tq

i. 1a
f:r I

,1

{;

rg
)f
:a
1-
a

{,
rt
in
rt
le
t-
:t;
e.
st
es
d-
.r-

a-
.re
tel
it-
ls.
,ut
The Slqrs
d-

ct
:o
1S
w
dl

ld By Witliam Falloon
.,s
le n the world of futures ond options trading, Chicago
I (SIMEX) has clearly imported "Chicago-style" trading
ti- is the focal point of many Horatio Alger stories.
II and made it work.
te Rumors and tales of what such traders as Richard With it have come new stories and new mystiques
:d , Dennis, Tbm Baldwin, and Rick Barnes have done in a
-particularly in the Far East's version of "pin-striped
v- day (or a career) in the market are legendary. And so are pork bellies," the Nikkei 225 stock index future.
ne the mystiques behind such money-making empires as Deregulation in Jopan has motivated Nomuro, Daiwa,
.al
,E!;:,1:;r:esearch
& rtading GRT and the o'connor Nikko, and Yamoichi, along with U.S. securities houses,
he to quickly sumound the pit with booths, and average
/s- .'While these stories age gracefully, and in large part dollar value of daily trading has surged to over $150
)c- .are tue, the growth of futures and options exchanges million. Arbitrage is now going on between the Osaka 50
.gvgrseas has allowed more than a growing market share stock future and the Nikkei, and increased institutional
: of volume orii ipio interest to iove oulside Chicago. participation means that new volume records are set
:.'-The "local" now adds as much color to many ofihe almost weekly.
.overseas exchanges. Perhaps more so than any other, Still, ftttle is known in the U.S. about this pit, whiclt
:,th€ Singapore International Monetary Exchange trodes a contract more volatile than the S&P 50O futures

51
INTERVIEW
contract. Four of its most successful sticks to daytrading, using point and SCHOENFELD: I was doing gradu-
traders are Loh Sui Hian, Phong Kai figure and bar charts in the pit. He ate work and research work in the
Huat, Yew Soi Khoon, and an Ameri- rarely goes home with a position at School of Management at the
can, Steven A. Schoenfeld. Accord- night, and is well known for bottom National University of Singapore.
ing to a reliable source, these four picking and skillfully timing long Midway through I switched my
traders have pulled as much as $I positions when the market is over- research to the Institute of Southeast
million from the Nikkei pit since it sold. Asian Studies, which is a think tank
started trading in September 1986. Interviewed on July 16, Schoen- run in cooperation with the Associa-
Each of them hod his own unique feld out lined important developments tion of Southeast Asian Nations
beginning. Phang, a Malaysian citi- taking place within the Nikkei pit, (ASEAN). By then I was already
zen, formerly worked on offshore oil facts U.S. institutions should know starting my involvement with
rigs and became tired of the hours about how the contract trodes, and SIMEX, so I did the first futures-
and pay of a manual loborer. He his perceptions of liquidity. Inter- related research there
describes himself as a trader who viewed on July 23, Loh, Phang, and I came home in spring of 1986 to
trades on "the feel of the pit," with Yew talk about a Far Eastern locol's borrow some money to trade. While I
one eye on the paper flow from such difficulty with taking o loss, the Jap- was home, I decided to do the floor
heavyweights as Nomura and Daiwa. anese, and their most successful days orientation program at the Merc
The 32-year-old Yew wos equally of trading in the pit. instead of SIMEX. I thought that
utired" after working after being at the Merc, the SIMEX
for o few years
in a manufacturing line as an engi- INTERMARKET: How did you end pits would be less intimidating.
neer for General Electric. He decided up as an American at SIMEX? I stopped in Tokyo on mY way
to look around for o chollenge and SCHOENFELD: I went to Asia to back to learn more about the JaPa-
discovered the SIMEX. study in general the development of nese markets. All along my intention
ft wssn't easy. Tfading the Deut- AsiazPacific financial futures mar- was to trade the Nikkei. I thought it
schemark and Japanese yen, Yew lost kets. I picked Singapore as the base had the most potential as a contract
heovily in o year and a half before because of the link with the Merc, for locals, and from an intellectual
switching to the Nikkei pit. The rise because it had an English-speaking standpoint, it was most intriguing
of the Japanese stock market allowed university, and because SIMEX was because I knew how large the JaPa-
him to dig himself out of a hole, and and still is the farthest along in the nese stock market had become, that it
the volatility of the contract made path to growth as a full-fledged had no hedging mechanism, that it
him more comfortoble positioning in futures market. was tremendously overvalued, and
the pit. A hordened trader, he has that it had a history of volatility. AII
earned a reputation of being able to INTERMARKET: :'Are you still that led me to believe that it would be
trude the contract's "big swings" of attending the university there? a good contract.
400 to 1000 points in a day.
Loh and Schoenfeld, on the other
hand, came to the pit with intellectual
backgrounds. The 24-year-old
a Fulbright Scholor in
Schoenfeld,
Economics from Clark University in
Worcester, Mass., first mode his way
over to Singapore to study the devel-
opment of Far Eastern futures mor-
kets last year and to work as o part-
time journalist. He is to the Nikkei pit
what journalist George Plimpton was
ina Detroit Lion or New York Yankee
uniform-o foreigner in a foreign
market. Borrowing $16,000 to trade,
he quickly turned his enthusiasm into
an understanding of the nuances of
the Japanese equity market and Far
Eastern culture. Profits and a trading
advisory firm-Lion Pacific Invest-
ment Pty. Ltd.-came with time.
Finally, Loh is reported to be the
most successful of them all. A gradu-
ate of Columbia University with
an MBA and o Bachelorb degree in
fuonomics, he shuns fundamental
analysis because "there is no woy that
I can compete with a Nomura or
Daiwa on a fundamentol level." He Steven A. Schoenfeld

