachs, I sued them all, uh, it was a nine-year litigation. I won a fraud case against my ex-partners. Archipelago was was thrown out of the case, but I literally get to sit here and tell people I started a company that became the New York Stock Exchange, right? So I literally, um, that the one thing that was great about being a trader, um, is that you have a knack, um, well, you understand the fast business economics, right? Because you're, you got to buy low, sell high, or sell high and buy low, right? So you got to take that mindset and put it into other things. Um, I always kind of felt that, um, you know, I found the exchange, and I used to say, I hope this last five years, I hope this last five years. So I did other things that I thought would, you know, I had some good instincts on, and uh, so the electronic trading was the one thing uh that I, I started preparing for, and I was right, you know, it just didn't make any money on it. Yeah. And going back into towards obviously when you mentioned about keeping yourself in shape, you know, game day every single day, what was the mindset in doing that, cuz as we discussed, like other people, they would make the money and they would find themselves vic, and then they would end up in a pit, you know, of their own, yeah, um, you know, what was it that allowed you to be different? Uh, I think my sense of family, mhm, my kids, you know, and my wife meant everything to me. We were literally, you know, I had a home up in Lake Geneva, Wisconsin, which is sort of like our Hamptons, you know, uh, uh, I had a private plane, a twin engine, was it a Baron, twin engine Baron? My wife would move up there with the kids, I would fly in the Meigs field every day, 18-minute flight, work for a couple hours, fly back to Wisconsin, be with my kids on the boat, tubing, skiing. So I knew what kind of lifestyle I generated and what it's going to take to maintain that lifestyle, and if I was one of these guys that was seated to, you know, you know, just had a...

I had a bad lot of bad habits that not only didn't affect me, it affected all the people in my life. So, um, I guess this sense of purpose, family, being, you know, the breadwinner, the supporter, you know, my wife did not work, and, you know, I wouldn't, didn't want her to work, right? She raised seven kids, did a great job; all her kids are productive, you know, and it's, you know, mainly because of her.

Yeah, for sure, you know, uh, but uh, I think that, you know, it's it's easy. I used to call it The Humbling Effect, right? So I had a brand new Mercedes; I'm driving down the street, I stop at the stoplight, and I look over, and there's a guy in a brand new Rolls-Royce, and I'm going, "What is that guy doing better than me?" Right? So, you know, it's like every time you think you're um good, you're going to find somebody better.

Yeah, right. So if you don't keep that sort of mindset, um, you know, you lose your head, and your ass follows, right? What they tell you. So it's it's it's, you know, I'm not saying that I, I do, you know, a robot; I made my fair share of mistakes, but you learn from them, definitely.

Would you say as well that obviously making all this money, especially in the fashion that we've described, in terms of basically how fine air and it's very euphoric, did you ever find yourself chasing money, not in terms of trading wise, just generally in terms of like, "I need to be richer," as you just gave an example there, like you're in the Mercedes, there's a Rolls-Royce? Yeah, did you ever find yourself in that sort of notion of like, "The more money I make, the more happier I'll be, the more I'll be respected," etc., etc.?

Well, I mean, that presupposes that what you do, what you were doing, had to do with making money. So I say this all the time: when I was trading, it was more about me competing with you, me competing against the market, me competing with the other guys in the pit, right, and buying and selling, and at the end of the day, there was a profit. I wanted to be the best; I wanted to be in the in there, and the byproduct was money. But if you're going to do, be in that environment, being the master of that environment, being able to to be constantly um more right than you are wrong, that's a challenge, right? So I always looked at the challenge of how do I become the best today? I'm going to be, I want to be better myself, and some days it meant more money; some days it meant I didn't lose any money, right? So I was all, I was more about the process, right, than I was about the money it was making.

And yeah, do you want to make more money? Well, then you kind of, you know, you kind of you gotta understand that um I was making money on 100% of my efforts, which becomes a very hard thing to do day in and day out, right? So I did other things where I backed traders and I took a percentage of their winners, and I started The Trading Company. Um, I started a website uh called teachtrade.com, and I was on CNBC, you know, twice a week, week, and so on. Within months, I had 30,000 people on my website.

Wow. Right? And I tell this story all the time because it's very, very—you want to talk about your retail traders, right? So we did everything on this website; one of the things that we did was that we had, you know, introduction to um, uh, what do you call it, the financial analysis, or like charting. We had charting and um, so we were teaching people how to become, you know, how to do uh your basic charting, right? Buy points, sell points, so on, right? Then we had the Ten Commandments of trading; then we had here's the difference of all the brokerage firms, right? So it was more of an education site for retail traders. What we did is that we would put a morning comment out about the S&P Futures, Dow futures, right, and so we would do all that, and then we do a midday comment, and then we do a closing comment, right? And then we would have a story, like a a pit story, you know, from the stories from the pits.

