INTERVIEW


From The Pit To The PC
Lewis J. Borsellino 

by Thom Hartle
The current, never-before-seen bull market in stocks has led to tremendous growth in trading the Standard & Poor's 500 futures pits. One top S&P trader, Lewis Borsellino, has been a runner, a clerk, a broker, an independent trader, and now, a fund manager. Recently, Borsellino wrote about his life and time in the pits in The Day Trader: From The Pit To The PC. STOCKS & COMMODITIESEditor Thom Hartle interviewed Borsellino on April 21, 1999, asking him about, among other things, his strengths, his mistakes, the future of futures, and more.
 

ILLUSTRATION BY CARL GREEN

Did your trading career begin in the Standard & Poor's pit?
No, my trading career began in the gold futures pit. At one time, the Chicago Mercantile Exchange's gold pit was the largest and traded the most volume of gold contracts. At that time, gold was trading over $800 per ounce. One day, I was playing racquetball with a trader and I asked him if I could open an account to trade gold futures. He suggested I come down to the exchange and see what it was like. He didn't want me to just open up an account, he said, because I didn't know what I was doing and I would just be throwing my money away. The moment I walked out on the trading floor, though, I thought it was the greatest thing I ever saw in my life.

So you arranged to get a seat?
I was a runner for about two months. Fortunately for me, I met Maury Kravitz, who was a very successful gold trader. I introduced myself to him. My mother had been his legal secretary for about 15 years. As it so happens, at the time, he had a young law clerk whom he had got started in the business, Jack Sandner, who years later became the chairman of the Merc.

Interesting twist of fate.
It was. When I introduced myself to Maury, he looked at me and asked why I hadn't called him for a job. I said I hadn't wanted to bother him. He said I had a job in two weeks.

Just like that! What happened?
He made me his assistant in the gold pit two weeks later. I did that for about a year, and then he sponsored me for a seat.

So you were assisting as a clerk?
That's right. Back then, the arb wasn't as big [Editor's note: "arb" is the hand-signaling of orders to floor brokers in the pit], and we had a huge deck. I was the clerk who managed the deck.

So you started out as a local in the gold pit?
I was just assisting Maury. Then he helped me get a membership, and I started filling orders and trading my own account.

And how did that go?
Not well. Every trader has to go through a learning process, and I went through mine. The mistakes were eating me alive. About six or seven months into it, I ran out of money. I hadn't made any money because the gold market had abruptly switched from a bull market to a bear market. It went from over $800 to about $330. During the Falklands War in 1982, there was a peace scare, and gold had a $50 range. I was checking a trade with another trader, and we realized that we had an out trade where we had made nearly $60,000 each.

And then what?
A month later, the S&P pit opened up, and I said to Maury that I thought this was going to be a good pit. I suggested that we get a deck in there and do some business, and we did.

And so obviously that worked out.
In trading the S&P, we started to get the customers that we had had in the gold market. The pit grew every day. The volume grew, and the bull market was just getting started. I remember that the Dow Jones Industrial Average (DJIA) was below 1,000 when we started that contract. By the time we went through the 1,000 level, it was clear that the S&P was going to be big. I grew my business, and by 1986, I had the largest deck in the pit and had become the biggest trader.


I found that people who were traders are good traders, and people who were chartists are good chartists. It doesn't mean that a chartist can be a good trader. -- Lewis Borsellino

Excerpted from an article originally published in the July 1999 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 1999, Technical Analysis, Inc.

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