t^tTt D| / / DV DT /C-a..-L.- 1 OR 7

t- INTERMARKET: How much did
you start trading with?
e SCHOENFELD: $16.000.
v INTERMARKET: What,s been your
L
sugcess on your investment?
k
SCHOENFELD: At this point, I
don't like to talk about it is a ieal
s
return on investment because it is my
t/
livelihood. It's not like you pui
I $15,000 into an account and it comes
out as more money. But not includine
my original investment, I have madi
over $100,000.
INTERMARKET: That's fantastic
for an American trading in a foreign
market.
SCHOENFELD: Some of it has to do
with my timing as far as the currencv
goes. The Nikkei is priced in yen, so
every time you make money or lose
money for that matter, you are also
making currency market decisions
and can convert to your home curren-
cy-in my case U.S. dollars.
Through the fall and winter and
until April this year, was keeping
I pit. I still recall times when it was iust
most of my trading profits in my
account in yen. Only when the yen
broke 140.00 did I start converting it
like gangbusters to U.S. dollars. Mv
timing was pretty good and probably
rncreasecl my returns by llVo. It was
really a matter of discipline.
INTERMARKET: So you made
money in the Nikkei right from the
start?
SCHOENFELD: In the beginning, it
was very difficult because you could
call the market right and still be
wrong because of the illiquidity. you
could call the cash markit and see a
turn beginning, but by then all the
offers would be lifted and vou
couldn't turn, or vice versa. iou
ygyld usually end up by scratching or
raKrng a loss on the trade.
- Any of the people who survived
the beginning of the Nikkei were
Pretty much toughened. We were
used to seeing the extent of the vola-
tility but not being able to profit from
the full extent of the movi. Once the
Pit became more active, it was easy
for us, because we were used to a
rotten situation and it had become
better.
In September and October last
Yjat, it was active but volume was
definitely dwindling. By November,
WARKET
INTERVIEW
YEW: I started trading the Nikkei
when it
was first launched and have
never looked back.
I traded for I 12 years in the cur-
rencies and Treasury bonds during
Chicago hours and had no money
afterwards. I was really down. My
turnaround came when the SIMEX
started to trade the Nikkei. I got
interested in trading and started over
again.
INTERMARKET: And what did you
change about your style to become
successful?
YEW: Before, I was trading curren-
cies, the Deutschemark and the Japa-
nese yen. There wasn't much vola-
tilityand liquidity at the time, so they
were very difficult for a trader in the
pit to trade. I stopped trading other
contracts to concentrate on the
Nikkei. I like big market swings. My
style of trading works well in these
Yew Soi Khoon
types of markets. That is what you
find in the Nikkei. Slowly I made
December, and January, it was me
back all of my money.
and one or two other traders in the
me in the pit playing with a quote INTERMARKET: Does SIMEX still
have the incentive program they
machine by myself complaining the
currencies were active and no one was offered locals in the beginning?
trading the Nikkei. But I had com- SCHOENFEI;D: No. Since the
mitted myself to the conrracr-men- exchange sold out the last of the ini-
tally and financially. tial seats [450], they dropped the
installment plan. One incentive that
INTERMARKET: And now? still remains is that if vou trade a
SCHOENFELD: Now it is another certain volume a month, they will
story. It is definitely the most popu- rebate your clearing fees. The number
Iar contract in terms of the numbei of of trades that you have to do your
locals. Eurodollar futures still do first year remains the same, but after
twice as much volume or more, but a the first year they expect you to do
Iot of it is institutions trading hun- more volume if you are going to
dred lots with each other or big locals receive the clearing rebates.
doing the spreads. There is still a tax incentive. And
Without a doubr, the Nikkei pit is that will remain in force in the fore-
now the most populated. The last seeable future. If a local forms an
count that I got was 90 locals in the approved company, which is a com:
pit. We just moved to a bigger pit on pany under a certain tax statute