Well, when I did the web trend thing, so this is 1996, I was absolutely enamored and floored by the power of the internet. I was looking at this thing and going, "I'm getting a million impressions a day; I got 20,000 people on my website," and when you do an analysis of a web trend, it tells you where people go and spend their time. Where do you think they were going, spending all their time? Introduction to technical—Oh, another thing I did was kind of clever. On my spread was my wife had a a book, you know, like Esquire magazine, Glamour, and if you're reading, "Is your husband a good lover?" Right? They'd have all these questions, right? So what I did was I went to University of Chicago, hooked up with this uh psychiatrist, or the guy who was a, you know, sociologist. I go, "Here's all the traits it takes to be a a good trader; make me a quiz. I want to see if you got a personality trait." Of course, you know, at the end everybody had a personality trait, right? So but what I did, here are the 20 questions to take to take the quiz; you had to give me all your information: what's your name, where do you live, how much money you make, what education are you at, do you have a trading account? So I was building a database; I didn't even know it was going to be valuable, right?

Um, so when we did the web trend, everybody, like I said, where do you think they were going? Were they going introduction to technical analysis? They went to the quiz. Where did they go, or going to the commentary? Yeah, they were spending most of their time on what I thought the market was going to do, what I said midday, when I said at the end of the day. So I, you know, I have this little paradox I tell people all the time: you walk into your best friend walks up to you and says, "I've been I've been doing all this charting, and I think that this company is going to go from $20 to $40 in the next six months; you should be all in and buy it," and you look at him and say, "Wow, that's great; I'm glad you you know you've done that that work, and it's really you've done all this work and back testing and all these things." Goes, "Yeah," the next day one of your other friends goes up and says, "Hey, I know the CEO and the CFO of this company; they're telling me that that this is going from 20 to 40; you're going to buy that 20 to 40 from the guy who said he has inside information first," trying to do the work yourself. Think about that. Yeah, right? It's typical of everybody, people that want to shortcut the system, and this is the really thing that things I look at when you're talking about your retail traders, right? If you're going to be retail traders, you need to learn this to do it yourself.

So what we did, we started expanding our market commentary every 15 minutes, right? And I met this gentleman out of Houston, Texas, who worked for Baker Hughes, and he was building trading systems, but he he was a computer scientist, right? And he calls me up; he says, "Hey, would you trade this system for me?" I go, "Yeah." He goes, he goes, "If I give you the system, when you trade it, and you know we can I can make some profits," I go, "I'll tell you what, give me the system, and I'll trade it for you," and within six months, in about three months, I made him about 300 grand trading the system; I made it profit for him, and then I had my own, right? And then we started developing a relationship, and he said to me in 1996, he goes, "Les, what do you want me to do? I'll take over your website; make sure that it's, you know, what do you want it to do?" And I said, "You know what I want is I want to be able to type our information in, and when we say it, when we put it in into the website, it pops up on their screen." He says to me, "Yeah, there's this new thing called Java; I'm an expert at Java language," and in 48 hours, he created a popup window so that when we were, if you left us minimized, as soon as we typed in somebody, "Hey, market's doing this, blah, blah, blah, blah," you could read it and then minimize it. That created a market of—I had people, I had 6,000 people using my my site for six hours a day.

Wow. And then I decided, "Well, how you going to monetize this?" So I went around to all the, like I said, um, commodity future mer, I s, commodity future merchants, SVMs, right? So I went to all them, all the different ones that had retail business and said, "Hey, why don't you sponsor my papa, you know, sponsored by, you know, Goldman Sachs, sponsored by, you know, uh, R.J. O'Brien, sponsored by whatever," and then they'd have my commentary, and then they could get those people to clear them, because that was their business is getting people to clear. Uh, nobody understood what I was doing in 1996. You know, I like to say I invented Twitter, but you know, what are you going to do, right? I was forced, I was literally was doing popup stuff in 1996, and so um, uh, I that failed, meaning they didn't want it until I went to Michael Bloomberg and showed him our traction and said, "I want to give this away for free on the Bloomberg terminal for six months." He goes, "I'll give you 30 days," and so we did it for 30 days, and at the end of 30 days, we had 30 hedge funds paying us $300 a month for the service.

Wow. So I kind of got off topic, but at the end of the day, people would rather hear from the experts than do the work themselves.

100%. Yeah, right. So um, beware, right? I, when I used to go to the trading shows, I used to be out there, and and I would laugh; I go, "Did you guys, everybody find the Holy Grail while you're here?" They'd all start laughing. I'd go, "You want you want to know why there's no Holy Grail? I said because if you had something to let you make money every day, would you share it with people? What would you sell it for?" Right? So yeah, it's, you know, you know the the the trading world is, you know, "What have you done for me lately?" You know, I I I got done after a 20-year, you know, very, very successful career, very well known, and I couldn't walk into Goldman Sachs and say, "Hey, give me a job making a half a million a year, and I'll tell you everything I know," right? They just want to see what your last trade was. So the trading system is uh, trading world is very efficient; losers win, or no, losers, you know, fade out, and the winners keep going.

Yeah, it's fascinating what you said there because that was I was actually going to ask you about that, but then you expanded it anyway, which was in terms of the process; you were saying how you focused on the process; it wasn't about the money, you know, as a byproduct of focusing on that process, the money ended up being there, and I think that's so important to highlight because, as you've mentioned, that everyone's looking is looking for the commentary; everyone's looking for the signal; everyone's looking for the fast route, the fast pass, the Holy Grail. Nowadays, it's the hack, whatever the the trading hack is that allows them to be successful overnight, and I think it's so important to really highlight that, and for someone obvious, you know, from where you're positioned, um, for people to listen, from someone like yourself, is so important for them to start focusing on that process.

Yeah, um, on multiple levels as well, because it is still, unfortunately, and it shows really how how interesting it is, like you, even though technology, the markets, everything has changed and evolved over the last 40 plus years, people haven't, people haven't. Yeah, they still showing the same um, you sort of negative traits, the same greed, the same rushing, um, you principles versus—you would think by now that everyone's been saying it, or every all the successful traders pretty much share the same point of view; their strategies are different, right? And the way they they may say that, you know, you can't scale. I've had people where they say scaling doesn't work, or this doesn't work, and that's fine because that's their their opinion, right? But in terms of what it takes to be a profitable trader or successful trader, it's always the same.

Yeah, no one listens, still to this day.

Yeah. Um, how, what does that make you feel though, as as you, as you've seen like everything evolved, but you see the same thing when it comes to the retail trader or the average trader going through the exact same mistakes?

I mean, if if you look up my the rules that I wrote in 1996, everyone's written rules; they're all my 10 rules; they all have at least seven of them in the rules, right? And it was just like 20 years of experience saying, "These are all the things that it took me to mature; these are all the mistakes I made; these are all the shortcuts I tried to make," and so on, and you, it's like, you know, um, when I left, I started um a couple things; I started a healthcare company, and uh, currently, you know, uh, I'm I'm in um, so like if you're going to be in trading, so when I started the Healthcare company, I actually was buying nursing homes and creating CCs, 'cause I love the demographics; it was baby boomers retiring; this is 2003, and you just think about how that market has exploded in the last, you know, since 2003. I was buying nursing home beds and um assisted living beds for 25 to 40,000 a bed; those beds now go for $250,000 a bed, right? Um, I sold that company, and then I, and I, you know, what, what attracted me to it was the demographics; it was going to get bigger, and it was, and there were going to be more players; 80% of the market at that time was um mom and pop, like where a person owns three nursing homes and two assisted livings and so on; the big players haven't even entered the market yet, the national chains. But the demographics of the market, I could I could see that, you know, how how there was an opportunity to make money there. Same thing when you're trading; you need to trade things that are liquid; you need to trade things that have give you the opportunity to when you're wrong, it just doesn't sit there, right? So you got to be able to, you know, get into a a place when you find liquidity and demand; the more liquidity and demand, the more volatility; the more volatility gives you an opportunity to make money, right? You're not going to get, you can't can't make money training illiquid markets, right? Unless unless you know something everybody else doesn't know, right?

So um, in 2017, okay, I started a cybersecurity company; a cybersecurity company, great timing. I mean, right now they're saying that it's a $2 trillion dollar industry; venture capital poured 14 billion and created 6,000 companies over the last five years, right? Um, there's so much I, there's so much different; everybody specialized in cybersecurity; there's just so much demand out there that it it, you know, we hit it at the right time; we went from two employees to 120 employees. So, you know, it's the same process, right? Like when I look at my investments and what I do, it's a process, right? Now I'm not a bean-counting process; I look at I look at market trends, and I look at um the size of the market, right? Can it, will it be scalable? Well, th those are the kind of things that I learned from trading, right? You just got to have some good instincts, and then you have to kind of pair down the risk, and then you have to execute your plan, right? And so um, yeah, so if you're going to be a retail trader, um, it's not something you can just do part time, and and you're going to have to put yourself uh out there, and and it's a 24/7 uh decision process.

I loved what you said just then in terms of the comparison between your trading mind and the experience and how that's allowed you to go into the outside world in terms of investments and how you look at those and how you sort of can try and predict those trends and and that demand and that growth and volatility, essentially, that you're looking for. You know, how helpful was that in terms of—you've already mentioned obviously you got that from trading, the plan, the risk—yeah, would you say that those traits are there, you know, in terms of successful trading, really can translate to—I would say because you've already made the comparison as well previously of uh, you know, being an athlete and sort of the mindset and discipline that's necessary there and how that translates to trading? Because I've always been of the belief, and I've shared many times, in terms of success is a blueprint, regardless of whether it's trading; trading has its own nuances and niche as well, but overall, if you want to be successful, that you know, being able to take risks, being able to back yourself, being able to uh notice and and pay attention to detail, be disciplined, be hardworking, be switched on essentially 24/7, like I feel that that's quite universal, regardless of what you do. What are your thoughts?