June 22, and it is working out well. designed for SIMEX trades, and
It is about the size of the Swiss trades through this company
franc or Deutschemark pit at the account, he is taxed at only 1090. That
Merc, or perhaps the Japanese yen applies in any futures exchange
pit. At first it wasn't full and was -London, Sydney, Chicago, any-
unevenly populated. Nomura now where that you trade.
has the front booth on the opposite
side of the pit whereas previously INTERMARKET: How are you
there had been no booths manned. trading the markets'!
Now there is a very even flow dis- SCHOENFELD: I've always "
by my
tributed around the pit. nature preferred to be a day trader,
something of a position trader, and
INTERMARKET. Mr. yew, you an overnight trader too. I'm very
didn't always trade the Nikkei, did you? aggressive at the close and willing to
JJ
INTERVIEW
hold overnight positions. During the
day, I am usually looking to spot the
trend. I usually bome into the daY
holding an overnight position, and
will be making a decision to hold mY
position, lighten it, or increase it. It
all depends how heavy I come into the
market.
Usually during the daY there will
be one trend change. The market, for
example, may shoot uP in the first 45
minutes, but then lose momentum. It
may not have a fall, but will start to
dribble down. So I may cover some. I
may wait for things to bottom out
before establishing the size of mY
position. Or if things really go down,
I'll cover and go short.
One of the things I've been work-
ing on with an associate of mine at the
Institute of Southeast Asian Studies
is the first position trading system for
the Nikkei futures. No one else that I
know has this kind of sYstem. We
have been developing it over the last
nine months, have three Years of
tracking, and one year of tracking
with the Nikkei. I use it to keep posi-
tions running.
Once I have a longer-term position
running, I try to forget it and focus
on my own daily trading activity in
the market in front of me. I don't
have to think about the long term.
Before, I was acting as a day trader
and as a position trader on the floor,
which is sort of contradictory.
INTERMARKET: How do each of
you day trade?
LOH: It may sound crazy for an
economist to say this, but I trade on
a technical basis. The majority of the
time I am strictly a day trader. I may
take a longer-term position if I see
something significant happen in the
market. I keep a point and figure
chart going in the pit, and use bar
charts. When I go into the pit, I also
know precisely the price support and
resistance levels.
PHANG: I basically trade on the feel-
ing in the pit, and watch what the
cash market is doing very closely. As
the cash market turns upward, I can
buy. You can see some wild swings.
YEW: I use a mixture of technical
and fundamentals to trade. I try to
take positions when both confirm a
position that I want to take.
SCHOENFELD: If there are scalping
opportunities, I am going to take
them. That's why I'm there. Other-
wise I might as well be upstairs. I also
like to trade the closes, because usu-
ally there will be something big.
Five minutes after TokYo closes
15 minutes extra before
-and in the
we close will usually be a short
-there
covering rally or some heavy profit
taking. I
like to focus some of mY
bigger trades at that time, because
most locals are covering for the next
day. A lot of locals may be lightening
up, or something else, and that usu-
ally can affect the market.
INTERMARKET: What off-floor
business has made its way to SIMEX?
Do you see portfolio insurers, index
arbitrage, or hedgers coming to the
market?
SCHOENFELD: Before the JaPa-
nese were officially allowed to trade
"For o big lroder,
it is q more
formidqble
mqrkel becquse
il is more ditficult
lo cul your
lossgs.tt
for Tokyo [May 23], we saw a steady
increase in their business. At first
they were a little bit reluctant,
because they weren't sure which way
their regulators were going to go. So
they certainly weren't trading the vol-
ume we expected them to.
Around February, we saw a lot
more activity from Nomura and
Daiwa. From Nikko, I saw some of
the first program-related trading.
Whether they were buying or selling
for their index funds, or testing some
kind of arbitrage, it was apparent that
it wasn't just pure spec or hedge