Yeah, so um, I I I feel kind of lucky because um I've never had a job, right? Right? I mean, I worked uh in in high school and college, but literally I came out of college, became a clerk, then just traded for myself for 22 years, then I started a healthcare company, and I was the owner of the company, right? And then I started the cybersecurity company; I was the owner of the company. So um, I I think that I have a personality type that's not risk-averse, um, but you know, when I was um, I I had a bunch of guys from MIT approach me when they were got kicked out of Las Vegas for card counting, right? And they came to me and said, "Look, we like we like to be a trader," you know, "Here's what we did at uh, you know, got kicked out of Las Vegas," and I'm like, I looked at the guys, and they had the right mindset because they were looking to play odds; they were looking to say, "How do when the odds are in my favor, I increase my bet," and so on, right? Then I would have people come—now those are kind of people I that I gravitated to; those are the kind of people because they had a they had a a market plan, right? So when you're looking at at putting on a trade, that's when you want to put your best best execution on; why am I doing it, you know, so on and so forth. But you know, um, then I would have people come to me and say, you know, "I go to Vegas, and if I'm up money, I just keep laying it in; you know, I'm I'm the best gambler there is," and I look at him, go, "You're not going to make it as a trader," right? Because it's not gambling; it's really it's called risk return, right? And that's why there's so many different strategies out there now, like look, people are making money doing covered calls, right? Buying uh buying ETFs and then trading the options around them, right? And everybody's just looking with all these new products that have been invented, becomes inefficiencies, and everybody's just looking, "How do I can take advantage of those inefficiencies?" So there there's a lot of opportunity out there, and there's a lot of things going on that you have to conceptualize today as a trader, and you know, um, it's it's just like, you know, starting a business; you just got to find your niche, and then uh try to, you know, play within that niche and be, you know, make the right decisions.

Going back into your career, there was a moment, I know this is like a a very famous trade, I don't know if it was your largest trade, yeah, but I think it was during the crash in '87, right?

Yeah.

And I think you made over a million dollars, or $1.5 million in a matter of seconds, right? Can can you break that down for us?

Yeah, so it was um the week prior to the crash, that Wednesday, Thursday, Friday, markets were extremely volatile, and I I made like 300,000 so far for the week, but I had already planned to go to Europe with a bunch of guys that were friends of mine that were older; they're all about 10 years older than me, but I met him at the country club; was playing golf, and I'd never been to Europe, so they said, "Come on, we're going to go to Italy; we're going to go to Switzerland; we're going to go here," right? So um, I I, you know, we we we get on the plane, but when when I was getting to the the plane, I had a 20-lot position on when I left the market because I went in in the morning, and I called my clerks on the floor, and I said, "Hey, what's going on?" She goes, "The market's almost limit down." She goes, "You're up about 200,000 on that position." I go, "Really?" She goes, "Yeah." I go, "Get me out; make sure you get me out," I said, "Because Monday, I think there's going to be a big bounce on the way up." So we go to Europe; we leave that Friday. Friends go, "You know, everything okay?" I go, "Yeah, I'm going to have a good time; I just made 200 grand." We have some fun out there. So uh, we get to Europe; we're in Italy, Saturday, Sunday; we end up in in Lucerne, Switzerland, and um, I checked into the Baur au Lac Hotel, drove down, took a cab into the city, and um, I was sitting in PJ's, and as I was sitting in PJ's, I'm looking out the window, and I could see the ticker tape; I think it was the Swiss Bank building at the time, and it said uh the New York, or the the Dow was down uh 500, and I go, "Hey, uh, there's something wrong with that ticker tape," right? Now you got to remember this is 1987; if the Dow moved 25 points, it was a big deal; the high of the Dow was 3500, okay? And now it was down 500 points in a day, and this is before any circuit breakers, anything that was, you know, uh, put in the market; no one ever thought a market could go down that much.

Yeah. Literally, it from Thursday to the Monday morning, it was down 50%.

Wow. Right? So what's the Dow at now? Was it the—I don't even know what it's at right now. He's like, over 30,000.

Yeah, 30,000. Right? So imagine you wake up next tomorrow; it's at 15,000; you know, people are going to be throwing out the window, right? And so um, so I I I walk, I tell the the the clerk, I go, "I'm not buying that watch." I was buying a watch for my wife to kind of smooth things over because I went to to Italy with a bunch of guys, you know, uh, and and so when I get back to the the room, my brother's on the phone, my wife's on the phone, "Let me message you; got to come; you know, this market's crazy; it's I don't think this place is going to be here anymore." Um, they threw all, you know, half the people out of the out of the uh the pit; they couldn't trade anymore. So I had to get back. Um, it was funny 'cause I had left with a a position, and I was long a Eurodollar calls at 94, and they went into the cabinet, so they were worthless basically, um, and the mark was like 91 and a half, okay? Um, so I start calling around, and the only thing I could do to get back fast was fly to London, um, get on the Concorde, fly to New York, and from New York, get to the trading floor. So that's what I did; I had to pay $15,000 for one way back in 1987 on the Concorde.

Right. How much that would be in today's money? Like nearly 100 grand.

Yeah. So I freaking go home; I get on...

The floor and um, my EUR dollar calls, right? I, I walk on the trading floor at noon on Tuesday. So my euro dollar calls on that Monday morning uh, opened up at 94 and a half. But I, on Tuesday morning, they opened up at 94 and a half, which means they were in the money. Mhm. I, I was on a plane. I, I couldn't call anybody to, to do anything, right? So, uh, when I walk on the floor, the options I had like a $300,000 profit on the options, so I took the profit on the options. But if I was there when it opened, I could have sold the thousand at 94 and a half because I was long. I had the right to be long at 94, and I would have been, would had like, they call a synthetic put on. Then what happened then was the market went back to '92. Mhm. So that was worth like a $2 million trade, but I couldn't put the execute the trade because it wasn't on the floor. So I took the profits in there, and then it was a Tuesday afternoon. I made about 200 grand just trading in the S&P pit.

But the funny thing was everybody, like there used to be like 400 people in the pit, there was only 200 people in the pit. Yeah, a lot of the order fillers were taken out of the pit. CU, nobody wanted to risk because the market was going up and down so fast, they didn't want out trades, they want this, they didn't want that. Um, a lot of guys didn't have a lot enough money in their account. The clearing firms were taking them out of the, out of the pit. So I walk in on that Tuesday afternoon, I make like two 200,000, 300 grand. Then Wednesday morning, I do the same thing. I make another 200,000. Then Thursday morning is the famous trade, and what happens is I walk into the pit, and the Shearson broker comes in, and he's going, uh, he's looking at me, goes, "What are you doing?" I go, "What are you doing?" He goes, "I'm a seller." I go, "I'm a seller too," right? And he goes, "Well, I'm a thousand lower." I go, "I'm 2,000 lower." He goes, "Well, I'm 3,000 lower." I'm 4,000 lower, and the market opens up like 5,000 lower, and I want to go buy his trade, and the guy behind me tackled me and said, "Hey, I'll show you 300." I go, "Where?" He goes, "I don't care, the low you can have the low." And so now I'm long, I'm long 300 S&P, and the market's not moving like 5, 10, 15, it's moving 300, 500, a thousand, like literally, and I got 300 contracts on, right? So, um, I catch the, the broker on the other side. I go, "What are you doing?" He goes, "I'm a buyer." I go, "Sold." I made a bunch of other trades. I handed the, the, the, the my cards and my clerk and I said, "Go figure out where I'm at." She came back like 15 minutes later. She goes, "I think you made $1.5 million." And I go, "I what?" She goes, "You made 1.5, 5 million." I just literally walked out of the pit, went in the bathroom, and threw up. I was like, and, and it wasn't because of the, the fua of making the money. When I had bought that 300, it was total silence, like the market kept going, could have went to zero, who knew, right? I could have lost everything I worked for up to them, um, but I didn't, and it, it's been recorded as one of the top 10 trades ever made, so it's incredible, absolutely incredible, literally in 13 seconds. Yeah, and really, and that was ended up being the for famous George Soros mistake. Um, uh, he used to clear all his trades through Shearson, he didn't to this day, so until they went out of business, but uh, they put the order in backwards twice, so they were supposed to sell 2500, they sold 5,000. Wow. Then they had to get out of 2500. So, uh, the market was crazy, like I said, when the world's melting, just stay cool. MH, right? It's absolutely insane, cuz even that 1.5 million in a matter of seconds, but in today's money, probably 5, 6 million. Yeah, in a matter of seconds, and as you say, you threw up because it could have been the opposite, it could have gone the complete other way. Yeah, and therefore completely wiped you out. What was it, what was it in that moment that made you make that call?