trades.
Nikko would come into the market
when we were at a steep discount or
premium, and there would be a
steady selling or steady buying until
that premium had come into some
normal relationship, even if it then
went back. It was definitely premium
related trading on their Part.
INTERMARKET: Can you tell if the
Japanese houses are trading for them-
selves or customers?
LOH: As far as Nomura and manY of
the houses are concerned, I think they
are trading for themselves in a large
way. But manY orders from other
houses appear to be for customers,
and I would say that makes uP the
majority.
INTERMARKET: What about the
U.S. securities houses?
SCHOENFELD: With thc U.S.
houses, it is difficult to figure out
who is behind their trades. There is at
least one -probablY two or three
players out of
-very big institutional
Asia who are going through the
American houses and camouflaging
their trades.
There was a lot of sPeculation in
the pit as to who these clients were.
On the floor, we have seen some big
positions initiated bY one house,
added to and liquidated bY a second,
and liquidated through a third' As
much as I can tell, this is still going
on. This client started through Shear-
son Lehman, switched to Daiwa,
switched to SecPac, and now spreads
trades diversely. Because the pit was
very small, especially in the begin-
ning, and people are very aware of big
position sizes, it was probably a very
smart move. I resPect the trader or
traders who were behind it.
INTERMARKET: What size Posi-
tions?
SCHOENFELD: It started in
November with this one big client.
This was after the Nikkei had had a
big correction and we were seeing
some steep discounts. He would come
into the market and just sit there with
a bid all day.'He was building uP
positions of 1000 contracts, big posi-
tions then because open interest at the
time was only about 3000 contracts.
He was not arguing about Price, and
as it turned out, he was right, because
we were at a 400 to 500 point discount
in November at the 1?,000 level, and
you know where the market is now.
This was something that had a signifi-
cant impact on the market.
We saw this customer establishing
longs the whole ride uP. Not bverY-
body noticed it, but he was selling
through another house while he was
I NTE R M A R KET /Sebtember 1 9 8 7
 keeping the buying pressure on from
the house we were expecting the buy-
ing pressure from, thus keeping
bullish sentiment in the pit while tak-
ing big profits.
I'm sure he had to run into some of
the air pockets we ran into in March,
April, and May, but he certainly got
out of a few of them well before they
would hurt, and then was establishing
himself at the bottom.
INTERMARKET: Did you find a
high mortality rate among locals
when this was happening?
SCHOENFELD: It was tough
because SIMEX itself was new. There
are always new locals coming in. A lot
of them who tried to start with the
Nikkei got burned quickly because it
is really volatile. They took some big
losses. You have to be on your toes.
You can't be stubborn with Nikkei
an up and down, up and down con-
tract. It can move 1000 points in a
a day. It can move on average about
400 points each way in a day, which is
above $7000 in U.S. terms. There are
big streaks.
PHANG: We have had days where
the market has gone down 1000
points and up 900 points, all in the
same day. Just yesterday, it went up
200 points, and then came down 700
points, and then came up 400 points,
and down again 300 points. Even on
On Jopqnese
chqrls: "They
helped remind
me lhql I wqs q
for other reasons.
PHANG: We have seen 500 cars
being traded. The key is to do it in 100
lots so that it is done most efficiently.
YEW: What the large Japanese
houses are doing is offering at the
same level as the spot market. They
keep offering at those prices. If the
market really crashes, they have done
a lot of orders at a high level. What
they will do is sell in an up market.
They will have 500 cars, offered at
26,500. Although it may look like
they are getting hurt, if the market
crashes, they will have trades exe-
cuted at very high levels. There are
quite a number of houses that do
this-Daiwa, Drexel, Nomura, and so
on. When the market keeps coming
down, they buy all the way up, They
would buy all the way to the level of
26,000.