I was just doing what I do, right? I mean, 5,000 low around an opening was a little oversold to me, right? Um, but you know, who, who knows, who it could have, you know, we didn't know that there was a double order put in that caused everything to open up that low. What if there was really a world catastrophic event that was really CA, you know, the, you know, the issue, you know, when they did all the investigation after the crash of '87, they tried to point the finger at the Futures pit as the, the tail that was wagging the dog because all these people that were long stocks instead of selling their stock position out, they were hedging in the Futures market, so it was literally letting them, you know, offset their, their, their physical stock, um, uh, positions, and, and there were no circuit breakers involved yet, right? Like, so you know, at the New York Stock Exchange, if you were a market maker, you could close a stock if the market, if it was falling too fast, right? Um, we never, we didn't have any of that stuff in. So you know, afterwards, there was a big, you know, big, uh, you know, you know, the S, the CFTC and SE, and I was actually on the, on the committee that did the study of what caused the crash and things like that, uh, but um, you know, it's just a matter of market maturing and, and learning how to, you know, safeguard the things, right? It was funny because I was, I was sitting in the, it's kind of, there was an event that changed my frame of reference on the world. Um, I'm sitting in my, in Jack Sander, who's the chairman of the exchange at the time, and uh, I had about $4 million in my trading account, and I go, "Hey, I got to get a check, check for like 3 million." He goes, "I can't give you a check." I go, "Why?" He goes, "We can't make our margin calls." And then literally his secretary goes, "Hey, Jack, I got uh, Alan Greenspan on the phone for you," and I'm, I'm on the speaker phone listening, and he says, "Don't worry, Jack, we're gonna, we're going to free up the money supply, we're going to make sure everybody's good," right? So it's was the first time, 28 years old, I'm taking a look at, who is this Federal Reserve, why are they doing this, m, how do they operate, right? You know, this is a, you know, then I, you know, this is a private group of banks, this a has nothing to do with the government, and so kind of, it became, I became more, uh, you know, in tune with the way the markets work. Like the first thing I thought about was, I wish there was electronic trading so I could have traded the bonds. I, I, I heard the chairman of the Federal Reserve say he's going to loosen up the money supply, right? That means if rates are going down. MH.

So what, what's it like in terms of having the edge in the pit, as you said, like when you made that trade, you could, you're seeing the panic, you're feeling like it's oversold, like is there, was there a long, a strong sense of edge just being in the pit and reading the emotions in the room and in the environment? Well, the edge was that I was the biggest trader, so people had the biggest auras was going, I was, I'm, I could see what they were doing, right? So, um, as you know, being the bigger trader, people didn't care at that what was happening in those days, the days of the crash and days after, all they cared about was price was, was buy, sell, price was. We figured that out later, they just wanted to make sure you were selling, I was buying. We didn't have an out trade, so it, it was literally, there were four different markets being traded in that pit, like there was 300 guys, it could be $20 over here and $15 on the other side of the pit, but they didn't care because the world was panicking. Yeah, you know, I mean, think about that, I mean, if we woke up tomorrow and that was at 15,000, the world will be a massive meltdown, 100%, because there's a lot, a lot of talk to be fair. I know obviously during COVID, we had quite a strong rally, uh, not rally, sorry, but a decline, then a strong rally thereafter. Yeah, um, completely, and then all-time highs. I literally wrote, I, I literally wrote a thing, uh, on my LinkedIn, um, about the Co, mhm, and told people not to panic, here's all the things I've experienced, right? Um, market's going to come back, that got about 20,000 views, um, you know, I, I got like 6,000 people follow me on LinkedIn, but it, it, you know, I, I trle basically said, listen, you know, Co, this is something we've never seen. But at the end of the day, you know, it's going to work its way through, the markets will, you know, come back, um, so yeah, I haven't, I've never seen anything that we haven't been able to come back from, you know, I've seen a lot of, a lot of, you know, different things, uh, including the Michael Milken scandals, uh, uh, insider trading scandals, the two, the two things I, the two constants that happen in trading that is, you know, the end of the day when there's a scandal, it's either inside information, right? Or a Ponzi scheme. MH, the two things have never changed over the last, you know, since 1980, right, right. Um, so, uh, even the Madoff thing, um, you, I knew Madoff. I, I had a fund that I started that I was in Bermuda, and I had knew people that had money with them, and I said, "Why you give me some money?" He goes, "Look, this guy's made me 1% a year for the last five years, no draw downs," and I, I looked at him, I go, "That's not possible." He goes, "What do you mean?" I go, "It's not possible." I go, "So, I, you know, I'm one of the best traders ever," I go, "And I have draw downs," right? So, but people didn't want to believe, right? Then you know, if it looks like a duck, walks like a duck, and quacks like a duck, it's a duck, right? So, um, there, there, there's, there's, there's no way to ever be putting money at risk and capital that you can't have a draw down, just doesn't happen.