losses. foreigner in q INTERMARKET: Who are the best

INTERMARKET: What would you
compare it to?
SCHOENFELD: The only contract
you could really compare it to is the
S&P 500. But in percentage term
moyes, and absolute term moves, it is
still more volatile-without a doubt.
More than that, you are also deal-
ing with a less liquid market, which
adds to the volatility and the danger
because it is tougher psychologically
to cut a loss 50 points away than only
five or 10.
In the Nikkei, if the price breaks
up or down, it will usually go 50 to
100 points before you even have the
courage or guts to get out of your
position, whereas when it breaks in
the S&P, it is usually steady. It can go
fast. But the time between when vou
s.ay, "OK, I've got to cut my loss,'
and do it, it will only go two or three
ticks. It can be four or five or ten
ticks with the Nikkei.
For a big trader, it is a more formi-
dable market because it is more pain-
ful to cut your losses. The movei are
bigger. If you cut your losses at 100
points below, of course it hurts. But
YPu can usually go short and make
Your money back if you are not stub-
Dorn.
,' ;:.
-[IiTERMARKET: Do ail of you
agree with Steve?
Y_es, if you are trading five to
fOH:
|ur:ars [contracts] and can g6t on the
.right track, you cin make m-oney. It's
foreign mqrkel." brokers at disguising trades?
SCHOENFELD: There are two ways
to look at it. It is not just a matter of
disguising, but also good execution.
We don't always know what is going
quiet days, we are seeing 300- to on behind the scenes, because the
400-point swings. order may just be a give-up from
SecPac to Drexel, or something like
INTERMARKET: With the vola- that. We may see Drexel and we think
tility and liquidity you are talking it's them.
about, is it realistic for portfolio But usually we can tell. If Shearson
insurers and other risk managers to gives up a trade to SecPac, when we
try to use the market? check the trade, they have to give us
SCHOENFELD: I think they are. If Shearson's clearing number. We have
you look at open interest, it is touch- seen some Japanese go through this.
ing 7000. That should be enough in The Japanese are corporate non-
dollar or yen terms. Put it this way, a clearing members, so their trades
500-lot position can insure a lot of have to go through a clearing mem-
Japanese equity, and prior to the last ber. As far as execution skills,
few months and the entry of the Japa- Nomura is at the top. They have enor-
nese, a 500-lot order would be mous power but they don't abuse it.
noticed: It would move the market. They are very straightforward, and
The locals could pick it off. that's honorable. They are taking a
If you are willing to establish posi- long-term view, keeping the markets
tions over the course of the day, or healthy. They know that if they are
gingerly over two days, there is no fair with us, the locals will be fair
problem with establishing a 500-lot' with them. Nomura has order flows
position. Of course, it will take time on both sides. They can be in the
and if you reveal your cards and over- market with both bids and offers,
play the market, you will get a worse whereas others are just buyers or sell-
price. But it can be and is being done. ers. They have a nice balance.
LOII: I have talked to Nomura. And Even if they are executing a heavy
they have told me that they have cli- buy order for a client or the house,
ents that are now doing arbitrage. they still have sell orders. They won't
They say they have been very suc- cross it right away. If they have a
cessful. I also know some other client that wants to get out right
houses that say that portfolio manag- away, often they will make a market
ers from the U.K., Hong Kong, and for him. Plenty of other houses will
even the U.S. are using the contract do it very quickly, crossing without
 ,i
."1-_
u::.-'
INTERVIEW
,tj,a, t

',rr.
the low the next morning was 22,1C0. INTERI\{ARKET: . . . Casualties on
The futures had an even greater move
because the premium came out in lit-
the floor? -
SCHOENFELD: A lot of people, the .t=:
t't
erally three hours of trading. new ones, were cautious. But there ,

were casualties. For the ones who got-

out at 200 ticks, you could still make
INTERMARKET: What caused it all back. But there were some peo-
that? ple caught in the markets on the
SCHOENFELD: (Laughs) The buy- wrong side both ways.
ers disappeared. It was right before ,A 1000-point move is one half mil-
one of the golden week Japanese holi- lion yen, which is about $3500 per
days, where there are a series of holi- contract. So if you were short five
days. The Japanese turn it into a week contracts, which is common for expe-
off. So the Japanese are like any rienced locals, you lost $17,000. But
good people, they like to take profits no one caught the whole move.
before holidays so they can enjoy All told, I made well in excess of
themselves. They didn't realize how $20,000 that day. That was generally
overbought their market was. catching only one good chunk of the
Essentially, the powers that be in move in small size, and a smaller part
the Japanese market let it happen in big size.
because the market was fluffy. It was
giving the locals a chance. Nomura pure panic selling by institutions. We INTERMARKET: Where were you
will make a call -slowly and loudly in the futures market watched the guys on April27 and 28? What were
three times -so that some locals can contract at a premium. Needless to your most successful days?
take a part if they want. They have say when a contract is dropping 20 LOH: I cannot remember any spe-
very professional staff. points in a flash, you are going to see cific days. My best days usually hap-
With the American houses, it that premium disappear very quickly. pen when the market is oversold, and
depends who is the order filler at We went straight into a discount. The I buy it. This can happen when the
which time. Continental Illinois is one futures market always leads the cash discount is as deep as 700 points and
of the more active in the pit. They use market. We are always leading it into the cash market starts to turn. The
a combination of their own staff and the turns, and in the re_bounds, so we cash market starts moving, and usu-
locals. They are professional. were way ahead of the cash on the ally we get wild swings. It can move as
way down. The minute the break much as 1000 points. That's usually
INTERMARKITT: You always hear started, the premium came out. We how I like to trade.
of the two days in September last year closed that first day back at a pre- PHANG: My best day came about
[llth and l2th] and one day in Janu- mium, so we tracked the move pretty two months ago. The market hit the
ary [23rd] with the S&p 500. What much tick for tick. I was lucky to be high of the day and I was on the
about in the Nikkei? short most of that time. wrong side, so I cut my loss. One t
SCHOENFELD: April 27 and 28 But by the second day, the day it large trader failed to meet a margin
were by far the wildest days, without fell 1000 points, it was already 500 call and there was a forced liquida- I
a doubt. On the 27th,the Nikkei hov- points off and I was already begin- tion on the floor. The market came
ered in the morning and lost 800 ning to say it was ridiculous. So I t
down very rapidly then. I covered all (
points in the afternoon. In the morn- started buying, cutting losses, buy- my shorts, and then got long. The I
ing on the 28th, it continued with a ing, cutting losses, trying to bottom
1000-point drop in the first 45 min- Pick. t
,
utes. It was one of the wildest things Eventually what happened with u