It's interesting you say that because the majority of retail traders, I say majority, I always, I kind of accidentally say majority quite often, but there's a lot of retail traders who are on the hunt, as we talked about before, about a Holy Grail, they're searching for something that allows them to predict the market tick for tick, point for point, um, looking for something that doesn't have draw downs, just profitable multiple, um, you know, say tens of percent per month sort of returns, that's the strategy they're hunting for. I've seen traders where they had a profitable edge where they worked it as well, worked and, you know, got disciplined, had a plan, free form months, they're showing good returns, you know, it could be 3, 4% a month, right? Not saying that there won't be draw downs, but like for that period of time while they were learning, they showed a, a good edge, but then they drop that edge to go learn something else because they're hunting for something that allows them to predict, um, what are your thoughts on that when you hear something like that? Well, I mean, there's so, listen, no one can pick bottoms, no one can pick tops, all right? If you do pick a bottom and pick a top, just chalk it up to luck, you're not a genius. Okay? So the key to trading is, uh, is, is literally following the money flow, right? Guys, people I deal with now, um, that we've talked about different trading strategies, um, it's about me beating the money flows, like you know, money flows, you know, out of chip stocks into healthcare stocks or from out of healthcare stocks into ril, roll stocks because everybody wants to be market neutral or have some pained dividend. So the key now is getting a strategy that gets in front of the money flow when the institutions are going from one, one, um, vertical to another, trying to, to time that movement with the mass amount of money that they're putting into it, that's the only ways you're, you're going to make money. You just want to get on the ride, especially if you're only a technical analysis trader, like if, if you're a fundamental trader, you may be able to create a basket of stock that's not correlated to the S&P that's very successful for you, but it's going to take a lot of testing, back testing, you know, doing all those things. So you know, to this day, it's still about beating the money flows. You, you want to, you want to be on the, the trend, you, the trend is your friend, right? So, um, the think that you could pick a bottom and pick a top, if it happens, like I said, it was luck, it's not something you can do all the time.

So it's essentially not just pick a trend in terms of what the market is showing that say bullish or bearish, but also where people are putting the money, where the large portion of the money is flowing into, trying to get, trying to observe and understand where that's going to be ahead of time, position yourself accordingly, or at least recognize when that's starting to shift and position yourself accordingly, and regardless of what that edge looks like, as long as you're doing that, I'll give you, I'll give you like an example, all right? How that thought process, okay, can transcend. So when I got into the cybersecurity business, well, I first heard about Bitcoin was at like $300, $400. I went to a, I went to a Bitcoin convention in Las Vegas, saw a bunch of old traders or a bunch of guys coming out to, hey, you, Louis Borsellino, blah, and you know, I'm trying to look, look at Bitcoin now, this is 2017, and I'm looking at Bitcoin going, "How could somebody tell me they're a Bitcoin trader? All you could do is buy it," right? So you really can't get shorted, all you do is buy it. So I, I'm looking in 2017 towards uh, probably the spring of, no, I'm sorry, 2018, the spring of 2018, um, Bitcoin went from $1,000 to $2,000, and I'm going, "Wow, I can't believe that it jump up like that." First of all, went from 400 to a thousand, right? And everybody's talking, know the euphoria around cryptocurrencies, and I'm going, "Well, why would this jump in a matter of 3 weeks, double in price?" And then what came out was the WannaCry virus, where 150 countries, people got hacked, and they were encrypted, and all of a sudden people had to pay their ransoms in Bitcoin. I'm go, "This is interesting," right? I'm in cybersecurity, I see this hackle, and all of a sudden I see the, I see the, the price of Bitcoin go up, but the price of Bitcoin went up before they announced the WannaCry virus had hacked everybody, so that means the people that were encrypted had to go and buy Bitcoin to pay the ransoms to the people that encrypted them. Then I'm watching it, and then it went from 2,000 to 4,000 in the fall. What do you think happened then? Equifax, right? So the Equifax breach happened, 150 million Americ, Amer, uh, uh, credentials were, uh, released on the dark web. So when I got into the, when I got into the, um, uh, into the cybersecurity company, I really got into the dark web, started spending hours and hours and hours on the dark web, and really understanding how to function, and so what it really functioned as is it's a marketplace for illegal activity, M, right? And so now I'm thinking, well, now the W, then Equifax came out, it doubled again. So I basically wrote a LinkedIn article that said, "Bitcoin price is a leading economic indicator for a cyber crime," right? So, and then I said, you know, it's at 2,000, it's at 4,000, I go there, and the reason, you know, they had the F, and then what would happen was you're going to see all those, all those people on the dark web that were buying the data, they were starting to sell it to people, like databases, credentials, and so on, and then the CME announced that they were going to, um, literally, um, release Futures on Bitcoins. So as soon as they did that, then I said, "Now you can trade them. You literally have a way to get short Bitcoin," right? Now the, the margins weren't very conducive for trading, they were very large, like 50% margins or whatever at the point, but I wrote an article that said, "I think Bitcoin, now that the Futures are coming out, are going to go from 4,000 to 10,000. After 10,000, I really don't have a market call, but the expansion of Bitcoin not only happened with speculation, but it was also what was going on for cyber crime," right? So, um, you know, got a little bit off topic, but there was a reason for the price, you know, people come to see, "What do you think of Bitcoin?" I go, "As long as there's cyber crime, we're going to need Bitcoin," right? So, um, that, that was, you know, market trend that I found, you know, quickly, right? And we used to tell our, our clients, we still tell our clients, you know, "Watch the fluctuation of Bitcoin when it comes at," because it's still the way that people pay the ransoms, no, there's not changing, and cyber crime is only going to be on the rise, the way that we're going, it's a, it's a 2 trillion dollar industry right now. Wow. Well, crypto right now, crypto is a very, in a very hot topic, you know, it has been for a very long time, and, and probably will continue to be as it expands. We've seen a lot of ETFs now, we have Bitcoin, we have Ethereum, um, we're coming towards the end segment of, of the podcast. There was one, uh, thing that you've said previously, which was, "Everyone's always trying to hit a home run," and, and you say that really every trader should be trying to hit singles.