I've seen in my life. It was a the contract, because there are a lot s
)
u
1300-point decline from the 23,400 of smart players, was that the cash f.
level to 22,100, so we are talking continued falling but the futures
about a very large percentage move. stopped. We had been doing a big I
It started a recovery in the late morn- discount and were slowly moving
r
ing, and then dropped back. back to par and then to a slight pre- II
,mium. At that point I stopped worry-
d
INTERMARKET: A move of 2000 ing about cutting losses and started
points in the futures? buying. As soon as the cash stopped,
SCHOENFELD: Yes, in two ses- it didn't even have to turn yet, and the I
sions. We call it two sessions. Our futures started rallying. It was right
market never closes, but the Japanese back up like a rubber band, 800 ti
have two trading sessions, one in the points. We closed that day only down 0i

morning, one in the afternoon. So in 200 points, after being down 1200 in tl
essentially one Tokyo afternoon and the futures, 1000 points for the index. *
rnorning, it dropped 2800 points. The I made more money on the long side. n
futures started at the 24,200level and It was my best d1y at SIMEX.
in

56 I NTE RMA R K ET / Scbtctnbn 1 98 7 f

^t1
 INIERVITW
market rebounded. I made lots of tions to ask. I spent time in dealins It also helped remind me that I was
money. rooms, securities houses, watchin! a foreigner in a foreign market, and
the action from a Tokyo perspectivel to keep an open mind. That'i the key
INTERMARKET: How does a U.S. I learned their mindset, how thev
trader even begin to try to trade a think about for me as an American to work in that
markets. It couli
foreign contract on a foreien have been verythe dangerous if I hadn't
market. I am trading a Japanese index
exchange? Is it realistic to trv? and I'm a foreigner in the pit. I am
done that.
SCHOENFELD: I believe so. It gne of very few foreigners. Everyone
Coming from the States, if I had that I work with is Asian, 95v/i are
depends what hours you work. Ifyou been j.udging
the Japanese market by Chinese.
are a technical trader off the fl'oor American
standards, I could have If I behaved like a local in Chi-
trading bonds or S&ps, there is no been calling
reason you can't stay up with your to-
it overvalued and trying cago, I wouldn't have half the friends
short it like many fund managers. that I do in Singapore, and it,s not
Quotron or Reuters monitor, chart Many American and foreign
the thing, and trade it. In a sense. I lund likely I would get all the trades I do.
think it is much easier, since it is You have to swallow your pride and
much more trendy than the currencies learn about Asian attiiudes in
and the bonds. expressing emotions. In Chicago, it is

.. .T!. Nikkei usually has very estab_

On lhe concepl part of your day to curse someone out
in the pit, in front of everyone else.
Iished trends during the day. Nothing
is as easy as it sounds. Iiut I truli of soving fqce: You can't do that at SIMEX. It hap-
pens, but problems are solved in
believe that position traders can trv.
We know that the trend has prer;y
"ll wqs much more of a group way,
much been one way until recently. embqrrqssing for Big problems are usually taken out
of the pit. It is the Asian concept of
In the middle of June, we saw a
very serious correction. Some of the me lo reveql lo face, saving face or losing face. To
publicly insult someone will make
props holding up the Japanese mar_
ket have been removed. If the dollar
lhe resl of the them lose face. I have learned to con.
is stabilized really, then the Japanese lrqders in the pit trol my temper. It is quite interesting
in the pit, because you see many
loseof lot of their motivation to be
afraid of U.S. equities and U.S. lhql I wqs toking Asians breaking their society's rules
bonds. One reason that the Japanese
market was up was that the Japanese
q loss.tt about facg becairse they can't help it.
It gets emotional in the pit. So it's a
felt trapped. They were afriid to learning experience for them too, a
move^their money into foreign mar_ unique social experiment.
kets for fear of losing on currency managers wefe trying to call the tops.
moves. They were net sellers through tlis
Ifthe dollar is stabilized, one of four-month rally fiom November. I INTERMARKET: And what about
_ from the non-American point of
the reasons for remaining' in--th" could have gotten hurt. I could have
domestic market is removed. That is said that P,zE ratios are 70 and view?
would LOH: Well, you see a lot of different
yhv this is going to be a very exciting have killed myself shorting.
time for the Nikkei because the fun_ reactions in the pit. Some guys are
I also bothered to learn about their
damentals are changing. Not that the charting methods and made very polite. When the markets eet
some hot, you do see pushing and rushing
Iunclamextals really ever meant any_ contacts. I don't rely on contacts
for in the pit like you do in the States.
tiing in Japan, at least corporate fun_ my daily trading, but if I'm in a verv
damentals, but one of the chief rea_ confused state of the market Compared to Chicago, though, we
sons for Japanese cash going into where it is heading, I'm not
ani are not as forceful in the pit. people
qomestic markets one who say that when they come to the
with no concern for hesitates to call someone in Tokvo to
fundamentals, shall we say, is gone. exchange.
hear what they have to say.
In general, Chicago traders tend to
INTERMARKET: Steve, how cut losses more quickly. I used to have
yourself about the
did INTERMARKET: what is different a tendency to restrict myself from cut-
il:::g::il. under- aUout their chaitin c;.?"-- ting my losses so quickly because of
tytng rLUUK
rvru5, stock marKetT
market? srlrnrNrtirn. They r1^,, ..^^
SCHOENFELD:
ScHOENFELD: Spending hard catieo a candre chart. use --.L^1 :_
what is the concept of "face saving," It was
yen in Tokyo. In Juni, before describe.
It-ii #; -; embarrassing for me to reveal to the
,e13eo It is a bar chart-corored rest of the traders in the pit that I was
SIMEX, I spent rwo weeks btack if it is a down duvl una white if
Lttl:l:-g:t *".tine'
llJllqr,11 ffih1l-9..:
n.6ar.,'
I
;;;:^" ;il;
learned by wayof
;;:il."il'i,"i,l;,Tl#il1!ii
taking a loss. I looked stupid to all of
my fellow traders. But pretty soon it
:'::"^::
,,ofTo.'j' r';ilJiftd Jii*'i'ii i;l#,:ffii:i
.
that,I.believed
tearningthemirkets. Notthat
lff ;Hiffi: rTllH
stafted to really hurt my pocketbook,
so I learned to express myself very
abour ttre poteniial oi a iriena f.; To[i; runJ tn.- to,n, quickly (Laughs).
:.-'v r\rArer anq
'tne-Nikkei and JrMEx
SIMEX. ;;"
every dev
day. rr
It wqc s.nmerhina la
was something ranL at
to look ar
PHANG: It was hard to get used to at
D":.j0,.::,^-**' -9'e weeks in t"-ri.-li' i"J;; ;;*" dirrerenr, first. But the more people laugh at me
;,199.mb-e1
and November after trad- uecauie-i irri rr,.Jr'*."rrr" charrs in the pit, the better I seem to trade.
l8lhe Nikkei, and I knew the ques,- they use in Tokyo. IM