Yeah, I, I, I, I could tell you that from all the years that I stood in that pit, it was the singles at the end of the week, right? Um, I used to tell my, it was funny you were talking about if you lose control of, uh, you know, you're, of the value of a dollar, right? I just ask my, my secretary, I go, "How much are the bills for the month?" 50,000, all right, I'll be back, and go down to the floor and make 50,000 to pay the bills. It was like an ATM, ATM machine for, but uh, yeah, everyone, because I was such a big trader, thought I was always swinging for the fences. I, I had a goal, if I, you know, if it was market went off at 8:30, by 9:30, if I was up 5,000 or more, I left, right? I didn't want to stay there because you know, many of times I did that and lost what I made, right? So, um, it's just about taking what the market gives you, right? And then when those big days come, you just, you know, you're ready for them, but uh, it's not because you're swinging for the fences, it's because the market opportunity at the time allowed you to put a bigger position on that was more volatile and generated more money. Yeah, same, same strategy, just more volatility, more, more volume. Do you feel like you ever miss the, the, the chaos, the organized chaos? No, yeah, I missed the money. No, I miss the fast money, right? Like I said, I used to look at my, at my clerk and say, "What's the bills?" 50,000, all right, I'll be back, you know, I mean, you want to have a, a jaded, not jaded, but you want to have a, a distorted look on life, right? I, I was having lunch with my, one day, and I know breakfast, and it was like, I, $15 a bill was, right? And I did, I gave the girl like a, a, all I had was like a 20, you know, and I gave her a 20 and another five, and he goes, "You just gave her a $10 tip on a $15 bill." I, yeah, so what? He works hard. He goes, "Don't ever lose track of money," right? Don't, don't lose perspective of money, but it's kind of hard, very, very hard when you're, you know, there was a bunch of guys in their 20s driving around in Porsches, Mercedes, Ferraris, single, you know, um, in the, in both cities, both New York and Chicago, you know, uh, you know, they used, said women used to look at, at, uh, you know, I got a married a doctor, a lawyer, I like the F, very nice, respectable, professional, all of a sudden they saw these young kids driving around in Porsches in their 20s, everybody wanted to marry a commodity trader. We had our choice, you know, we had our, our, uh, our pick of the litter.

I guess in terms of your advice to traders as we've discussed, we've already given so much, I know there's going to be so much taken away from this episode already, but what would be your direct advice to traders of this generation, right? We've already summarized that majority of people, regardless of how much the markets have evolved and how much they are told, um, you know, these are the mistakes or these are the things that need to be done, but there's still the same mistake seems to be being made, so what would you say to the audience in terms of like how can they focus on progressing as a trader and start to make steps forward? Yeah, so I mean, you got to have your process, you got to have discipline, you got to stick to it, but you have to trade markets that are going to give you the opportunity, right? Like, like I said, when, when Reagan was in, the markets were, you know, very mundane and slow and, and sort of, you know, didn't have much market movement, so, um, if you're a day trader, you need that, so you need to understand, if you're going to be a retail day trader, you have to trade markets that are volatile and give you the opportunity to make money both on the down and the up. If you don't do that, you'll get yourself in a trade, you'll get stopped out of the trade, and then the market just sits there, and there you are sitting with a loser. So you gotta, you got to be able to look at things that are giving you opportunity, right? If you can't find, um, something that's, you know, volatile enough to give you opportunities both on the up and the down, it's going to be very, very difficult. You're going to be a position trader, then you're just literally going to, you know, I'm going to buy the, the S&P 500 and I'm, you know, put a stop in, and I'll just stay long, or I'm gonna buy this stock or whatever, um, when stock trader is completely different animal when it comes to Futures Trading, but you, you gotta, you gotta play in a game that's gonna give you the opportunity to make the most amount of money. I love that. Well, Louis, I really appreciate your time today, sharing everything with us, um, you know, it's a, like I said, true honor to be with you and to have you on the podcast as well, and hopefully maybe, fingers crossed, we can have you again for a part two in the future. Yeah, but everyone at home, drop a comment of your biggest takeaway from this episode. Obviously, there'll be links for Louis in the description below, and yeah, drop a comment, like there'll be other episodes on screen, so make sure you check them out, and until next time, take care.